Экономические науки/10. Экономика предприятия.

Prokip M.I.

National University of Food Technologies, Kyiv

HOW TO CREATE A STRATEGY

People do not always clearly understand the meaning of the term Strategy.

People make strategy much harder than it needs to be. For some, the problem is that they focus too much on the tools: environmental scans, SWOT analyses, customer analyses, competitor analyses, financial modeling, and so on. Other people get into trouble because they think it's all about the broad, conceptual, future-oriented, big picture stuff — not to be confused with tactics.

The reality is that strategy is at some level about all those things, and you can't do a satisfactory job with your analysis alone, or your big picture alone, or your changes alone. You have to do a bit of work on all of them.

That's actually a lot easier that it sounds. My preferred approach is to treat strategy- making as developing a set of answers to five interlinked questions. The questions — which cascade logically from the first to the last — are as follows:

The trick is to have five answers that are consistent with one another and actually reinforce one another. Aspirations & Goals to be a great international player and a Where to Play response that is domestic doesn't match well with a How to Win on the basis of proprietary R&D (researches and development) — because the competitors with global aspirations will almost certainly out-invest and outflank you. Winning on the basis of superior distribution is unlikely to happen if you don't have a concrete plan to build the capabilities and a management system to maintain them.

So where do you start? Most organizations start at the top with some kind of mission/vision exercise that drives participants around the bend. The reason it drives them crazy is that it is extremely difficult to create a meaningful aspiration/mission/vision in the absence of some idea Where to Play and How to Win. That is why those conversations tend to go around in circles with nobody knowing now to actually agree on anything. Any mission or vision will do when you don't have a thought-through Where to Play or How to Win.

That said, if you think entirely about Where to Play and How to Win without consideration of Aspirations & Goals, you may end up with a strategy that is effective for its intended goal but isn't something you would actually want.

What this means is that to create a strategy, you have to iterate — think a little bit about Aspirations & Goals, then a little bit about Where to Play and How to Win, then back to Aspirations & Goals to check and modify, then down to Capabilities and Management Systems to check whether it is really doable, then back up again to modify accordingly.

While it may sound a bit daunting, iterating like this actually makes strategy easier. It will save you from endless visioning exercises, misdirected SWOT analyses, and lots of heroically uninformed big thinking. Crafting your strategy in relatively small and concrete chunks and honing the answers to the five questions through iteration will get you a better strategy, with much less pain and wasted time.

The next stage is how to develop your strategy. Turning a small business into a big one is never easy. The statistics are grim. Research suggests that only one-tenth of 1 percent of companies will ever reach $250 million in annual revenue. An even more microscopic group, just 0.036 percent, will reach $1 billion in annual sales. In other words, most businesses start small and stay there.

But if that's not good enough for you - or if you recognize that staying small doesn't necessarily guarantee your business's survival— there are examples of companies out there that have successfully made the transition from start-up to small business to fully-thriving large business.

In order to create a strategy, you will need to analyze where you have started at. Write down the history of your business, the purpose of the organization, the mission and the business model you follow. Along with this, determine what the strengths of your business are.

Define your goals. The next step to analyzing your business is to define your goals. This will include 'objects of desire', meaning what you want to achieve and what you visualize for your business for the next year, two years and even ten years. You should include a vision and objectives to this section.

Start building your strategy. This is the point where you define how you will achieve the goals and mission of your business. You should include things such as: customers you want, how you will get the customers, what plans and projects aren't working with the company, what you should do instead (with the steps).

Admit your weaknesses. One of the overlooked parts of businesses that causes them to not reach the goals that they want are the weaknesses. You will want to define what these are and figure out ways to overcome them. This can include things such as: the system you have set up, the organization's competitors, societal forces.

Build steps to overcome the weaknesses. You will want to focus on specific tactics and plans to overcome your obstacles. This includes competitive advantages, as well as how you will reach the societal forces that are causing weaknesses. Combine this with the strategy that you have already built and you will have a plan for success.

Conclusions should submit the following Do's and Don'ts:

DO...

1. … put customers ahead of everything else. Figure out which problems you can solve for your customers or which benefit you are offering.

2. .… find out what types of individuals or companies are most likely to want the product or service you are providing. Who are they, where are they, what are their key characteristics?

3. … devise a sales process and a marketing method that will take your business to the customers most likely to “buy” them. This includes price and pricing models, market positioning, and promoting your company in a way they are most likely to respond to.

4. … build your company – the structure, people, systems & processes, reporting, finances, location, name, brand, distribution etc – to focus on and deliver to your customers.

5. … make sure you include digital/online in your strategy – no matter which creative sector you operate in.

DON’T…

1. … think that a certain level of profit or revenue or other business metrics are strategies. They’re not. They’re targets, at best. What you need is a strategy that will take your business there.

2. … slavishly copy what other people have done (they will have ingredients you can’t match or won’t want to match). Some of the best and most innovative strategies probably break all the rules. Do it your way.

3. … assume that your current business model is the most appropriate or best model. Think about licensing, renting, subscription models, Freemium models, franchising, etc in addition to sales revenue.

4. … blindly and unchallengingly believe your business and market assumptions – especially those that relate to numbers. As soon as you hear yourself say, “My numbers are [very/actually/really] conservative” you’ll know they’re probably overblown and over-optimistic. That’s when you need to challenge them most closely.

5. … unthinkingly follow lists of dos and don’ts or tips or guides about strategy.

Each company has its own characteristics, so that each strategy should be special and unique.

References:

1.Саєнко М.Г. Підручник. – Тернопіль: «Економічна думка». – 2006. – 390 с.

2.Roger Martin - Five Questions to Build a Strategy – HBR (Harvard Business Review) Blog Network– 2013 – [Electronic source]. Access to the source: http//blogs.hbr.org/martin/2013/05/the-five-questions-of-strategy.html

3. How to create a business strategy - website brings together ideas about creativity, innovation, and business to support Australian creative businesses and entrepreneurs. 2012 - [Electronic source]. Access to the source: http//creativeinnovation.net.au .