7 Business Strategies Every Leader Should Know
While ‘business strategy’ may be a cool buzz word that people like to use nowadays, ‘strategy’ is one of the most misused or somewhat overused words in business. The reality is, the majority of people who use this term randomly, are not aware of what all strategy entails or they don’t understand the underlying business strategy principles.
Listed below are seven crucial business strategy principles that every business leader needs to know.
- Always strive to compete to be unique..not just the best. One of the common misconceptions that people have regarding strategy is that you need to be the best in business. Leaders compare competition in the world of business to sports where there is only one winner. However, the fact is that competing in business is more complex. There may be several winners unlike sports, and within one industry you may have several organisations beating the industry average with a unique and different value proposition. So the worst business strategy that you can have is to look out for the biggest player in the industry and try to follow/copy whatever they are doing. But if you do take the imitate approach, iterate, improve and do it better!
- Compete for profit. Business is not about growing rapidly or about having one of the largest market shares. It is in fact all about making profits. Growth in business is not a strategy; it is an outcome. However, that doesn’t mean that you can’t utilise this term, ‘growth’. For instance, you can utilise it in the context of analysis, when you speak about areas of growth in business or when you seek for growth platforms.
- Learn about your industry before developing a business strategy. Every industry has its unique structure and characteristics. These two factors determine your organisation’s profitability within the industry. Some industries have a higher level of return compared to others. So the better you understand and know your industry, the higher the chances for you to be able to determine the elements that will make you stand out, reap higher returns, and be unique.
- Be clear with choices. This is one of the most simple but an important business strategy. You must be absolutely clear about who is your customer and how you are going to serve them. You need to have a unique value proposition for a particular customer segment and strive to develop unique activities in the value chain to serve them in the best possible manner. It’s all about making the right choices. You cannot please everyone. Less is more. So it is wise to target a limited segment of potential buyers and tailor your activities in such a manner that it addresses their demands or needs exceptionally well.
- A good business strategy can say ‘No’ at times. If you have a clear value proposition to service a certain client segment with a unique set of activities in your value chain, you may often come across multiple things which you are probably not going to work but appear profitable. For instance, there may be certain customers or client segments that you won’t serve, certain range of products/services that you won’t offer, or certain activities that you won’t perform. So while strategising, selecting what not to do is also equally important. Hence, every business strategy needs to have a section where it defines the NO GO.
- A good business strategy is one that needs you to keep moving. In the business world, everything evolves – be it the needs/ behaviours of customers, technology, or the move of competitors. Hence, in order to determine the way ahead for your organisation, you should be able to predict these trends and evolutions and incorporate the same into your business strategy. If you fail to do this, you may get into trouble, be left behind, or even miss out on a new change in the industry.. A bit like a Kodak’s not so glorious moment ignoring digital.
- Scenario-based thinking is an important business tool. In business you should be able to translate data into assumptions that will help to boost your reflection process. One of the ways to work with assumptions in a structured manner is to resort to scenario-based thinking. You can achieve this by fixing some parameters and let some to vary. By offering you possible future strategic options for your company, this technique will help your reflection process. It is an important skill for anyone who wishes to deal with business strategy. Every business leader needs to learn at least the basics of scenario-based thinking so that they don’t need a strategy consultant for every small reflection process.