Before we answer the question “how important is business strategy?”, let us look at the definition of business strategy:
- “Business strategy can be understood as the course of action or set of decisions which assist the entrepreneurs in achieving specific business objectives.” – Business Jargons
- “A business strategy is the means by which an organization sets out to achieve its desired objectives. It can simply be described as long-term business planning. Typically a business strategy will cover a period of about 3-5 years (sometimes even longer).” – CIO Wiki
So what is business strategy?
It is a plan on how to achieve your business goals and objectives. The strategy could be short term or long term.
Why is business strategy important?
The business strategy is intended to give your team the direction and guidance.
How to win more customers? How to stay ahead of the competition? How to establish a clear value proposition? How to turn profitable and sustain growth?
You may argue that planning and documenting a winning strategy may not be necessary for a business to succeed. And yes, you are right. It certainly is not necessary. It however is useful. How?
- Gives the entire team clarity of purpose – where and when to focus? How to position the brand and business to the target customers? What should be the message of the brand? If not thought through and documented, the communication from different members of the team and their focus may be very different and at times confusing for the target customers. It is good to win everyone’s confidence and have a unified goal, message and focus.
- Helps discuss challenges and possible solutions – business strategy meetings give the team opportunities to brainstorm and discuss challenges. If not done formally, some or most of these may never get discussed in a common forum.
- Helps in establishing long term goals and action plan – Regular team meetings and discussions often revolve around current operational challenges and open deals. A focused approach is needed to plan for the future. While preparing a business strategy, teams carefully evaluate market trends, competition, customer needs, budget and resource requirements. This exercise helps in preparing better for future growth prospects and perceived threats if any. Along with the problems, the team also discusses and identifies the solutions.
- Helps in defining operating boundaries for the team – while chasing growth, team’s quite often get lured by easy sales opportunities which may not be a good strategic fit for the organization. A business strategy helps in defining clear operating boundaries that everyone must follow. Any deviations or exceptions must be discussed to avoid surprises. Often overlooked, this is a critical ingredient for sustained success – the entire team should know when to say “NO”.