Strategy is the work that you do now to create a positive impact for yourself or for your business in the future. It means that you are setting aside time to think about the vision that you have, align your resources towards those objectives, and execute that work. As executives prepare their strategy, one of the most frequent goals I hear is that they desire to grow. Who doesn’t, really? But growth is not a strategy. Growth is the outcome of an effective strategy. Reasons why your strategy isn’t working can be attributed to several factors. While this usually requires a diagnosis, I have seen four primary reasons stand out:
Reason #1 – Not capitalizing on a key resource
If you have resources that you possess but that are not organized in a way to capture additional value, the advantage that those resources provide you will continue to be temporary or limited. For example, if you employ several engineers but sit them in separate cubicles and do not afford them the time or space to be able to collaborate and come up with new ideas, you are not capitalizing on their capacity to innovate. If you have a machine that manufactures widgets but do not spend time estimating the estimated margins of other types of products that machine can produce, then the results that you obtain will continue to be limited. To avoid this mistake, think about your key organizational resources – those things that define value for the service you provide or for the product that you create, and what must be done to better capitalize on them.
Reason #2 – Not overcoming an organizational limitation
If there are aspects of your business which have become outdated or irrelevant, address them proactively. With each passing day old structures and systems become obsolete. If you have a limitation which you are not choosing to address, then that hinderance will continue to grow greater with time. If you are running your business platform on DOS and using floppy disks, for example, the capability of your business will be limited from a software perspective. Even if these types of systems meet your needs presently, your ability to incorporate new capabilities will be limited to the platforms that you presently use. Business leaders may have difficulty objectively identifying limitations within the business without help. Feedback can have several sources – employees, customers and other subject matter experts. If you don’t have an employee feedback system in place, or if you are not taking the time to evaluate responses from your customer feedback sources, the time to look at that is yesterday.
Reason #3 – Not knowing how to profit from market shifts
Identifying a market shift depends on you taking the time to evaluate what is happening externally to your business. One trend that is prevalent in the market today is leveraging technology to capture and organize the data that your organization produces in its systems and processes. If you have data that you collect and information that you analyze that is solely based on your business now or based on product and service performance now, you are missing leading indicators that also impact your business. Do you know the key external drivers for your industry? If you are in the management consulting industry, are you assessing corporate profit rates, manufacturing trends and tax legislation? Are you evaluating the behavior and trends of both your suppliers and your customers? What industries are similar to yours? If you understand market shifts, you can brainstorm how to leverage your capabilities to respond to and incorporate them.
Reason #4 – Not adjusting to negative impacts
For many businesses, realizing a negative impact on your business can be very difficult. It is also difficult psychologically because you want things to go back to how they were. For example, if you are a restaurant in an area where social distancing orders are in place, your seating arrangements and capacity restrictions have changed which inevitably impacts revenue. If you manage a bar that provides a thriving social atmosphere, achieving that objective during a global pandemic is going to be very difficult. Respond to negative impacts in your business by adjusting or turnaround business processes. Assess what you can change. If you are a restaurant noting that your takeout order percentages have increased from 10% to 50% this past year, you can adjust your kitchen staff levels, for example, or limit your menu to those foods that taste even better after they marinate on your customers drive home. Negative impacts can be overcome, but often adjustments or turnarounds in business approaches will be required.
Creating, adjusting and managing your strategy is both an art and a science. Spending some time to think about how you can combine your capabilities in new ways in consideration of what is happening within and externally to your organization will help you generate ideas and scenarios for what you can adjust.