31 May 6 Steps to Create an Effective Business Strategy
Whenever you set off across new territory you’ll want to consult a map, otherwise you’ll get lost.
Stepping forward into the unknown (also known as ‘the future’) is what companies do every day.
And what do they need to make sure they don’t get lost? A strategy, of course, which some may also call a roadmap.
Whether you’re looking to set new business priorities, outline plans for growth, determine a product roadmap or plan your investment decisions, you’ll need a strategy. Coming to the realisation that your organisation needs one is easy. Actually creating a strategy is a little trickier.
Here are six simple steps to help you deliver an effective business strategy:
1. Gather the facts
To know where you’re heading, you have to know where you are right now. So before you start looking ahead, you should review the past performance, or the current situation. Look at each area of the business and determine what worked well, what could have been better and what opportunities lie ahead.
There are many tools and techniques available to help with this process, such as SWOT (Strength, Weakness, Opportunities and Threats) analysis.
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You should look internally at your strengths and weaknesses. And for the opportunities and threats you should look at external factors. A great framework for looking at external factors is PESTLE (Political, Economic, Social, Technological, Legal and Environmental). So, for your big idea or plan you would ask: what threats and opportunities could arise under each category?
The most important part of this process is involving the right people to make sure you’re collecting the most relevant information.
2. Develop a vision statement
This statement should describe the future direction of the business and its aims in the medium to long term. It’s about describing the organisation’s purpose and values. Business gurus have debated long and hard about what comes first – the vision, or the mission statement (see step 3). But, in practice, you could develop both at the same time.
3. Develop a mission statement
Like the vision statement, this defines the organisation’s purpose, but it also outlines its primary objectives. This focuses on what needs done in the short term to realise the long term vision. So, for the vision statement, you may want to answer the question: “Where do we want to be in 5 years?”. For the mission statement, you’ll want to ask the questions:
- What do we do?
- How do we do it?
- Whom do we do it for?
- What value do we bring?
4. Identify strategic objectives
At this stage, the aim is to develop a set of high-level objectives for all areas of the business. They need to highlight the priorities and inform the plans that will ensure delivery of the company’s vision and mission.
By taking a look back at your review in step one, in particular the SWOT and PESTLE analysis, you can incorporate any identified strengths and weaknesses into your objectives.
Crucially, your objectives must be SMART (Specific, Measurable, Achievable, Realistic and Time-related). Your objectives must also include factors such as KPI’s, resource allocation and budget requirements.
5. Tactical Plans
Now is the time to put some meat on the bones of your strategy by translating the strategic objectives into more detailed short-term plans. These plans will contain actions for departments and functions in your organisation. You may even want to include suppliers.
You’re now focusing on measurable results and communicating to stakeholders what they need to do and when. You can even think of these tactical plans as short sprints to execute the strategy in practice.
6. Performance Management
All the planning and hard work may have been done, but it’s vital to continually review all objectives and action plans to make sure you’re still on track to achieve that overall goal. Managing and monitoring a whole strategy is a complex task, which is why many directors, managers and business leaders are looking to alternative methods of handling strategies. Creating, managing and reviewing a strategy requires you to capture the relevant information, break down large chunks of information, plan, prioritise, capture the relevant information and have a clear strategic vision.