Warning! Your Business Is In Epic Danger If You Don't Do This
As I travel around social media, I see the word “strategy” a lot. Everyone is creating, offering and selling strategies for everything. There are social media strategies, sales strategies, and personal development strategies, you name it. And while using the word “strategy(ies)” is not wrong in this case, what is most often missing from the equation is the integral strategic planning and strategic management processes. Therefore, what is being passed off as “strategy” are steps and/or tactics. Now, these can make up a strategy, but they are not the strategy in and of itself. This is an important distinction for businesses. Because having a strategic management process and a strategic plan in place is important to your business success. Nevertheless, what many online entrepreneurs are doing, following, and paying for are not strategic plans that lead a business forward and allow it to scale. Without that, it is difficult for them to have strategic management that will guide them in the direction the strategic plans were established to lead them. So, what exactly is strategy, and more importantly what is strategic management and why is it integral to your small business venture.
What is Strategic Management?
Strategy is a plan of action created to achieve a major aim. It’s the game plan, the master plan, the big picture. A good strategic management definition is the analysis, decisions, and actions your business takes to create and sustain its competitive advantage. Simple enough. But, taken apart, it highlights key processes you must continuously practice in your business.
I’m sure that you already conduct an analysis of some kind. Whether it is tracking social media engagement (likes, comments, views), website traffic (goals, monthly hits, subscriber conversion), sales targets, or even your expenses, you are conducting some analysis. Strategic management goes a little deeper and analyzes your company’s strategic goals (planned objectives your business strives to meet), which come from your vision, mission, strategic objectives, and environment (internal and external).
This process pushes you to make sure that the steps you are taking in your business and tactics you are executing are aligned with your overall business purpose. It wouldn’t make sense for you to invest in marketing on Snapchat (for instance) if your target audience isn’t a Millenial or part of Gen Z. Likewise, you wouldn’t invest time and energy in developing contacts and partnerships with businesses and brands in home and garden if your business is focused on financial services. There may be a scenario where that works, but in general, it’s not part of an overall strategic push for your business.
Second, good strategic management will answer what industry you should be in and how you will compete in that space. Those are broad questions that should always be in the back of your mind as you make decisions for your business. Regardless of whether you’re creating a local business or building a global brand. What you’re doing and why will come down to those two questions.
So, should you create a value-based pricing system or a cost-driven model? Will you develop a social responsibility initiative to tie your business to your beliefs about social justice, climate change, and women’s rights? How deep into your business will those decisions go? Will that mean you choose to only work with women-led organizations or companies that use 50% recycled goods in making their products, or partner only with food influencers who are vegan, or you will make it a point to use your platform to speak out against social injustice and donate a portion of your profits towards charitable organizations who address those concerns? Making these decisions becomes much easier when you understand how and what your business’ purpose is.
Last, and probably most important, are actions. No matter how good your analysis, how thorough your decision-making process, it is all for naught if there is no action taken. Your level of execution will determine the success of your strategic planning process. Doing this isn’t always a simple task largely because of the scope and depth of these actions. At this level, you have to provide the required resources to build your business and bring your strategies to fruition.
For instance, the healthcare industry has been experiencing an upheaval for the last several years. As President Obama was entering office, senior managers in the healthcare sector were well aware that one of his key initiatives was enacting some kind of healthcare reform. While they may or may not have known the specifics of what that reform would look like, they were able to prepare themselves for the changes that would occur. Once the Affordable Care Act was passed, the healthcare space began to change. The way health insurers had conducted business had to adjust to the external environmental change that arose from the bill. Medical professionals and facilities had to deal with the new reality of increases in the number of patients that might utilize their services. It was a good time for healthcare consultancies and lobbyists who got an upswing in their business. Conversely, as President Trump came to office vowing to repeal “Obamacare”, healthcare companies that had just recently adjusted their internal environments and strategies to accommodate the external environment were once again going through that process.
Strategic planning, and especially strategic management are ongoing. It is essential that business owners and managers are aware of the changes that will affect how they currently do business. It’s also essential that you keep up with these changes to stay at the forefront of your business and one step ahead of your competition. Which leads us to the second thing we get from our strategic management definition: competitive advantage.
The other key point that the strategic management definition brings up is competitive advantage. Strategic management and competitive advantage go hand-in-hand. Competitive advantage is that “thing” that makes your company special, unique, or better than your competition. It’s your special sauce. What makes your audience prefer you over your competition? As you go through strategic management processes in your small business, you will constantly ask yourself how do we create competitive advantage, how do we articulate our competitive advantage, how do we convince our audience we do have an advantage, and how do we sustain that advantage in a way that is valuable and difficult for our competitors to copy.
It is important to note, that you will not sustain your advantage just because you do something better than others or spend more money. For instance, I’m sure you’ve all seen that business on Facebook, Twitter, or Instagram that just seems a mess. Yet, people flock to them. They don’t provide much valuable knowledge or insight, they don’t have the best price, they don’t have a lot of products, and they may not even have the best aesthetic. Yet, people seem to love them. Your ability to reach peak operational effectiveness will not sustain your advantage in your market.
What will is your ability to perform different activities than your competition and/or perform the same activities in a new way. That will come from a good strategic planning process and good strategic management. Companies such as Apple, Amazon, Starbucks, and Walmart have found a way to do this. They have businesses that are consistently excellent, and they function at such a level of excellence that even other businesses that are similar cannot do what they do quite the way they do it. That is how they’ve developed a sustainable competitive advantage.
In summary, you do need a good strategy. But, an effective strategy is developed from good strategic planning and strategic management. That is what will lead you to success. You won’t be able to be great at everything. The key is to focus on that thing that makes your business competitive and gives you an advantage and to then do that thing so much better than everyone else that no one can touch you.
Once, you’ve done the above, you should continuously check and evaluate how things are going. Strategic requires that you evaluate your analysis, decisions, and actions to see how things are going and adapt as needed to changes in both your internal and external environment.
If you want to begin planning for your business in a strategic way, check out my class 1-Page Business Plan walkthrough. In that class, I take you through a strategic planning process to devise your business plan. If you'd like something you can work through faster, the Strategic Planning Workbook is a great start.