101: Business strategy
A business strategy should shape your organization with marketing efforts, customer service, a mission statement and policies stemming from that game plan. Then, strategy should be constantly reviewed to keep your company nimble and aware of information it needs to adapt. Here are three things to keep in mind in developing a business strategy:
Understand your industry's competitive forces. Michael Porter, in an article at Harvard Business Review's website hbr.org, says there are five competitive forces that should shape your business's strategy: the threat of new entrants; the threat of substitute products and services; suppliers' bargaining power; buyers' bargaining power; and rivalries among existing competitors. These forces, which differ by industry, he says, “(reveal) the roots of an industry's current profitability while providing a framework for anticipating and influencing competition and profitability over time.”
Don't aim for perfection. What's worse than a flawed business strategy? According to Phanish Puranam, in an article at Forbes.com, it's no business strategy. Even a strategic plan rife with missteps in its implementation can lead to better ideas, he writes. “Managers instinctively know good implementation is important, but too often think of it as only as good as the strategy it serves. In fact, it should be considered an adaptation mechanism in and of itself … to help find and fix flaws within the current strategy — and find better ones.”
Keep strategy at the edge. In an article at Accenture.com, Paul F. Nunes and Tim Breene write that to determine strategy, go beyond what you know about customer needs and wants. “High performers … look for the very edge of those needs and desires to find a market insight capable of spurring the development of a major new business,” they write. n
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