Corporate strategy boils down to the broadly coordinated and highly focused initiatives that will have substantial impact on revenue growth or cost containment. Your mission is to determine the essential actions to take in an atmosphere of limited labor and capital resources.
As you plan to embark on a new strategic direction, spend adequate time thinking how the chess board is going to evolve at least a few moves forward. Ask yourself how your employees, your customers, and your competitors will react. In some instances, you may need to add anticipated supplier and government reactions to your analysis. As a good steward of your company and the planet, comprehend the environmental and social impact of your actions.
Many successful strategic directions that you can take, any of your competitors could replicate. If it makes sense after careful consideration to travel that path, then by all means do so, picking the low hanging fruit first. Ultimately, however, the greatest strategies take your company in a direction that reinforces your strengths in such a way that competitors cannot follow.
Identify the major levers that drive your business
The best way to identify to the strategic objectives that matter, is to determine the major levers that drive your business. Some levers, like the cost of commodity inputs including labor, are mostly out of your control. Other levers can be tuned through concerted action. In most organizations, the primary drivers are incremental investment in initiatives that drive growth, in contrast to those that affect operational effectiveness or cost.
Regardless of your organization size, you have a responsibility to continually evaluate where your business is performing well and where it is not. Larger enterprises can do this using business intelligence dashboards that sit on top of data warehouses. Smaller companies have enough information to do this as well. You should explore how your business is doing in various major customer firmographic or demographic segments. You should know which of your products are growing, which are declining, and how much of the total available market you have captured.
If you sit through a business school course on corporate strategy, you would likely learn about four major ways to grow. These include investing large sums of money in vertical integration, diversification, product innovation, or geographic expansion. Rather than retread this well traveled landscape, I encourage you to think about major drivers that rely more on effective coordination than they do on expenditure. There are at least three places to find initiatives with that kind of profile.
The first is how you bring your products to market. Major levers there are actions that you can take to either retain or to upgrade existing clients. By way of example, if you crunch client retention statistics in the information services business, you find a pretty obvious result. Engagement drives retention. If a client spends time reading a document, then he or she renews at a higher rate. If he or she takes the time to meet with you face to face, the rate grows higher. Booking a hotel room and getting on an airplane to attend your conference, boosts retention even higher. On top of total engagement, there is a strong recency bias at play. You can find a window of time toward the end of a contract period that has the greatest impact on renewal. In your business, collect a lot of data and hire a statistician to tell you what matters to your clients.
In addition to optimizing retention and upgrades, another product direction you can take is selling existing products to new buyers and new products to existing buyers. Though geographic expansion is one example of the former, there are many other avenues such as expanding in a focused way into new vertical markets. The worst thing you can do is sell a new product to a new buyer. Avoid that strategy at all costs.
The second place to find low-cost, high-reward strategic initiatives is in sales effectiveness. This topic is covered in depth in another chapter in this book. Among the various knobs to turn, hiring and compensation will have the greatest effect.
The third place to explore is your marketing activities. Finding new ways to generate and pre-qualify leads can have an amazing influence on your revenue growth. Most sales professionals abhor cold calling, so apply an automation process such as Webinars that filters the leads. In addition, systematically measure customer loyalty so that you can maximize promoters and minimize detractors. Remember, if you ask customers for feedback, then you must ensure that you have allocated the time and money to fully address or at least empathetically respond to their concerns.
Launch strategic initiatives in a coordinated fashion
After you have identified a reasonably comprehensive set of growth levers for your business, it is time to get down to brass tacks. Since new strategic initiatives involve human beings that have constrained capacity for change, the number one thing is to focus. To keep yourself honest in the selection process and in measuring outcomes, rank order projects by forecasted return on investment multiplied by expected probability of success. In the end, you should land preferably one but as many as three critical initiatives.
The most important decision that you will make is assigning a single, fully focused, and fully accountable project leader. Broad executive support all the way up to the CEO is critical to success. However, “C”-level executives should not be project leaders unless the project is their sole focus. Working in concert with the larger team, the project leader should have full decision making authority over the required training, tools, and management systems that need to be created to inspect and correct as the program marches forward.
Successful kick-off meetings are crucial to coordinating large projects. A strong statement of the problem that motivates the emotional and the rational brain will help promote commitment. Additionally, participants will want to know the concrete business objective so that they know what they are fighting for and when they are done. When the meeting is over, important stakeholders should have a clear understanding of the scope of the project, the work-streams they own, and the expected timeline for progress.
With a major project, define a series of project phases. In many instances, you can implement changes as each phase is completed. This is a variation on the valuable ‘execute and iterate’ theme. In other cases, you have the option to develop in phases and then release all at once.
Right size your budget to succeed
To succeed, major strategic initiatives need adequate capital and labor resources that have to come from somewhere. To make room, you have three options.
The first is to ask yourself if there is anything on the plate that you can do differently and more efficiently. Since you are likely to be busy and too close to your own processes, this is at least one area where outside consultants can add value.
The second is to ask if new initiatives have to be so big. In many circumstances, you can find ways to reduce scope that have minimal impact on the ultimate return on investment. Reducing scope has the added benefit of increasing the probability of success.
The final task is exploring if you can make the plate bigger. For most companies, this is the last avenue pursued since it requires raising capital.
Here are the concepts you can immediately apply to become a talented business strategist:
- Identify the major levers that drive your business
- Launch strategic initiatives in a coordinated fashion
- Right size your budget to succeed