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How to build a competitive strategy that works for you

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Specialized in governance, strategy, finance and M&A. Author & Experienced External Director. Kona Advisors LLC

Many business owners view strategy as complicated, with consultants creating 80-page PowerPoint decks to explain what to do and why. This is often the case in larger public companies because the forces at play are so complex and intertwined.

Yet most private companies have only a few product lines, strive for limited distribution channels, are limited to a domestic reach, and are either capital and/or management constraints. This reduces the difficulty of creating an effective competitive strategy. If revenue is primarily generated through e-commerce, the strategy questions are even simpler.

While we’ve been led to believe that a competitive strategy must be complicated, for most private companies, history has shown that a simpler approach is likely to have more impact. You should be able to articulate your growth strategy in just a few pages, and it should be easy for everyone in the organization to understand. After all, they are the people who have to do the work. You want them to be able to easily link the big picture to their day-to-day activities. This approach creates organizational leverage and increases their engagement by making their efforts more meaningful.

Army companies have between 60 and 200 soldiers, because with that size, one captain could manage those relationships. This may or may not be the case in your organization. The greatest challenge of leadership is to deliver business results through others, especially when there is no personal relationship or direct communication to rely on. Working remotely makes this even more challenging.

A concise, well-developed strategy document is as much a communication tool as it is a business planning event. Here’s what it should look like.

1. Contains well-defined goals set by the owner

Entrepreneurs are responsible for providing guidance to the board of directors and management about what they expect from the company and what restrictions they wish to place on the way the company operates.

Statistics should include sales, EBITDA (earnings before interest, taxes, depreciation and amortization), higher valuation, market share or something similar concrete. If this information is confidential, translate it into operational metrics already in use. Whenever possible, goals should be SMART (specific, measurable, achievable, relevant and time-bound).

2. Has a time frame to measure results

It is difficult to plan much after three to five years as the world will change your situation by then. If ownership sets a five-year goal, break it down into annual increments. It is difficult to solve a complicated problem in one step. So break it down into smaller, more solvable problems, then roll up your results. Years become quarters, quarters become months, and months become weeks.

3. Links strategic objectives to operational tactics, from top to bottom

Annual and quarterly business goals should be broken down into the quarterly, monthly, weekly, and daily tasks for each decision maker in the organization. Everyone, from top to bottom, must be connected. You’ll want to do this in consultation with the people you rely on, as you’ll need their buy-in to get results. Have these discussions to identify the limitations on growth and then do something to remove the limitations.

4. Is consistent with the company culture and persona

Organizations generally do not tolerate decisions that conflict with their inherent values. You know who you are, for better or for worse. Don’t fight your own DNA.

5. Is made for what the management team can actually do

Once you know what needs to be done, be realistic about what can be done. If you don’t have the talent or bandwidth, figure that out before launching a campaign that’s doomed to go nowhere.

6. Holds management accountable

Traditionally, management develops a strategy that must be reviewed and approved by the board of directors. Ownership has given the board a clear mandate about what it expects from the company. The board then holds management accountable for delivering the approved plan. If these bodies are the same pair of people, who will hold accountability? For smaller organizations, this is often the hardest issue to grapple with.

7. Provides a timely feedback loop

One of the shortcomings of the PowerPoint method is that the reports have a short half-life. A strategy piece must be a living document; it evolves over time as conditions change. An annual review is always a good starting point, but may not make sense for your industry. What is the rate of change in your industry? Be sure to stay ahead of it.

In business school, many of us learned that strategy development is a fixed process, which is then translated into action. But for most private companies it is more important to take action, learn and adjust in real time. Keeping your pace will give you time to adapt without taking too much risk. This is why most software is now developed using the agile or scrum method versus the traditional project planning method.

Strategy development and execution is a process, not an event. Someone has to manage the entire process as everyone already has a full time job. That may be the most important decision of all.


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