Many business owners decide to go into business for themselves as a result of the confidence they had in their technical expertise and skill in their chosen field. The underlying premise is “because I am very very good at what I do – I will be successful in business.” Unfortunately, rarely does that expertise provide them with the skills necessary to operate a business profitably and successfully. To build a successful business requires an owner to transform from technical expert to Master Strategist. The focus must be on working “on the business” rather than “in the business.” Their efforts are no longer applied only to a product or service, but now must be expanded to include financial and operational management, production, delivery and aftermarket service.
What is the primary responsibility of the Master Strategist? To answer the question, “How do we …?” The answer to the “How?” ques-tions are the strategies the business will employ to accomplish the corporate and operational goals that define a profitable and successful enterprise. These strategies, whether simplistic or complex, are merely a set of actions that enable the organization to achieve results.
A Master Strategist treats his business as if it is for sale – every day. Every strategy and decision must be evaluated by answering the question “Will taking this action enhance shareholder value in the company?” And, at the end of each day the Master Strategist must answer the question “Am I building a business worth buying?” There is only one acceptable answer to these questions, “Yes.”
Two caveats to any strategy: 1) A strategy must be designed to increase the chances of success, not simply aimed at reducing the likelihood of failure. 2) A strategy must provide a competitive advantage by differentiation and delivery of unique value.
Most competitors in the marketplace strive to maintain a reputation for a quality product, low price to consumers, and high quality of service. All of these are easily copied among competitors, and therefore every product will appear increasingly similar. The key is to offer a product that is different in a unique and genuine way. Products that deliver a unique mix of value and appeal cannot be easily duplicated. This will identify your brand as the market leader.
All of the individual strategies combined together form a strategic plan. The problem with strategic plans is most of the time they simply aren’t implemented. The Master Strategist recognizes that for a strategic plan to be successful there two parts, first develop the strategies and then develop action plans to execute them.
How to Develop Strategies:
• examine critical issues
• determine how the organization’s strengths and skills can be employed to address the critical issues
• analyze the opportunities available
• select the best approach
How to Develop Action Plans:
• identify goals to accomplish
• specify what results (or objectives) are to be achieved
• specify how those results (or objectives) will be achieved
• specify by when they must be achieved
Where is the best place to start?
The “80/20 rule” applies.
In most businesses 20% of your customers yield 80% of your revenues. And even more important, 20% of your customers yield 80% of your profit. The problem is neither of the 20% groups contain exactly the same customers.
Therefore, identify the top 20% of the following (that are responsible for 80% of your profit) and develop strategies and action plans to enhance their effectiveness:
• Sales – top sales staff (create a support team to increase their productivity) and target top customers, territories, and distributors (if applicable)
• Market segments – top products, services, territories
• Production – top production employees and top production problem solvers
• Quality – product(s) with most defects and type of defects
• Employee retention – reward top 20% with inventive bonuses and benefits for increased pro-ductivity
Strategies are not etched in stone. They must remain fluid and adaptive. As with any fluid situation, a Master Strategist is careful to avoid the three pitfalls of planning:
• failing to successfully communicate your strategies and action plans
• failing to manage change
• failing to make the hard choices
Without effective strategies and action plans, success will be merely a matter of luck.
© 2004 Kenneth Sweet - Kenneth Sweet, JD, is the Executive Director of Management and Tax Consulting at the largest privately-held business development company for small to medium size business in North America, and a leading authority on small business.
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