Strategy - How to ensure your future competitive advantage

I work with many leaders who struggle with strategy. They are aware of the significance of having strategies to coordinate business decision-making. They are aware that not everything in their companies can be monitored and controlled. They comprehend the idea and sincerely want to create effective tactics. But when it comes to formulating a strategy, they quickly become bogged down.

Although disappointing, this is not entirely unexpected. It directly results from misunderstandings over what a "business plan" is and is not. Here is what I mean: A business strategy is a set of guiding principles that generate a desired pattern of decision-making when communicated and adopted in the organisation. Therefore, a strategy is about how individuals throughout the firm should spend resources and make decisions in order to achieve critical objectives. A sound strategy lays out a clear road map for the company, consisting of a set of guiding principles or rules that specify the actions employees should do (and should not do) and the priorities they should set in order to reach desired goals. Everyone in the organisation is clear on their “to do” list and their “not to do” list.

A strategy is, therefore simply one component of the broader strategic direction that executives must establish for their businesses. It is important to note that a strategy is not a mission. A mission is what the organization's executives want it to achieve; missions are broken down into precise goals and performance criteria. Another element of strategic direction is the value network. Key stakeholders include the connections between suppliers, clients, staff, investors and the community through which a business co-creates and extracts economic value. Finally, a vision is an inspiring depiction of how the organisation's mission and goals will be pursued and achieved; a plan is not a vision. An effective “Level 5 Leader” will impart his/her vision to others and can create a movement. This can be incredibly inspiring and a strong motivator for people to go above and beyond for their company.

In a nutshell, the value network is about who will create and capture value; the mission is about what will be accomplished; strategy is about how resources should be allocated to accomplish the mission within the context of the value network; and vision and incentives are about why people in the organisation should feel motivated to perform at a high level. The network, mission, strategy, and vision all work together to define a company's strategic direction. They provide the what, who, how, and why that complex organisations require to powerfully align action.

These four elements all need to be considered and aligned to create an effective strategic direction. You cannot consider one without the other. The correct sequencing of these four elements is the key to crafting a business strategy.

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The information contained on this website is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice.

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