An Intro to Strategy and its Importance in Business

If you’re interested in business, or in personal growth, you’ve probably come across the word strategy more times than you’d care to admit.

But what actually is strategy? And why is it so important?

A strategy is a way for organisations to plan their evolution, by making decisions and doing activities that will allow it to grow and thrive in its present and future environments.

Much like in nature, organisations use the resources they have at their disposal to grow, thrive, and evolve over time, with the overarching purpose of longevity (sustainable advantage). If they can’t continue growing, or evolve to defend themselves, they soon either get eaten, or they run out of fuel.

The difference between organisms and businesses, though, is that businesses can choose where they want to go, and take deliberate action to get there.

These choices form a “filter” for decisions that will be taken and activities that will be performed.

This “filter” is the strategy of a business, and it exists because resources are scarce. Organisations need to do their best to make sure their resources are used for activities that are most likely to lead to winning outcomes.

The ‘mesh’ of the filter is made up of a number of key pieces of information. In general terms, these are:

  • The functional purpose of the business: What does the business do? What does it not do?
  • The values of the business: What values do you want the business to portray? What perceptions do you want to avoid?
  • Positioning: What markets should the business be in? How will you position your business to win?

Clear strategies for small businesses are particularly important, as every unit of money or labour that is misaligned represents a greater percentage of the overall resource pool that is being wasted.

However, the majority of small businesses do not have clearly defined strategies that are designed to win.

Without a clear strategy, it is likely that a business may:

  • Attempt to ‘be everything to everyone’ (no clear purpose, misaligned resources)
  • Compete in heavily populated markets (intense competition, low profits)
  • Compete with no clear differentiation (no sustainable advantage)

Any of these traits is likely to lead, eventually, to decline and demise.

In summary, it is critical that a strategy is crystal clear on who the organisation will serve, what value it will provide, and how it will do this in a way that hasn’t been done before.

If after reading the above, it’s becoming evident that your strategy isn’t as crystal as it should be (or you don’t have one at all!), get in touch so we can turn your strategy into a winning one.

Leave a Reply

Your email address will not be published. Required fields are marked *