… Because if it isn’t, you probably need to do some Strategic Management to get your business pointed in the right direction.
Strategic management is an approach to running your business that focuses on delivering the long term outcomes you really want.
Strategic management transforms your business, so that it satisfies your top priority desires. They could be a capital gain, a passive income, more time for yourself, better teamwork, or just having more fun!
The Strategic management approach builds your business into what you want it to become. Its like building a house. You start with laying a foundation. And you build on it, from the bottom up.
The Strategic Planning Model illustrates the process. It is a layered model and you start at the bottom. It is shaped as an inverted triangle because, the process starts with a few key thoughts – what you want your business to become.
Each of the 5 steps that follow, expands on the step that precedes it, broadening the scope and increasing the level of detail.
In his book, The 7 Habits of Highly Successful People, Stephen Covey captures the essence of Strategic Thinking. Covey’s second habit is Starting with the End in Mind. Before you start doing anything, make sure that you are absolutely clear on what outcome you really want.
So your first step in the Strategic Management process is to build a Mission or vision for your business. It is a detailed mental picture of what you want your business to become. This is the raison d’ etre, or “reason for being” of your business.
Your business will only give you what you really want if your Mission becomes the driving force behind it. Which is why getting clear on you Mission is a good place to start.
With you Mission under your belt, you have clarity on where you are going with your business. The next step is to understand, in detail, where you are coming from. In other words, you have to systematically analyse your Current Situation.
Strategic Management is like reading a map. Before you can plan a route to get there, you first have to locate your destination and current position on the map. You are then able to choose the most effective route for making the journey.
Now that you are clear on where you are going with your business (your Mission) and where you are coming from (analysis of Current Situation), you start to get a good idea of what the strategic gap is. And you are well placed to Develop a Business Strategy that will bridge that gap. This is the next stage in the process.
Developing a Business Strategy is often hyped up in the media as something that only expensive specialists and business fortune-tellers can do. In fact, it is fairly straight forward and can produce spectacular results for anyone. As long as you use a systematic approach and follow through to the end.
The temptation, when developing a Strategy, is to focus on marketing, sales and the generation of income in the short-term. But it is very important that you take a balanced view of the whole business. In addition to Financial returns, you must also consider Customer Satisfaction, Business Processes and Learning & Growth areas in the business. Most importantly, you must understand the interdependencies between what is happening in these business areas.
Let me explain. Getting good financial returns from your business depends, in the long run, on how satisfied your customers are. In turn, customer satisfaction is largely a function of how good your business processes are.
To take it one step further, how good your business processes are depends on how good your equipment is, how skilled your people are and how well your systems have been set up (Learning &Growth).
All these interdependencies work together to produce the ultimate business outcome – the performance, or lack of it, of your business. Strategy is the key to the growth engine in your business. Without strategy, the business won’t go anywhere.
There are three key steps in developing a strategy. And you must go through them in order:
1- Understand interdependencies between different areas of your business
2- Figure out the critical success factors in these business areas
3- Identify tactics that support the critical success factors
A Tactic is a group of related activities that support achievement of an objective. For example, if the objective is to get more clients, a tactic could be getting referrals from existing clients. The activities are all those things you have to do to implement a referral campaign.
Your Strategy will consist of a whole lot of Tactics. Your next step is to organise these tactics into a Plan Design. At this stage, don’t worry too much about the detailed actions involved. Prioritise your tactics and decide which ones you want to start working on.
When you know what tactics you want to implement, you can start to Make Action Plans. Simply break your tactics down into detailed actions, and schedule them over a period of time.
Don’t think too far ahead. Planning for the month ahead works best in small businesses. At the end of the month, you review what you achieved and plan for the next month.
The final step in the Strategic Management model is taking Strategic Action. This is where the rubber hits the road. And this is where strategic management efforts often falter. It goes almost without saying. If you don’t take the action, all the planning you did beforehand was a waste of time.
Many businesses never manage to implement their strategies because key stakeholders were never adequately committed to the process in the first place. And they failed to re-arrange the way they work to ensure that strategic action gets taken.
To avoid this happening to your business, you must ensure that key stakeholders buy into the process. And that an effective, action focused ongoing Strategic Management process is used.
Note that the Strategic Planning Model has a Feedback Loop. This is because your business operates in a constantly changing environment.
While, your Mission may stay the same, your Strategy has to constantly adapt to changing circumstances. This is why a monthly planning cycle works best. At all times, you have to scan the environment and re-focus your Strategy when necessary.
Rapid and sustained growth in any business, has to be launched from a strategic platform. Failure to create and maintain a strategic focus means that growth, if it happens at all, is short-lived.
It also doesn’t matter how big the business is. Whether you work alone, or you are supported by a large team, the challenge remains the same. Developing a balanced business strategy, and making sure that all that strategic action is taken.