While a business vision provides direction, a business strategy provides the how. Michael Porter, the godfather of business strategy reckons the only business strategy is a competitive one. If you compete successfully, you will gather the financial resources to achieve your vision. If you aren’t competing successfully, then your vision can seem a long way off.
According to Porter, there are only three ways to compete, no matter the scale of the business.
- Your product is better
- Your product or service is different
- You are a cost leader
There is a fourth,
- A hybrid of two of the previous three.
Whichever you choose should give you a competitive advantage. You don’t have to have a different product if it’s the best quality, or you have exclusivity for a market or region. You can have the same product but deliver it differently – think café versus coffee van. Or you can have the same product but find a way to cut the cost – think economies of scale or rebates for volume purchases.
Doing a strategic plan, or a strategic review of your existing plan, is something that successful businesses do regularly. If your business is growing at 10% per year, then annually is sufficient. If your business is growing at 50% per year, then a review every six months is best. If you business is growing at 100% or more, then a review every three months is essential, as your plan is quickly out of date at this pace of growth.
The two best times to set or review your strategy are prior to the end of the calendar year or financial year. November planning allows for the team to return in the new year with a clear path forward. May planning allows time for budgets to be done prior to the new financial year.
Either way, you need to get it done to compete.
