How to Create an Effective Business Strategy

How to create an effective business strategy

There’s no getting away from it – you need to get your strategy right to be successful in business. Simply having a plan won’t cut it, unless you know where you’re going, how and why.

By definition, strategic business planning involves working out what your business’ vision and mission is. Or, in other words, how it sees things, and what it is trying to do. Successful strategy typically involves creative thinking, particularly to set you apart from the competition.

The strategy will describe the direction in which you’re planning to take your business. In contrast, the plan lays out the detailed steps that will take it there. A travel analogy is useful for thinking about strategy versus planning; the plan will tell us how to get there, but the strategy actually defines where we are going. Without knowing that, we’re simply left with a set of useless instructions!

Another way to think of business strategy, is as the ‘design’ of a company, with its intent and purpose, and the plan as the blueprint that describes how it will be built. Strategy also tends to be big – not only in thinking, but in the scope of its remit. In most cases it will describe an entire business or company, rather than an individual department, product or service.

So, how do you start to create your strategy?

Business plans tend to be created using a structured approach, methodology and set of templates that are prescribed and usually ‘best practice’. However, strategic planning is brainstorming in its most creative sense. It’s less of a science and as much of an art which requires a blend of fresh thinking and knowledge.

The best plans come from management teams that really understand, not just the business, but the broader operating environment, the customer, the business’ own strengths and a shared vision of the intended direction. It can really help to get different people into the room during this brainstorming phase with different ideas, perspectives and skill sets. Engage with customers and other stakeholders and use structured tools to help where necessary.

Tools to help with the job

A SWOT analysis measures your business’s strengths, weaknesses, opportunities and threats, and is a great foundation of a strategic plan, helping to identify the right strategic building blocks upon which to create success. Many large firms use this tool to begin their strategic planning and it works just as well for smaller firms.

Another good tool is the PESTEL analysis, looking at the political, environmental, legal, technological, social and economic influences on the business and its direction. These tools may sound a little academic but they really help to focus thoughts and often identify factors not previously considered.

The link with methods

The process of moving from goal visioning, through to strategy definition and then onto planning is the best way to drive strategic planning. Smaller firms under time pressure often feel tempted to jump straight into delivery, but the time taken to really think broadly and strategically – and to question assumptions and test new ideas – is essential for lasting business success.

You will find that strategy quite naturally directs action and creates a business plan as a result of asking the bigger questions. So it’s actually an extremely efficient use of time!

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