By Sandeep Barve, Founder Director, In-Unison Pvt.Ltd
“ Strategy is a style of thinking, a conscious and deliberate process, an intensive implementation system, the science of ensuring future success.” – Pete Johnson
As everyone would agree, you can’t achieve anything without a plan – everything in life or business, small as well as big things, require a strategic plan. A strategic business plan helps business owners determine their core competencies and based on those, determine where they should spend their time, money, and human capital. A book by author Azhdar Karami titled Strategy Formulation in Entrepreneurial Firms states that the approach to strategy formulation further decides the eventual management style as well.
Developing a strategic business plan may appear to be complex and overwhelming but it can be easy if you break it down. Here are 7 steps of how to define a strategy:
Identify Problem/ Opportunity
Looking at a market, do you see inefficiencies present in the market which you could possibly solve? Or, do you see some key hassles which people are facing while using a particular product and can you offer a better hassle-free product? Or, do you want to create a completely new experience for your customers? Whatever may be the case, the first step towards strategy formation is to identify the opportunity or clearly define the problem you want to solve. It is impossible to create a differentiator or be a market leader if you don’t address a unique problem or offer a unique solution to existing problems.
Recognize Possibilities and Aspirations
As a business, there are various outlets for growth. New possibilities constantly arise due to technological advancements, changing customer needs and buying patterns, changing trades and political trends, evolving economic trends, and competition. Apart from the new possibilities, the company might also have its own aspirations. For instance, aspirations could be about becoming number one player in the current market or becoming a global company or a company recognized for its brand or growing X times etc. It is important to keep a close eye on such upcoming possibilities and work towards achieving the aspirations. Real-time and context-sensitive data and powerful analytic tools can help businesses quickly recognize possibilities and create opportunities for rethinking their business models.
Define Strategic Intent
What, the company as a whole, wants to achieve and what the reasons behind it, is something that needs to be clearly framed. Once this is noted down, it becomes easier to list the required capabilities, investment plan, and potential outcome of the same for the future. Taking this effort is important so that an appropriate strategic roadmap can fall in place which can then further be analyzed for its effectiveness. Strategic intent is a powerful statement of the course that the organization plans to take in the future. Organizations should try to make as many people as possible to understand these intentions. Only then, everyone can work as a team to achieve the common purpose.
List Strategic Objectives
It is helpful to sincerely make a list of what the business wishes to achieve in the coming 3-5 years. This is different from the earlier mentioned strategic intent aspect. While Strategic Intent is a well-defined statement about what the company wants to do in the long run, strategic objectives are clear-cut goals to finally achieve the intent. Strategic objectives are defined and prioritized only after a thorough analysis of business practices such as a SWOT analysis. Strategic objectives should always be aligned with the organization’s mission and vision. A few good examples of strategic objectives would be – Bajaj Auto which focused on ‘Profits before Volumes’ as its strategy and took a tough decision of quitting the scooters market. Or how Indigo Airline put an utmost focus on on-time performance, low cost, and a courteous and hassle-free travel experience.
Once the strategic objectives are identified and listed, the next step is to evaluate each objective on various parameters such as risk/ reward, cost/ benefit, market position and market share, and so on. This exercise is important because it helps in making an informed decision on the final choice and developing the roadmap for a fine business strategy.
Implementation Readiness Assessment
Strategy implementation is the process through which a chosen strategy is put into action. Before the actual implementation, one needs to design and manage various systems to achieve the best possible results through an integration of people, process, structure, and resources. To convert the strategy into operationally effective action, there are multiple elements such as, procurement, production, distribution, sales and marketing, finance, and human resources, which need to be considered. Strategy formulation needs to take all these and more into account across all functions and individual function levels.
Capability Creation and Fulfilment
Once the operational action plan is finalized, the next step is to identify what all capabilities are required to effectively and efficiently achieve the said strategic plan. It then finally needs to come up with a fulfilment plan. This is one of the most complex processes because it involves assessment of the impact of the strategy on each function and understanding the functional level needs in terms of resources and budgets. One of the most important aspects is to set the right organizational climate which is conducive to the implementation of the defined strategy.
In today’s complex business environment where the priorities need to be constantly changing, creating a solid business strategy is a daunting task. However, with a thorough and thoughtful approach to strategy formation, business leaders can increase the odds of building a winning business strategy. Having a strong strategy formulation in place eases further course of action which entails tasks like strategy execution with budgetary provisions replete with investment rationale and ROI computation. Strategy formulation creates all the necessary ground work for preparing a business case, which is ultimately crucial for giving a complete all-round picture of how the company will progress.
Have you been involved in end to end or partial strategy formulation process? What have been your experiences about these steps?
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