Business Strategy 2010

Well, here it is, the second week of 2010 and I am finally getting around to posting my first entry of the year.  One of my resolutions was to post much more frequently.  For this entry, I am stepping away from my technical content and providing my thoughts on long-term item, business strategy.

We need to understand what "strategy" means.  In general terms, a strategy is a plan to reach a goal.  This is fine, but it does not provide a roadmap to how you actually do this.  What is missing is a "tactics" component.  To further extrapolate this, let's consider a strategy as where we are going and the tactics are how we get there. This is still somewhat incomplete to me.

A strategy should be a plan that maximizes the effectiveness of your resources, taking into consideration  environmental factors (including your competition), risk, and core competencies.   Strategy is also about deciding what you will NOT do.  This also means you need to stick to that decision.  Resources and products should be focused on your target audience and not try to be everything to everyone.  Taking an idea from Sun Tzu's "Art of War", if you spread your resources too thin and try to attack from all angles, you will not win. In essence, you will be nothing.

Tactics should be tied to your strategy in order to be successful.  What differentiates tactics from strategy is that tactics are the decisions that are made while implementing the strategy.  Strategy is your roadmap and tactics are the actual route being taken based on internal and external inputs.

Strategies have several traps that are easy to get caught up in.

EVERYBODY WILL BUY ONE

There is nothing that everyone buys. Not even water! Yet, time and time again, organizations insult us with claims that their product is so fantastic that everyone will not be able to live without it. The problem is that it is a misconception and one that may cost you greatly. The "idea" is the trap. Study the market and isolate those people who will buy your product.

JUST ONE PERCENT OF THE MARKET

How many times have you heard someone mention that the sales for {insert name here} were {insert high dollar value} and then make a comment something similar to, "If I could only get one percent of the market, I'll ... "? Ok, the arithmetic may be correct, but reality is a different story. That one percent proves to be more difficult to sell than originally thought. These statements prove nothing other than the fact that you can do simple arithmetic. Don't talk about how much of the market you need, show everyone how much you can get.

UNREALISTIC EXPECTATIONS

No purpose is served by developing elaborate strategies that an organization cannot execute. They must be SMART (specific, measurable, attainable, realistic, tangible). Money limits strategic alternatives. You must live within your pocketbook. You must live within your own capabilities. Make your strategies fit your organizations talents.

Strategy alone will not make you successful. Great strategies will fail if not adeptly executed. It doesn't matter so much what you do but how well you do it. There is no single Master Strategy.

In the end, You do not want to engage  unless you have the advantage.