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.
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4 comments:
Hello Balajhi Narayanasami,
I have read with great attention this article and, as a strategist for business in Spain, I was particularly pleased with the concise and clear way you have structured your ideas.
Reminding all of us that strategy is a choice is hugely important. We must make choices every day, beginning with choosing, very thoroughly and consciously, how we define our product or service and who our public is. In my experience, this usually represents one of the first fissures for a business' strategic plan. A core element often not clearly understood or defined.
The next points about explicit exercise and annual event touch on another key idea that I consider to be part of a fundamental philosophy: the continuous process of strategic thinking. If this kind of thinking becomes habit, if it becomes part of a team's daily practice, that is the surest route to success and meeting goals.
Another important point you communicate is that of flexibility. Again, strategists (which we can all be, there is no need for a formal title if leaders and teams learn how to embrace strategic thinking in their daily practice) must be agile. That is the name of the game. The etymology of the word strategy comes in part from a warrior, which I turn into a metaphor of course.
Drawing from Oriental philosophy/spirituality, the warrior must always be on watch, eyes open, senses alert, for movement by the surrounding forces. It is important to keep our enemy close (again, a metaphor), know them intimately, listen to their language and watch their choreography.
This agility of the senses and decision-making can be summed up in your idea of flexibility. Without that, we are rigid and quickly become stagnant, the antitheses of strategic activity, from my perspective.
Your last graph on formulate/reformulat illustrates in clear business lexicon the constant movement, question-asking and innovation that, for me, is inherent in sound strategic practice.
I think your article is a very useful snapshot definition and refresher for any business, large or small.
Thank you for putting it clearly for us.
Sincerely,
Jenifer L. Johnson
www.laestrategiablog.com/eng
Drawing from Oriental philosophy/spirituality, the warrior must always be on watch, eyes open, senses alert, for movement by the surrounding forces. It is important to keep our enemy close (again, a metaphor), know them intimately, listen to their language and watch their choreography.
This agility of the senses and decision-making can be summed up in your idea of flexibility. Without that, we are rigid and quickly become stagnant, the antitheses of strategic activity, from my perspective.
Excellent thought. Can there be a better explanation for why strategy should be a continuous process and should not be a rigid schedule on the calender. How well you have put it? Thanks for such an articulated expression.
Thanks for your feedback.
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