Business Management - Developing your business strategy

For small businesses, strategic management need not be complex, says Neville Stein.

Using a 'route planner' can help with strategic planning - image: iStockphoto
Using a 'route planner' can help with strategic planning - image: iStockphoto

Very few of us would embark on a long, expensive journey without knowing the destination or even the set route, yet in our business lives how often do we do that?

A business journey is the direction, aim and outcome of our business endeavours, and should be structured planned and considered. To do this, we need a "route planner", the underused and often misunderstood process of "strategic planning".

Many people struggle with the vocabulary of strategy. In simple terms, a strategy is a broad plan. Business academics Gerry Johnson and Kevan Scholes say: "Strategy is the direction and scope of a business over the long term." Having a strategy is vital to enable your business to achieve an advantage in the marketplace while meeting the needs of the workforce.

Work out your mission

Before we begin a journey, we must know where we are going. The same applies with strategic planning. You cannot begin to define your strategy until you have worked out your mission - your overriding purpose and your vision - your desired future state or your aspirations. Your mission could simply be "to be the best and most successful nursery in the UK" while your vision could be "to ensure that your nursery is the first choice for garden centre buyers".

Once you know where you want to go, the strategic management process can kick in. This is often ambiguous and complex. It concerns the whole of your organisation, is fundamental and has long-term implications. Strategy should not be confused with operational management. This process of day-to-day management can be described as tactical and is very different from strategy.

Most people think they are being strategic when actually they are being tactical - allowing the routine and demands of daily tasks to distract them from the bigger picture.

Let's look closer at what a robust strategic management process involves. The best method to use is a three-step process involving strategic analysis, strategic choice and strategic implementation.

Understanding where your business currently is and the influences on it is a key aspect of strategic analysis. Start with looking at the external environment factors - such as the economy and the weather - that influence your business but over which you have little or no control.

Opportunities and threats

Then you need to look at what your competitors are doing. Having done this, you will see that there are opportunities and threats for your business that you need to assess. An opportunity should be attractive if it can provide you with a sustained growth in profits. Threats need to be assessed to gauge how serious they are to your business.

Once you have done this, you may have a short list of opportunities and threats. Now it is time for a bit of navel-gazing. Look at the internal environment of your business and assess your strengths, weaknesses, skills, competencies and the resources available to you.

Apply these then to your list of opportunities and threats and you will have a better understanding of how you can maximise opportunities and reduce threats. Maybe you will also see where your strengths and weaknesses need to be improved.

The next phase is "strategic choice". By now you should know your overall purpose (your mission) and your desired future state (your vision). You will also know what opportunities exist to enable you to meet your mission and vision, and what threats need to be minimised. You have a destination in mind and now you need to choose a broad plan - a strategy - to get you there.

Through the analysis stage, for example, you might have identified a particular opportunity for a unique range of products. The market may be small with no-one supplying it, so your strategy would be to focus on a niche. Alternatively, you might have realised that through efficiency savings you can offer your product at the lowest price - a low-cost strategy.

But you might have realised that there is an opportunity to make your product or service different in some way. It may be that you can produce some unique packaging or provide a unique add-on service. This would be a differentiation strategy. Producing a brand new plant with innovative packaging is an example of this.

You are now nearly there. Having identified your strategy to compete in the marketplace, you now need to implement it. Be warned, however. This is often the most difficult aspect of strategic management. It involves translating your strategic choice into action within your business.

This might involve changing the structure of your organisation, adapting or creating systems, finding new resources such as finance or staff and, if your strategic choice is very radical, you will need to manage the change process.

 

A complicated process

Maybe the whole strategic management process sounds complicated. Well, perhaps it might be in large corporations, and often they would be guided through it by specialists. But in smaller businesses, it need not be complicated.

Business owners often go through the above process intuitively. The important point is that we should all take objective time out from our businesses and start thinking about them. That is a bit radical because in our business culture we value action - we like to be seen to be doing something and we value thinking less.

But time spent thinking about where you want to be, how you will get there and how you will configure your resources to help you get where you want to be is time well spent.

Neville Stein is managing director of the Ovation Business Consultancy.


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