Strategy is a combination of choices that a business makes and implements to achieve its guiding purpose. This may include
- choosing customers / segments
- choosing products and/or services and varieties within them
- choosing geographies
- choosing the value proposition
- choosing how the value is configured
- choosing how the value is delivered
Strategy need not be an explicit exercise. A professional who goes about his job in a chosen way and manner and consistently winning customers with the value he delivers and expanding his business does have a strategy even if he hadn’t thought about it or spent hours analyzing his competitors / industry.
Strategy exercise need not be an annual event or for that matter occupy one’s calendar periodically. As the situation demands or as foreseen, strategy exercise should kick start. In a happening industry / environment companies may be forced to re look at their strategy every six months. In a sedate or mature industry, strategy can even be a once in two or three year’s affair. The determinant for the timing of strategy exercise is the ground situation (either real or forecasted) and not the calendar. However nothing stops periodic review of business strategy to confirm assumptions / choices made and that the performance is on desired lines.
Strategy should be flexible to accommodate changes as may be necessitated by changing (either real or forecasted) situations. This requires feedback systems that track how well, strategy originally formed is implemented and serves its purpose.
· Every business must keep learning about its business / customers / performance / competitors / suppliers / substitutes / any factor that impacts its revenue and the very purpose for which it exists
Strategy may be formally formed at the top but the inputs for the same should come from all interested sources from within and from all corners of a business / company. Feedback systems play a huge role in strategy formation.
Strategy = Thinking + action. Strategy is “an elaborate and systematic plan of action” is how the dictionary defines it. Strategy sans action is not strategy but just a theorization of how an organization should move forward.
Critical factors in strategy formation are capabilities, environment and strategic insight. Capabilities involve both internal and partner capabilities while environment refers to industrial, regulatory and social environments. Strategic insight (customer insight + market insight + feedback) refers to the knowledge that a company develops by observing and learning about
- how well it’s products / services are received by the market
- customer experiences and what is missing in that experience
- changing tastes / preferences of customers
- how substitutes and complementary products / services are shaping up
- how various players and their capabilities threaten / complement the businesses’ position
- how the business has performed in meeting the demands of the customers / market, where it has failed, where it succeeded and what it needs to achieve
- gaps in capabilities, resources and infrastructure
A business needs to formulate / reformulate strategy under following situations.