2.2 Setting/Choosing a Strategy
How do you craft a business strategy that is perfect for your business? This is certainly not an easy question, but this book is designed to help. By exposing you to a wide variety of strategies and strategic tools, we hope to give you the perspective and frame of reference to better create and implement a strategy for your business.
Why do you need a strategy?
Why does your business even need a strategy? Why can’t you just do business? Using a specific strategy helps your company to gain a competitive advantage, use its resources in a more effective manner, and limit the number of things you try to focus on. Inevitably, all good companies implement some sort of strategy that fuels their success. However, many failed companies also had a strategy. Thus, the task become choosing the right strategy.
Benefits of Great Strategy
A great strategy is one that effectively drives growth, solves problems in your company, and is easily turned into actions that employees can put into practice. This is obvious, but identifying which strategy will actually accomplish those things is rather difficult. For that reason, we have provided strategy tools throughout this book. These are ways of looking closely at your business and the competitors to figure out an effective strategy. Examples include the SWOT analysis, the PESTLE analysis, the Pareto analysis, and a variety of other analyses and assessments. These allow you to identify where your company is at, what drives its growth, what it is good at, and where it is struggling.
Match Your Strategy to Your Business
It is important that your strategy matches your business. Perhaps too often, people will look at a successful company like Apple and copy its strategy. Fundamentally, Apple is at a different point than your company is, and is probably positioned much differently than yours. Look at your company: are you the low cost leader, the premium brand, or a middle-priced competitor? Do customers buy because your product has nice features, or because it is the only product that fulfills a need? Do you service the high-end of the market, or some other section? Unless you offer a premium product and have fierce customer loyalty that allows you some exclusivity, you can’t realistically copy Apple’s current strategy. Instead, look for strategies that match your company. This will help your company have great strategic fit in future decisions.
Look at where your business operates. Do you focus on a certain region of the country? Who are your customers? Do you focus on private label or on wholesale? Your location and distribution strategy will likely play a role in which strategy is right for you. It is practically impossible to have a strategy that doesn’t align with your distribution model. If your business is mainly focused on distributing through some local retail stores, you cannot have a low-margin, high-volume strategy and hope to succeed.
Set Yourself Apart
How does your company differentiate itself from the competition? This is a fundamental question when choosing a strategy. If you can’t set yourself apart from the competition, you will likely fail. If your strategy doesn’t focus your time and effort on the things that set you apart, your company is misusing its resources. Find what you do well and set up the business so the profits follow your expertise.
As you go through this book, you will likely notice that many of the strategies overlap, and some of them seem very similar to each other. This simply lets you craft more precisely what you want in your business’s strategy. We invite you to modify and adapt any of the ideas and frameworks explained in this book to match your business’s specific needs.