Strategies provide businesses with a roadmap, a path forward and objectives to reach. Strategies are determined to be successful when they deliver on the promised objectives and lead the business to grow profitability.
When devising a business strategy every leader should ask the following 4 questions.
1) What is our unique value proposition?
Your unique value proposition should be built on and enhanced by your business strategy. Without finding a unique position in the market you are unlikely to generate returns against established competitors.
Your strategy should further carve out your position in the market and establish a moat for your business. The automotive market is a great example of this. The market is full of many brands and many models all targeting a specific market segment.
2) Who is our audience?
Your strategy should define the target audience for the period going forward. Not only who those customers are, but what are their needs and what is the target price point. The goal should be to find or define an audience that is currently being underserved by your competitors. Plotting your competitors on a matrix can help in identifying these potential consumer segments.
3) What do we need?
Strategies are more than just a plan on a page they need to be executed. This requires resources, people, time and money. Ensure your strategy includes a detailed understanding of what resources will be required and where those resources are going to come from. This could mean a round of new hires or a capital raise.
4) How do we maintain our position?
If you become as successful as you hope then this won’t go unnoticed. Successful, profitable businesses often find themselves facing increased competition from established businesses or even new entrants.
The most effective way to maintain your position in the market is with an effective moat. A business can use seven types of moats: Scale, network size, switching costs, branding, counter positioning, cornered resource and process power.
TAKEAWAY: Good strategy is difficult. Strategy requires you to pick a direction and stick to it. By asking yourself these 4 questions and using the answers to define your strategy you can be confident that your strategy is comprehensive and will take you in the right direction.
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