Starting a New Business Requires Strategy: Are You Developing Good or Bad Strategy? 5 Lessons to Follow
Good strategy; bad strategy; strategic vision...Are you developing a good or bad strategy that meets your great idea? You plan to start your own new business. And now you need to develop a strategy. But wait! Before you start. I have noticed that too often entrepreneurs of newly established companies do not have a strategy to create profitable and sustainable businesses. Without a strategy you are operating haphazardly into trouble. It is like driving a car and only looking five feet in front of the vehicle. You will crash. You will need a roadmap to success, a good strategy.
Your passion shines through to what you believe is strategy. But let it be known that strategy does not just appear from a strategy management tool generating PowerPoint slide decks with beautiful charts and matrices. Know that most good strategy appears simple. What am I talking about? The core of good strategy is “discovering the critical factors in situations and designing coordinating and focused actions to deal with these situations.”
Having worked with small to mid-size companies, I found good strategy is quite non-existent. Most do not have a strategy. In its place for strategy, these businesses have “visions” and financial goals as strategy coupled with muddled activities, better known as “dog’s dinner”, of conflicting policies and actions.
It Is hard enough tackling the myriad of barriers, restrictions, and headwinds, businesses today must focus in on strategies that leverages their reality. The entrepreneurs’ central task is developing and implementing a coherent strategy, a strategic vision. That addresses the obstacles faced mustering available resources to achieve positive results.
In other words, good strategy attempts to harness and apply force (resources) where it will have the greatest effect. Strategy is a united and coordinated “set of commitments and actions planned” to exploit the company’s core competencies to gain a competitive advantage. For the entrepreneur, the first challenge is to understand that the starting point is getting clear about the challenges.
Unfortunately, most organizations that claim to "have a strategy" have nothing. Like I previously stated, these companies have set some financial goals, but a real coherent strategy does not exist. This is because their plans do not provide the road map as to how to achieve these goals. And to provide no sense as to whether achieving the goals will solve the core challenges. Five lessens of good strategy are:
- Strategy begins at determining what is going on to comprehensively assess the situation, and then taking action.
- Identifying the critical issues, developing pivot points to effect change, focusing on action and employing resources collectively, providing the foundation of the plan.
- Avoiding “scope drift” and battle the never-ending organizational disarray must be exploited to keep the execution of the plan under control.
- The Entrepreneur must dissect the complexity of the organization’s obstacles into simpler problems that can be understood and dealt with.
- Follow the three essential components: 1) a diagnosis of the environment, 2) the choice of an overall guiding policy, and 3) the design of coherent action.
Unfortunately, many attempts a instituting a strategy lack a good diagnosis. My recommendation is to step back. Analyze the situation. Try to comprehend the micro and macro picture. Design the guiding policies and needed action. Then execute the strategy. It is about creating a profitable and sustainable business enterprise.