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Strategy For Success

Mercia Blog Strategy for Success

Strategic thinking can benefit the smallest of businesses, a corner newsagents or an IFA working out of her home office. The common thread is the desire to plan for the future, to navigate the competitive rocks and shoals that confront anyone in business over the coming years.  It’s working out how to best employ those resources you have available to make the most of the opportunities that may come your way.

This article will look briefly at how SMEs or even individuals can make strategy and then give some thoughts on how it can be help future proof your business. The topic will be looked at through the eyes of a manager or an individual within a business- not from the perspective of senior management or a university academic theorist.

Creating strategy is relatively easy: you gather some information, you conduct some sort of analysis to sort through things, and then you set goals and maybe even create some action plans. But then you go back to the office and you work on more urgent things (notice the use of the word “urgent” rather than “important”). Why? Because executing strategy is hard, and there is always something more urgent that comes up in the day –to day grind.

“Companies often manage strategy in fits and starts,” says Robert Kaplan, Harvard professor and co-author of several books on the Balanced Scorecard and strategy execution. “Though executives may formulate an excellent strategy, it easily fades from memory as the organization tackles day-to-day operations issues” – doing what Kaplan calls “fighting fires.” That strikes a chord with most of us: there are times when dealing with everyday issues takes precedence over any longer term perspective.

Perhaps there is something psychological going on here. Every January we find ourselves making one or two worthy New Year’s resolutions. We will definitely cut out chocolate or promise ourselves to get down the gym three times a week and indeed for a while we find ourselves on those crowded exercise machines down at the local Virgin Active or David Lloyd club. As the weeks go by however we find that the gym is thinning out and that three times becomes once and then maybe its fortnightly. Our old habits reassert themselves. Sure you manage the Dry January but look forward to that first glass of wine on February 1st!

Looked at in a Darwinian sense, maybe humans are just wired to react to problems rather than proactively set and then follow a new direction. After all, we’re creatures of habit that settle into natural patterns, rather than disruptive change makers that set, implement, and sustain new courses of action that result in be healthier and more productive lifestyles.

So why should organisations be any different?

When asked to define strategy execution, most managers respond with statements like, “It’s the successful implementation of a strategic plan” or “It’s getting your strategy done.” While these perspectives are certainly valid, they aren’t very helpful in terms of understanding what needs to be done to actually drive business results.

A brilliant strategy may put you on the competitive map. But only solid execution keeps you there. Unfortunately, most companies struggle with implementation. That’s because they over-rely on structural changes, such as reorganisation, to execute their strategy

Why is Strategy Important?

It is not enough for your business to just develop fabulous products or services. Without a strategy, without knowing how best to price, market and distribute them, your SME is vulnerable to business changes as well as competitive threats. A sound strategy, skillfully carried out, will foster significant shifts in the way we do business, and these shifts will distinguish the company from its competitors. By guiding the ongoing evolution, strategy provides the necessary information for our managers to define their work-and help the organisation remain competitive on all fronts.

How is Strategy created?

Broadly speaking, strategy is achieved through two fundamental processes: planning and execution. You should involve both management and operations staff in the strategic planning process. Staff should be brought in because they house tremendous stores of knowledge about the organisation and can make informed recommendations about what it should be doing and where it should be going. Critically when staff members are included in planning, they are far more likely to support and carry out the plans that are created. They will have a stake in their success.

In short, operations staff are the execution agents of the company.  Without their support, even a brilliant strategy will go nowhere. Much recent research on strategy shows that SMEs  which fail to include staff when planning strategy produce results inferior to those that do. By undertaking the planning process together, managers and their colleagues ensure that a company’s strategies are tightly aligned and that successful execution can follow.

The Three Questions to ask

Where do you start to create a strategy? A cursory search on Amazon will show literally tens of thousands of books on the subject; many of which go into great detail and show complex models that all but guarantee success if only you follow their prescription. A more practical approach is to answer three direct questions and see where they lead you.

How are we going to be unique?

What is it that stands out about your business? In the crowded field in which you compete, what differentiates your offering? Now it may be impossible to demonstrate that elusive uniqueness if you are a web design company but that doesn’t mean you can’t be up there with the best. What do you have to do to ensure your product or service is second to none? Strategies that have an average or undifferentiated offering rarely grow at above average rates.

How are we going to gain a competitive advantage?

Using the skills and resources that makes your offering stand out, how are you going to get ahead of the pack? Be careful if you choose price as your main battleground, this is the least defensible of all advantages.

How are we going to sustain that advantage?

So you have carved out a niche, you have the best customer service, the smartest technology or the most efficient processes. How are you going to keep yourselves in front? What are the actions you need to take? Staff training, investment in facilities, research or getting closer to your clients and their strategic needs. These are all tried and tested methods for sustaining and growing your market position.

Execution of your newly formed strategy is just as important as your finely honed plan. Who is going to do it for you? Have you got the resources to make it a reality? Strategies that work tend to be those that are a living thing.  Colleagues have to feel that the company strategy is something they do, not something done to them. If the plan only comes out of the drawer once a month or gets tacked on to the end of the team meeting, it will fail to achieve all you hoped for when setting out on your journey of change. Like so much else in business, success is down to an engaged, motivated workforce.

About the author

Eugene has over 25 years’ experience in a variety of finance businesses and has spent a considerable amount of time training and coaching leaders throughout this time. His work has spanned from direct leadership situations as a Captain in the British Army to mentoring teams of bankers in different continents. While working largely with multinational corporations he has recently worked with accounts teams in UK companies, helping them to grow their commercial acumen beyond the realms of the strictly financial.

This article was first published in “Financial Accountant” which is the Institute of Financial Accountants bi-monthly magazine that is distributed to all members. The magazine covers a range of accounting, finance, tax and business topics with a specific focus on small business and small accounting practitioners.