Time to Refresh Your Strategy
Are You (and your team) Prepared for What Comes Next?
The pandemic has brought changes to virtually every business and industry. Some of the changes have been small, but many are significant. Some are positive changes, some are negative. These changes happened in a relatively short period of time. It is a tribute to business owners and their employees that businesses adapted as quickly as they did. Since the beginning of 2022 businesses have stabilized into a “new normal”, adapting to the market environment as it stands today. As you begin the process of making business plans for the future, you should consider how much of the “new normal” is here to stay. Which customer needs are temporary, and which are permanent? Which activities previously done in person will return and which ones will not? Now is the time for you and your team to take a few steps back and consider whether you need to refresh your go-forward growth strategy.
What is Strategy?
At the highest level, strategy is about deciding what you are going to do, and equally important, deciding what you are NOT going to do. For businesses, a well-defined strategy allows you to answer and be aligned around key questions for your business. The critical questions are:
- Where will we play? — Which products or services will we offer? Which customer segments will we pursue? In which geographies will we operate? What sales channels will we use?
- How will we win? — What is our unique value proposition? What are our competitive advantages?
- What capabilities must be in place? — What are our core competencies? Where are our capability gaps to execute the strategy?
The answers to those questions must also sync and reinforce each other. For example, if you are selling the most high-end product on the market an unlikely competitive advantage would be the lowest cost of goods in the industry. More likely would be an outstanding engineering and design team.
Why is a well-defined Strategy important?
Having a well-defined strategy is a critical component of building a high growth company. A good strategy will give the company and the management team confidence that the organization is on a solid path toward company goals. Think of a good strategy as a map of the wilderness from one mountain peak to another peak at a higher altitude. With the map you can chart the course to navigate from where you are today to where you want to be on the higher mountain. Without the map, you may lead your team down a ravine that requires backtracking or to a river with no crossing. You may ultimately achieve your goals, but the path may be longer and riskier than it would have been with a good map.
A documented and communicated strategy is also very helpful for alignment. It helps align your team to where they are headed and how they will get there. It gives them something at a higher level they can reference as they lead their individual areas. Are their departments helping execute the strategy? A documented strategy is also an excellent lens for assessing company initiatives. If an important initiative does not support the strategy, the executive team should re-assess the importance or direction of the initiative. It is easy to be lured into continually focusing on the urgent versus balancing what is urgent with what is important. The strategy is the constant signpost for what should be important for the company.
When Should a Strategy Change?
A good strategy is connected to the environment in which it was developed. Customer needs and behaviors, competitor strengths and actions, organizational skills and capabilities, all influence the final go-forward strategy. Year-to-year things change incrementally and minor tweaks and modifications to your strategy are needed. Companies should do a full review of their strategy every 3-5 years as enough things may have changed to warrant a new strategy or a major revision. Strategies are dynamic, not static. The more things change the higher the chances you need to pivot or completely change your strategy. Using the map analogy from above, the right path from point A to point B is good for during the day in good weather. If the forecast calls for a rain storm, your strategy would need to evolve to account for these changes.
What Stays and What Goes?
From our point of view, the dramatic changes wrought by pandemic will drive more innovation across the entire business landscape than anything that has occurred in the last 30 years save the invention of the internet itself. In the next several years we will start to see second and third order effects: Homes and apartments designed with 2 home offices, knowledge workers fleeing high cost metro areas creating growth and change in smaller markets, supply chains mitigating the risk of their global footprint with more on-shoring and many more we cannot yet envision.
Even in our small part of the world, the pandemic brought challenges and opportunities to Maven. In a portion of our business we facilitate annual planning and strategy meetings. Before COVID, 100% of those meetings would be held in-person to facilitate collaboration, focus and communication within the executive team. We adapted by hosting those meetings online in Zoom and eliminating the constraints of travel. And while we lose some of the benefit of an in-person meeting, Zoom is helping us innovate everything from how time is blocked (mulit-day vs single day) for different topics to using digital tools for brainstorming to bringing in specialists for some sections (no travel required) and recording meeting video for post meeting transcription. As one door closes, another opens.
How has the pandemic changed your business?
Most businesses have already made COVID19 related changes to their business, both in their strategy (new customer needs, different competitive landscape, pressure on prices, etc.) and in their operations (headcount reductions, different work processes, working from home instead of the office, etc).
What leaders should question is whether they need to take a further few steps back and look more thoroughly and long term at their business and industry. The decisions and changes that were made to get to the “new normal”, may not serve the organization going forward. We think it is imperative that organizations do a fresh in-depth review of their current strategy and operations to be prepared to have future success.
For a thorough strategy review we recommend, at a minimum, a 1-2 day executive meeting to reconsider the answers to the strategy questions posed above.
- Where will we play? What new products or services should we offer? What should we change about current products or services? How have customer needs changed? Should we change which customer segments we focus on? Where are the new opportunities?
- How will we win? Is our value proposition as compelling as before COVID19? Should we modify our value proposition? Should we change prices? How has the competitive landscape changed? Do we have new competitors? Have current competitors gained strength or weakened? Are we in a better or worse competitive position to win?
- What capabilities must be in place? What new core competencies are needed to succeed?
Are you and your team prepared for the future?
If your team is not prepared, now is the time to begin making those plans. If you have questions on how to make next year a success for your company set up some time with our team to talk about your goals. Contact us at firstname.lastname@example.org.