Friday 14 April 2017

Top business strategy principles every leader should know

1. Business Strategy = compete to be unique, not to be the best
Strategy is not about being the best, but about being unique. Competing to be the best in business is one of the major misconceptions about strategy.
And if you only remember one tip from this list, it should be this one. Many leaders compare competition in business with the world of sports. There can only be one winner. But competing in business is more complex. There can be several winners. It does not have to be a zero sum game – you win, I lose or vice versa.
Within a single industry, you can have several companies beating the industry average, each with a distinctive, different strategy. They are no direct threat to each other. There can be several winners. So the worst possible approach to strategy is to seek out the biggest player in the industry and try to copy everything they do.
  1. Business Strategy = compete for profit
Business is not about having the largest market share or about growing fast. It’s about making money.
‘I want to grow my business’ is not a business strategy. ‘I want to grow my business’ is the same as saying, ‘I want to be rich’.
Those things (unfortunately) don’t happen by themselves. Growing is not a strategy, it’s a consequence. When someone includes growth in their strategy, there should be an orange light starting to blink.
That does not mean that you cannot use the word ‘growth’. I use it a lot in the analysis phase – for example, when you talk about growth areas of the business or when you look for growth platforms – areas where you can reach potential that will give you additional profit.
  1. Know your industry before you develop your business strategy
A company is not an island – it’s part of a larger ecosystem, an industry. Each industry has its own characteristics, its own structure. This structure and the relative position your company has within the industry determines profitability. Certain industries have a higher return than others.
Your thinking about the industry and industry competition will determine your thinking about your strategy – how you are going to compete within the industry.
The better you know and understand the industry, the better you will be able to determine elements that will make you stand out, be unique and reap a higher average return than the industry average.
  1. Business Strategy = Choice
In my eyes, this is the most simple strategy definition. You need a clear choice of WHO you are going to serve and a clear choice of HOW you are going to serve those clients.
It’s about connecting the outside world – the demand side – with your company – the supply side. Or in fancy terms: you need a value proposition for a specific customer segment and to develop unique activities in the value chain to serve them.
The key word is ‘choice’.
You cannot be everything to everybody. You want to target a limited segment of potential buyers with the same needs. Next, you are going to tailor your activities in such a way that they meet these needs.
Or in fancy terms: you want to tailor your value chain – your company’s activities – to your value proposition. Strategic innovation is the process to make those choices – defining a new who and how for the organization.
  1. A good business strategy requires you to say NO often
If you have clearly defined what you go for – a clear value proposition for a specific client segment (who) and a set of distinct, unique activities in your value chain to offer the needs of this client group (what), you will find out that there are lots of things that you are not going to do.
There will be customers that you are not going to serve, activities that you are not going to perform and services/products that you will not be offering.
In strategy, choosing what not to do is equally important.
Using the words of the founding father of modern strategy thinking, Michael Porter: “The essence of strategy is choosing what not to do”.
Each business strategy should also have a section where it clearly states the noes.
  1. A good business strategy requires you to keep moving
Having a good business strategy means that you have arrived. Competitors move, customers’ needs and behaviors change, technology evolves. One crucial element to determine a future path for your company is to predict these evolutions and trends and incorporate this thinking into the business strategy-building process.
If you don’t, you can miss out on new value that is created in the industry or even left behind and get into trouble.
Think about the smart phone and Nokia and you’ll understand.
  1. Scenario thinking is an important business strategy tool
The last one of the business strategy principles is not the least important. I don’t have to tell you that facts and figures can only go so far. You need to turn data into assumptions that will fuel your reflection process. The standard way to work with assumptions in a structured way is by scenario thinking – fix some parameters and let other vary.
This technique helps your reflection process by offering you possible future routes (read: strategic options) for the company.
I believe that scenario thinking is a crucial skill for anyone who wants to deal with business strategy.
Every leader should at least master the basics so that they don’t need a strategy consultant for every reflection process or at least to help them challenge the scenario models that the strategy consultant presents.
For more information about best business strategy, successful business strategies, companies business strategy, Tech business plan, successful company strategy, good business strategy, business strategies, business mindset, startup business plan, visit the SuccessFulStartup101.
Reference taken from here.

To Grow Fast Use Technology as a Business Strategy

THE PRESSURE ON today's corporate managers to maximize short-term profits often seems at odds with the need for a research and development program that will sustain company value over the long term. The solution to this apparent dilemma starts with the recognition that a business enterprise's value depends on the level and rate of growth of its cash flow. A firm's ability to maintain an advantage in market value depends on whether investors perceive that the rate of cash flow growth will be sustained.

The goal of strategic technology management is to contribute to the value of the enterprise by helping assure that the cash flow on which this value depends will be sustained and will continue to grow. Effective management of this kind can help a firm gain and sustain competitive advantages, ranging from incremental improvements in product quality or cost to major breakthroughs that create new market opportunities. Management of technology must, however, be purposeful rather than hopeful or "hands off' and must always be connected with the firm's overall business strategy.

Five sets of questions are useful in systematically examining the relationship of a company's program of managing technology to its business strategy:

Does the company have a clear product and market strategy? What markets does it want to attack? How? What markets does it intend to defend? What product and service attributes will accomplish these goals?

What technologies support the product and market strategy? Which ones produce competitive advantage in existing markets by adding value or lowering costs? Which ones promise to support new market initiatives or to define a new plateau of product performance?

What technological successes can the company support or exploit?

Does the R&D program focus on developing capability in technologies that will, or may, support its product and market strategy? Are options for technology acquisition (in-house development, licensing, academic support, etc.) being examined in relation to the company's immediate product and market strategy as well as its future vision?

Does the company have the means to answer, and keep reviewing the answers to, these questions? Does the R&D staff have access to the firm's key customers? Do the R&D staff, manufacturing engineers, and marketing people work together to ensure that R&D ideas can be made into high-quality, low-cost products that will meet customers' needs?

These questions cannot be answered in a facile or casual way. Answering them requires work, understanding, and realism. Corporate leadership that presses for answers can, however, help to assure itself and its stakeholders that the R&D program will sustain growth in company value.

For more information about best business strategy, successful business strategies, companies business strategy, Tech business plan, successful company strategy, good business strategy, business strategies, business mindset, startup business plan, visit the SuccessFulStartup101.

Reference taken from here.