What is strategy? Well, each of us has heard of the concept of “business strategy.” Unfortunately, too small a percentage actually have such a thing in their company’s portfolio.
Why? is perhaps a rhetorical question. In the hope that this percentage will increase in the future, today I am starting a series of articles on the topic of strategy (business and marketing, respectively).
First of all, let’s clarify what “strategy” is and what “tactics” are, as they are often confused. Strategy is the general direction we set for our business, “the set of operations and maneuvers carried out in order to achieve a victory” (according to DEXonline.ro). Tactics, on the other hand, are a tool that supports the fulfillment of the strategy: “the totality of means and procedures necessary to achieve a goal” (According to DEXonline.ro).
If we use a metaphor to visualize this, it’s as if strategy were the map and tactics were the roads. A business is an adventure. We don’t know what comes next; each new step defines the next, especially at the beginning. However, we must at least know the direction we are heading, and that is the strategy. How we define tactics is a matter we will discuss later.
However, just like every time we set out on a journey, in business we also need a checklist:
- Control elements (a compass, for example; in business, this can be the Unique Selling Proposition, that “something” that differentiates us, making us shine on our path)
- Possible scenarios (what if we encounter a bear?, which in business can mean unfair competition from rivals)
- A plan B (what do we do if the road we want to follow is closed?, which in business translates to a market that is difficult to penetrate or unprepared).
How do we define our strategy?
To define our strategy, we must answer a set of questions that may seem simple but are certainly fundamental: WHAT we want to become, as well as what we DO NOT want to be; WHERE we want to become it: what is our market?; and HOW, through what methods: what differentiates us?
Strategy, according to Michael Porter, can be defined according to one of the 3 models (examples come from the Romanian vodka market):
- the best price (Stalinskaya)
- differentiation (Finlandia)
- focus (Grey Goose)
Choosing a strategic direction will lead us to make strategic decisions. Thus, we will be forced to sacrifice some decisions that may seem good for the moment in order to follow our strategy. For example, if we choose a differentiation strategy, we won’t be able to make decisions that place us in the “low-cost” category, because we would lose our strategic advantage (which is sometimes the same thing as the Unique Selling Proposition).
Advice? Yes, a few. First of all, a good strategy should have a maximum of 35 words (according to the article by Collins & Rukstad in Harvard Business Review, Can you say what your strategy is?).
Secondly, a good strategy will be SMART (just like the objectives that will compose it), but at the same time, it will come from the heart, as it represents the essence of our business. Above all, a strategy must exist!
You can’t arrive if you don’t know where you’re going!
Article also published on Mad3.ro
