The word “strategy” in business, is as critical as a defibrillator, for a patients in cardiac arrest. Strategy makes or breaks a company. It is one word that concerns C-level executives the most, and one of the major parameters by which their salaries and stock options are evaluated. Overall, it governs accomplishment of a company’s vision. But how would you define business strategy? Does every in management know what is really means? The short answer is – not really. Many think they know what it means. Read again. They “think” they know what it means.
Most of them think strategy is effective planning for future while having contingencies in place. Others think it is best practices to ensure operations and people management. Even in the best of companies, very few understood what business strategy means. When I used to work in market research, I’d ask this golden question that will immediately give away a client’s understanding of strategy:
“At what stage of your strategy do you want us to help with?”
Those who clearly understand strategy, they know that:
- It is a process to achieve business objectives / vision: This indicates that strategy has a sequence of events. These include: Planning, implementation and execution. Referring to the golden question above, if a client answered one of these events, then it is an indication that they genuinely understand strategy.
- It is a long-term perspective: There is no “strategy” to run daily operations. Instead, it is about what the company will be doing in 3 to 10 or more years into the future, depending on the industry. In fact, the phrase “short-term strategy” is an oxymoron.
Example: John wants to get into pizza business and he has to start from scratch. He needs to have a strategy. He understands that it is a process with a long-term perspective. He assembles a team and proceeds with these steps:
- A) Planning – In this stage, John brainstorms (plans) with his team on investments cost, operational cost, staffing requirement, raw material procurement, equipment purchase, governmental regulations, food safety procedures, insurance, compliance policy, etc. All these discussions are confined to a room and happen regularly. These are documented and periodically reviewed. A clear road map is set in place, on how efficiently the pizza joint would function, and increase sales over the next 3 years. The planning stage, depending on the business objective, can range from few weeks to months.
Small disclaimer before I proceed: In the dictionary, the words implementation and execution may have the same meaning. However, from a business strategy perspective, these stages have their unique process.
- B) Implementation – In this stage, John and his team set up the infrastructure for pizza restaurant and these would include:
- Scouting for real estate and negotiating the rent
- Utility purchase including ovens, kitchen ware, tables, chairs, etc
- Job posting, interviewing and hiring
- Safety inspection, validating food laws and other governmental procedures
- Budget allocation for advertising medium marketing promotions
- Distributor contracts for raw material procurement and many more
This is marked by regular meetings to track progress and ongoing ground work. Think of the implementation phase as the juncture that marks the beginning of real-time operations towards envisioned objectives.
- C) Execution – This stage is strictly people-centric. Most business objectives fail, despite having fabulous ideas and impeccable implementation, because of flawed execution. In the restaurant case, think of the following scenarios despite serving the best tasting pizza:
- Long waiting time for in-house customers because chefs are limited
- Home-delivery numbers always engaged due to disorganized order taking
- Lack of discipline among waiters and rude behavior towards customers
- Lack of customer centric choices on pizza flavors and no system in place to collect feedback
All such cases are people related. Even a lack of employee motivation or morale can affect the business. A successful business ensures that employees are in sync with values and business objectives. This is why a lot of modern companies emphasize the significance of company-culture. It is to ensure that executions are in sync from top management to all the way down in hierarchy. Leadership plays an important role in this stage because employees must be competent in their duties, and at the same time, remain disciplined to company’s vision. It is the leadership responsibility to ensure that over the course of company’s progress, constant assessments in place to ensure people are competent and disciplined. Those lacking competence will require training & development, while those lacking discipline will require mentoring in accountability.
Once the management realizes that fulfilling objectives are on track, they shift the company’s focus to newer business objectives for successive long terms. Strategy is always evolving. It is a continuous process that trickles down to various departments within a company: R&D, Sales, Marketing, Procurement, IT, etc, each with its own cycle of strategy evolution.