Business Strategy.
If – as it truly is – understanding what the customer wants, having effective channels for delivering what they want, and effective deployment of the key resources required for a business, are key elements for gaining competitive edge, then, having unique strategies that’ll put your business ahead of the competition is a world’s worth.
Truth be told, most businesses have strategies upon which they run their enterprise. However, running with un-researched, unarticulated, unstructured and uncoordinated plans is usually as bad as not having any. By stroke of luck, they may survive for a while, but are constantly prone to competitive vicissitudes sweeping them off – usually unexpectedly.
The practice of running an enterprise without well-articulated strategies typically stems from the avoidance of the rigours involved in developing good strategies. However, the benefits of having the right strategies far outweigh the sacrifices involved in the development process. After all, who goes into a battle without the right tactics, and expects to come out triumphant?
What is business strategy?
Simply put, Business Strategy is a deliberately crafted plan of action that will develop a business’s competitive advantage, and compound it.
If you carefully consider the above definition, two elements are worthy of a second look. Those are: (i) Developing competitive advantage and (ii) Compounding that advantage.
The search for how to compound your competitive advantage is unarguably far more important than the competitive advantage you have at the moment. For instance, is you’re in business and you have some loyal customers at the moment, those customers are perhaps loyal to you because of the competitive advantage they consider you business to have over your competitors. To survive, grow and prosper however, your business must compound that advantage and expand beyond it – first to prevent the competition from taking of what you have already and second, to expand your market share. This is the realm of Business Strategy.
This realm of Business Strategy has its root in Prof. G. F. Gause’s Principle of Competitive Exclusion (1934, University of Moscow): No two species can coexist that make their living in identical way. Though one may argue that the result of this experiment on small animals (protozoans) may take an overly pessimistic coloration when applied to business, the fact that an unabated loss of customers/market is an existential threat to a business undoubtedly validates this principle. Every business cannot grow indefinitely.
In the real business world –but for “Blue Ocean businesses” – competitors crowd each other out. Hence, the stronger your competitive advantage is – and the more you’re able to compound it – the higher your chances of surviving, growing, thriving and dominating your industry.
When to develop/review your Business Strategy
Competitive advantage is a moving target. The strategies that got you success yesterday may not today. Continually successful businesses know how to keep moving, and always stay on the cutting-edge.
Essentially, businesses that thrive keep their eyes on their strategies, continually review and refine to minimise threats, attack the market and take advantage of “secret opportunities” that others do not see. Truly, hidden opportunities are only visible when we you do not take your eyes off the “business strategy ball” In practical terms, there may be specific times set aside by businesses to undertake these activities – strategic planning and reviews. However – as we have come to know – time is a competitive advantage on its own. Hence, waiting till the next cycle of strategy review before tactics are developed and implemented to counteract competitors’ wiles may prove too late.
In essence, develop your strategy periodically, but keep your eye on the ball to refine as appropriate.
Is your competitive advantage contestable or sustainable?
Unless a business has a unique advantage over its rivals, it won’t survive for long. Or at the best it won’t grow nor get near excellence.
When we talk of competitive advantage, what we’re saying is actually unique advantage. The cliché “Unique Selling Point” has truly lost its effectiveness out of overuse, same way many products and services have become commoditised. There isn’t any unique advantage in commoditization. Remember Prof. Guase’s Principle. Competitors that make their living the same way cannot co-exist in the same shape for long. One eats into the other – one fattens (could be for a while), the other shrinks, possibly into non-existence.
What differentiates competitors in business may be design, functionality, intellectual property, features or location. Or it could just be the customer’s perception of the product, service or the company. While some of these may be truly unique, most are ephemeral. For instance, a business that’s built on “competitive advantage” based on connections to get contract may not last for long as personnel changes will eventually create shifts in allegiance.
Another common error in developing business strategy is the proclivity of business owners to develop “competitive advantages” rather than focus on a unique advantage. You’re always prone to “copy and paste” when you look at advantages rather than that uniqueness that’ll set you apart. Aside that those “advantages” are not original, they are surely not sustainable. It’s an easy way out – everyone copies, everyone implements, we crowd each other out.
So what is that Unique Advantage?
A unique advantage is that sustainable advantage which is crafted by the use of imagination and ability to reason logically to accelerate change and departure from the common. Aggressive marketing without a unique, sustainable advantage is an approach that won’t produce lasting results. As Bruce B. Henderson puts it in “The Origin of Strategy” – an Havard Business Review on Strategy, “Chasing market share is almost as productive as chasing the pot of gold at the end of the rainbow. You can never get there”. Great designs, products, great and sustained innovations, have all but been products of sustained use of imaginations and resourceful analysis of empirical data.
How to develop a winning Business Strategy
For good reasons, developing business strategy can be challenging. Yet, developing it is crucial to survival and growth. The question therefore is – how does a business develop an effective business strategy that’ll give it an edge over competitors? We have carefully identified 11 factors that are crucial to developing an effective business strategy.
| 1 | Be Deliberate – define your purpose, establish time frames, and establish resources |
| 2 | Revisit your business vision and mission |
| 3 | Involve everyone |
| 4 | Use external resources |
| 5 | Gather data |
| 6 | Use information wisely |
| 7 | Use imagination |
| 8 | Be logical |
| 9 | Analyse |
| 10 | Approve, Disapprove, Realign |
| 11 | Simulate |
| 12 | Review, Refine |
A blog by Teoaris Consulting
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