Modern rules of rock-solid strategy formulation: Not Rocket Science! Re-learn anew!
Planning plays an important role for the success of every business! And that, my friends, is a sealed strategy formulation.
Welcome to the grand strategy formulation matrix blog series for startup and small business entrepreneurs, from the play book of established profitable thirteen-figure business models.
Why are some businesses reporting explosive returns on investment (ROI) right from the start of catastrophic covid_19 crisis to the new normal, while others have closed shop?
This is not a post about the best strategy formulation.
I have decided to begin a series of posts, every Tuesday, that attempt to prove to you that your bankable business’ strategy formulation is now more important than ever. Times have changed. Covid_19 has had a devastating impact in the lives of people and enterprises all over the world.
Note: This Tuesday’s post has been delayed due to the Eid Al Adha Holiday.
Related reading: 137 Great Strategy Quotes for Business To Inspire You To Be a Better Strategy Execution Ninja
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Secret strategy formulation of over ten-figure businesses
If you took the initiative to quickly pivot your business, you are among the few reporting outstanding results that have never been witnessed before because you did not drop the ball. You listened to your audience and provided services and products the way the customer wanted them (even in tough times).
Which firm does not want to see a higher ROI today, than yesterday?
Sorry. One-size-fits-all does not apply here.
This series of posts is for you if your enterprise is grieving because you are in the woods, and worse still, not finalized developing the process of adopting the most apt strategy to alter your business.
Recommended gem for startup and small business entrepreneurs to read. Dan Lok Failed in 13 Business Ventures Over Three Years. Now This ‘Unemployable’ Immigrant Manages Millions and Mentors Young Entrepreneurs.
Strategic Planning for Strategy Formulation
Strategic planning is your ticket to a solid strategy formulation process that is extremely successful. In strategic planning, you first have to identify the exceptional and unique drivers of your business.
You start by answering very simple questions:
- What is the size and complexity of your business?
- Can you reach there with your current team?
- What are your priorities?
- Where do you want to go?
- What is your competitive advantage?
- Where is your business now?
- What can you create now to influence your business in the future?
Strategy Formulation
Of increasing importance to the success of any enterprise is the choices made by the organization among two or more alternatives. When choosing a strategy, the firm decides to pursue one course of action instead of others.
These choices are influenced by the opportunities and threats in the businesses’ external environment as well as the nature and quality of its internal resources, capabilities and core competencies.
The fundamental objective of choosing one strategy over another is to gain strategic competitiveness and earn above average returns. Strategies are therefore purposeful, precede the taking of actions to which they apply and demonstrate a shared understanding of the enterprises’ vision and mission.
An effectively formulated strategy marshals, integrates and allocates resources, capabilities, and competencies of the business so that it will be properly aligned with its external environment. A properly developed strategy also rationalizes vision and mission of the organization along with the actions taken to achieve them.
Definition
“Tactics is knowing what to do when there’s something to do. Strategy is knowing what to do when there’s nothing to do.”
– Savielly Tartakower
Strategy formulation can be defined as the development of long term plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses. It includes defining the corporate mission, specifying achievable objectives, developing strategies and setting policy guidelines.
Wheelen & Hunger, 2012
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Types of strategy
The reason you are still keeping up with the post and reading it is because you have decided to pivot your business faster with the most effective formulation of business strategies.
Thus, is it 3 or 5 or 7 or 10 types of business strategies? If you are a graduate student, you must be perplexed by the strategy menus offered by academics, consultants, and management gurus. Michael Porter is the go-to strategy expert, also known for “Porters Hypothesis”, “Porters Five Forces” and “Porters Four Corner Model.”
The broad classification of strategy fall into Cost leadership, Differentiation, and Focus Strategies. Which, therefore, is the best business strategy to pivot your firm to be a market leader?
We will answer this question shortly.
Purpose of Strategy Formulation
The purpose of strategy formulation is to cause strategic thinking that conceives the future of the business and how that future may be secured.
New strategies increase the chances of success of an enterprise securing its future. Successful businesses adopt a formulation process that matches the business, organizational culture, and the specific issues in context.
The strategy formulation process must be tailored to the current needs of the organization, the task of the manager being to understand the process that has generated strategies in the past in that business and to consider how to develop that process in the future (Shimuzu & Hitt, 2004).
Value of Strategy Formulation
Strategy formulation process trigger new ideas, capture ideas for discussion, and clarify ideas for implementation. The process must lead to ideas about how the future can be secured and must lay the ground for effective action. The solid strategy formulation process should lead to good strategic thinking.
Covid_19 has changed, and is still changing the strategic landscape of running businesses. For example, McKinsey & Company reported that Coronavirus is accelerating digital-strategy formulation (COVID-19 Digital Strategy, April 2020.) Any organization that is ready to pivot and adapt will weather all types of disruptions.
Could the focus on efficiency, efficacy and business agility help guide organizations in the next five to 10 years?
Watch the three themes of Gartner’s Top Strategic Technology Trends for 2021; i.e., People centricity, location independence and resilient delivery.
The unprecedented socioeconomic challenges of 2020 demand the organizational plasticity to transform and compose the future.”
– Brian Burke, virtual 2020 Gartner Symposium IT/Xpo®
The most strategic steps to pivot your business faster
Are you tired of lousy business plans rejected by thought leaders and other Investors that matter to your business?
What to tantalize your stakeholders with a barbed business plan?
Let’s master how to develop the solid strategic business plan that works for your business. Drop me an email, with the subject line “Solid Strategy Formulation Process” to skyrocket and dominate in your business.
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Key Definitions of Strategy
What is strategy?
- Strategy: ideas and actions to conceive and a secure the future of an enterprise (objective).
Strategic Management
- Science-backed Strategic Management is as a process by which top management determines the long-run direction and performance of the organization by ensuring that careful formulation, effective implementation and continuous evaluation of strategy takes place.
An enterprises’ competitive advantage
- Competitive Advantage: A superiority gained by an organization when it can provide the same value as its competitors but at a lower price, or can charge higher prices by providing greater value through differentiation. Competitive advantage results from matching core competencies to the opportunities.
Three forms of strategy essential to every firm
Its important for you to distinguish among three forms of strategy if you are running an enterprise, i.e., competitive strategy, corporate strategy, and general strategy.
Competitive strategy
As seen earlier, a company’s competitive strategy is concerned with competitors and the basis of competition. Thus, a crowning competitive strategy hinges on a company’s SWOT (capabilities, strengths, and weaknesses) in relation to market characteristics and the corresponding SWOT of the competition.
5 factors that drive competition of a business
As stated by Michael Porter, the reigning guru of competitive strategy, competition is driven by:
- Threat of new entrants
- Bargaining power of suppliers
- Threat of substitute products or services
- Bargaining power of buyers
- Rivalry among existing firms
Because of these five factors, competitive strategy takes the form of: (1) focus, (2) differentiation and (3) cost leadership.
Life-changing magic of corporate strategy
Corporate Strategy defines the choices and commitments regarding markets and businesses in which an organization competes, in addition to the very nature of the company itself. As we will see at a later date, a concrete corporate strategy defines the company’s mission and vision – what the company does, why it exists, and what it is intended to become.
Strategy and tactics
As referenced before, strategy, in general, refers to how a given objective is to be achieved, i.e., the relationships between ends and means. What results does a business seek vis-à-vis the resources at disposal.
Though the terms ‘strategy and tactic’ are borrowed from the military, in the business and management sector, and entrepreneur employs different kinds of “resources” for to achieve the firm’s objectives.
The following strategy Venn diagram shows the interrelation of strategy in general, corporate strategy, and competitive strategy.
When you keep up with the strategy series in future posts, you will understand the value disciplines and fundamental questions that must be on the tongue of each shareholder of your enterprise.
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This is how you keep up! ☝
13 Top Essential Strategy Readings and References
- The Strategic Management, 7th Edition (Lynch, 2015)
- Strategic Management and Business Policy: Toward Global Sustainability (Wheelen & Hunger, 2012)
- A Strategic Flexibility: Organizational Preparedness to Reverse Ineffective Strategic Decisions (Shimuzu & Hitt, 2004).
- “What is Strategy?” Michael Porter. Harvard Business Review (Nov-Dec 1996).
- The Discipline of Market Leaders (1994). Michael Treacy and Fred Wiersema. Addison-Wesley.
- Rise and Fall of Strategic Planning (1994). Henry Mintzberg. Basic Books.
- “Customer Intimacy and Other Value Disciplines.” Michael Treacy and Fred Wiersema. Harvard Business Review (Jan-Feb 1993).
- Strategy: Pure and Simple (1993). Michel Robert. McGraw-Hill.
- Strategic Management: Formulation, Implementation, and Control (Pearce & Robinson, 1991)
- Competitive Strategy (1986). Michael Porter. Harvard Business School Press.
- The Concept of Corporate Strategy, 2nd Edition (1980). Kenneth Andrews. Dow-Jones Irwin.
- Top Management Strategy (1980). Benjamin Tregoe and John Zimmerman. Simon and Schuster.
- Strategy (1967). B. H. Liddell Hart. Basic Books.
Over To You
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