How important is Business Strategy?

"It is said that if you know your enemies and know yourself, you will not be imperilled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperilled in every single battle." SUN TZU

Businesses are economic as well as human entities, and need to be built on a solid base of sustainable competitive advantage.

The business strategy of a company provides the big picture that shows how all the individual activities are coordinated to achieve a profitable end result. But can a business prevail if the strategy plan is poorly conceived or the company faces competitors with superior strategies, resources, and positioning?
 As Damon Runyon wrote, “the race is not always to the swift or the victory to the strong, but that's how you bet." (From Fast Company)

It is through the strategy process that the overall direction of the business is set. This is based on the opportunities and threats in the outside world and the internal strengths and weaknesses of the business.
As the external environment changes, perhaps due to changes in customers or competitors or perhaps due to the wider forces - political, economic, social, technological, environmental or legislation based - it is important to review your initial strategy and ask some fundamental questions.

And even if the basic environment is stable, actions and intentions of businesses competitors change and companies need to review what is happening, prepare for any real or potential competitive manoeuvres and find new insights into ways to create value for customers.

Whatever you do in your business, you must have a strategy plan and if problem occur, it is probably that the business strategy your company has implemented is just not good enough. It may not take into account clear threats from your competitors or the market; it could be that your company may not have spotted a great opportunity that could increase profit and sustainability within a tough market environment.

If a new competitor has been able to take over one of your existing clients (or even several in an attempt to consolidate their market position), it is clear that they have a very different approach to business and different goals. They may have a different business model which could give them a significant advantage to customer.
When business is good and profit grows as planned, the general assumption is that the company management team is very effective, knows what it is doing and future performance will remain high. The inevitable question is "Why change a winning formula?", although this view has led many companies to grow complacent and to lose any competitive edge.
Unfortunately, managers can become too comfortable and confident, because they have spent a long time working for the same company, within the same industry that they believe too often that there is only one way to compete, the one they know.

Let’s not forget Sun Tzu words: “Strategy is how you get to know your enemies, yourself and the terrain on which you will fight”.
In most company, there is an element of mystery about strategic planning and a feeling that it has to be more complicated than it really is. Sometime, the management team don't really know where to begin and there is the obvious fear of change. As we know, a business strategy implies change and that could mean that people within the company feel that they have as much to lose as they have to gain.

We probably all agree on the fact that business strategy is important, because it is the source of a long term profits for any ambition businesses today, and how you setup this in your company, should look like that :
  • By implementing a business strategy, you will get tremendous value from the strategy process and stepping away from the day-to-day issues by looking at the long term future of your company. Thinking about what may happen makes the company and you much more aware of the symptoms of change to avoid the boiled frog problem.
  • Your business strategy should focus on competitive strategy and how you can win customer preference over competitors. It has to be a strategy based on establishing a differentiation advantage.
  • You want a short strategic plan that becomes a living document and guides the decisions and actions made by the company, your team and yourself. As things change, the plan has to be updated and kept constantly relevant to what is happening in the business.
Again, let me finish this post with another Sun Tzu quote, from Mark R. McNeilly book, Sun Tzu and the Art of Business:

“Generally in war, the best policy is to take a state intact; to ruin it is inferior to this....For to win one hundred victories in one hundred battles is not the acme of skill. To subdue the enemy without fighting is the acme of skill.” 
Patrice de Boeck is director for Business_Network Consulting | A consultancy focused on providing fresh and innovative approach to investment and development in Central Africa, through the provision of services covering Finance, Marketing, Strategy and Sports Sponsorship.


Business consultancy said...

Wow, great article, I really appreciate your thought process and having it explained properly, thank you! I really like this post.