Business Strategy Formulation

Mountains of academic material will tell us that business strategy fails because of lack of or poor strategy implementation. This is very helpful not so? Of course not!

Strategy is by its nature not a complicated process but it is a complex process that takes a combination of time, effort, resources and leadership in order to make it the success it is designed for.

Step One

It starts from an existing point, either current state of business, or from just an idea if no business exists. This current state is then projected forward to the state we wish the business to be in after a certain time. What we have now is a “mission statement”, ie what business are we in (what business idea do we have), to where do we want this business (idea) to be in say 3 years’ time, ie the “Vision”.

How we get from the one point to the other is the ‘Strategy’. Now there is no universally accepted definition of the word ‘strategy’. But I always defer to the renowned Prof Michael Porter from Harvard who stated “The strategy process is all about the choosing of a set of activities, in order to deliver a competitive edge”. This statement makes it very clear; strategy is about initiating more than one activity, i.e. creating a combination of activities in order to make/grow your business and it also clearly states that the intention is to make your business more competitive.

Step Two

Why make the vision only 3 years you might ask?, well the simple answer is that anything beyond 3 years is so undeterminable that in today’s rapidly changing environment, it might as well be gibberish. Three years is also a time frame that is easily related to by you and your people, it allows for a foreseeable target, and will allow for celebration once achieved. Sometimes businesses set targets that are even beyond the employee’s lifespan with the business therefore making it completely irrelevant to those employees and which will result in zero buy-in to your strategy.

Step Three

So your ‘set of activities’ now get recorded by an inclusive process with your leadership and your operational people, depending on the size of your business this may be three to five strategic initiatives. Now what is important to understand at this stage is that these initiatives are simply investigative options. They will during the research & refinement process either become viable strategic initiatives with goals and time frames for implementation or they will be discarded as unviable for the business at that stage. Place them in the parking lot for future reference/revisit in need. Decide on new initiatives. Examples of these ideas are; new product lines, new/additional service offerings, organic growth via acquisitions, supply chain integration etc etc.

Step Four

Allocate people, financial resources (money/time etc) as needed and set time frames for the stages of research and report back. Review this regularly as needed in order to bring the research and investigation to the stage of defining it as a strategic initiative or not. Once identified as viable for the business’s future and the obtainment of its vision, then these ideas become articulated & formalised as strategic initiatives for your business. Once again you will now formally allocate resources & timeframes to these initiatives in order to bring them to fruition.

Step Five

Review, review, review your strategic initiatives in accordance with the time frames you have allocated, solving challenges that may arise along the way, at all times keeping your vision target in sight. Every member of the strategic team supports those stumbling blocks along the way in order to provide collective support in overcoming hurdles and getting the initiative back on track. Celebrate all achievements along the way, and most of all that greatest cliché of business; communicate, communicate, communicate effectively to the entire business.

Ian van Jaarsveld
Business Strategist and Financial Practitioner
Arum Close, Whale Rock Gardens, Plettenberg Bay.
Cel: 082 494 8771

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