Businesses are encouraged to spend time developing a business strategy for how they will compete profitably.
I am a believer but I will also accept that businesses with a time intensive strategic plan can also have performance problems and ultimately fail.
I also believe that every business has a strategy because if there is one from formal planning, one emerges from the decisions, actions and behaviours of the senior management.
What Causes Strategy Failure?
The strategy problem can be split into two:
- Strategic planning and development – either no strategy has been formally developed and the emergent strategy is inconsistent and unfocused or a poor strategy, doomed to failure, has been created; or
- Strategy implementation – the strategy is sound but the implementation of the strategy fails.
Common Mistakes In Strategic Planning And Development
- Focusing on tactics not strategy. Strategy explains the “why”, tactics are the “what”.
- Not understanding what customers really want. Customers should be the main focus of your strategy since it is they who will decide if you win or lose in the market-place.
- Failing to be unique and clearly differentiated in your market. Being the same creates competitive stalemate and customer indifference.
- Failing to monitor the external environment for opportunities and threats.
- Not understanding the motivations, strengths and weaknesses of competitors. I see too many strategic plans which assume growth in market share without explaining why customers should switch and how competitors will react.
- Not being clear on exactly how you will earn a profit. Definitely a problem from the dot.com boom but it is still clear that many business people haven’t created a sound business model.
- Not identifying and managing risks – strategic, financial and operational.
- Not creating a culture which encourages innovative thinking and action.
Whilst many of the biggest blunders may come from a flawed strategy, there are many well established techniques for you to develop a potentially effective strategy.
Perhaps the biggest issue is how competitors will react to your actions to make more money from your market which comes down to three issues:
- Will they notice what you are doing before it is too late?
- Can they retaliate and thwart your plans?
- Do they want to stop you or are your actions helpful to them as well?
A Great Strategic Plan Isn’t Enough
Effective strategy starts with the plan but it must be implemented.
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Paul Simister is a business coach who helps business owners who are stuck or struggling, to get unstuck. You can then start attracting, converting and keeping more customers. If your business is based in the UK and you feel stuck, get a Business SOS consultation (please click) with me to get you unstuck.Don't forget to download and read my FREE Report - The SIX Steps PROFIT Formula: The Simple Rules That Every Small Business Owner Needs To Know available to download at Six Steps Report (Please click).