Too many New Zealand businesses are holding themselves back from sustainable growth by failing to develop an effective business strategy. And many of them don’t even realise it.
Many businesses grow simply by doing what they do well, without planning strategically for where they want to be. And if they grow too fast without having a clear direction, it’s highly likely they will come off the rails under the pressure.
Even businesses that think they have a strategy often don’t, as they have confused goals or tactics with strategy. Quite often, people think what they need to do tactically is a strategy, whereas tactics should be a result of having a clear strategy.
They think ‘we need to do this or we need to do that’ – but hang on a minute! Why are you doing this? How is it going to help you get to the point of where you want to be?
Businesses often can’t tell me where they want to be without focusing on turnover or profit or sales. But they’re focusing on a number rather than a place.
An effective strategy starts by centring on a core ideology. What are the driving passion and core values of the business? Why do you do what you do?
Strategy is having the answers to the questions around the why, the where and the what. Until you know the why, the where and the what, you can’t determine the how. Strategy put together correctly and executed well should give you a competitive advantage.
- The why is about the passion driving the business and its future destination
- The where is about where it will be geographically in the market, and with which products or services
- The what is shorter-term priorities for the company
Once you’ve determined that, then you look at how you’re going to achieve it.
Setting out to achieve a certain level of turnover or profit is not a strategy – but meeting your financial goals is a result of being clear about your strategy and your tactics, and getting the right things right.
Another common obstacle for companies is that its leaders may be thinking strategically, but they’re all following a different strategy.
An example I encountered recently with a professional services company that was doing OK, but not spectacularly. Their profit was nowhere near where it should be. And, the main reason was the four directors all had different strategies, and were pulling in opposing directions.
I helped them to decide on a clear, mutually agreed strategy so they could all work effectively together. They’ve now got direction, and they’re executing it. As a result, their profit increased by 450% in 24 months.
It’s vital for businesses to be clear about their strategy so they know where to focus their efforts, and know what not to waste their time on.
With another client, it became very clear that two things the company was putting a lot of time, energy and money into were actually going to take it in the wrong direction.
Once the strategy was clearly identified, the company could confidently shift its resources to areas that would bring sustainable growth.
And, having a clear strategy also helps businesses ensure they’re not blindsided by events or situations they didn’t see coming.
Having a clear strategy will also drive what you are watching and what leading indicators you are taking notice of, so you will see what’s coming.
The good news is that once they have identified a clear strategy and a plan for implementing it, they do get that time back – and the sustainable, profitable growth they were looking for.
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