Strategy is one of the most overused buzzwords in the business vocabulary. So what is its essence in today’s competitive, fast-changing environment? Bruce Henderson, the founder of the Boston Consulting Group, coined this definition: “All competitors who persist over time must maintain a unique advantage by differentiation over all others. Managing that differentiation is the essence of the longterm business strategy.”
Strategy is based on an organization’s vision or long term goals. Strategy analyzes the industry—the competition advantages and strengths that the organization can harness to achieve the desired outcome. The strategic plan identifies the specific mission that will achieve results. Each mission is composed of tasks and activities that all make tangible progress towards the objective. Good strategic planning is therefore essential for effective goal and target-setting.
Strategic ability draws on analytical skills, decision-making, business judgement and creativity. Organizations need to be adaptive and responsive to rapid change. Creative thinking is an essential ingredient in strategic planning and the best way to capture the creativity is to make the process a team-based activity.
Strategic planning must also reflect the changing structure of organizations. Many theoretical strategic plans fail because managers do not have all the organization information they need—they don’t have the total picture. This can be especially true in organizations that have independent autonomous divisions or plants. Strategic planning therefore must involve a central unit or individual who has a good grasp of all the perspective that are likely to affect the success of the strategic plan.
Let us learn from Michael Dell’s strategies that revolutionized computer sales:
Michael Dell started Dell Computer Corporation, the world’s leading computer systems company, with $1000 and an unprecedented vision for the computer industry: sell computer systems directly to customers.
His strategy was to deliver custom-made PC’s at the lowest possible cost through responsive, just-in-time manufacturing, logistics and distribution systems.
By developing this innovative direct-marketing approach and by pioneering the industry’s first service and support programs, Dell established itself as the leading vendor of computer systems world wide. In 18 years, the company’s sales have grown from US$6 million to more than US$30 billion.
Michael Dell has been honored many times for his visionary leadership, earning a spot on Time/CNN’s list of the 25 most influential global executives. In 1999, he wrote Direct From Dell: Strategies That Revolutionized an Industry, his story of the rise of Dell Computers Corporation and the strategies he has refined that can be applied successfully to all businesses.
Here are 5 steps for a successful strategic planning:
- Understand the current situation. “Where do we stand now?”
Conduct a thorough internal and external assessment of the areas where the strategy will apply.
- Determine what results you want. “Where do we want to be?”
This shapes your vision and mission statement. A good mission statement is clear and unambiguous. Read those of companies you admire to help you formulate your own.
- “How are you going to achieve your aim?”
What strategy will you use to get from where you are now to where you want to be?
- Who is going to help you fulfill your strategy? Who does what?
- Review your strategy. “How are we doing? What is working well, what isn’t working so well? What do we need to change, fine-tune, adjust?”
This is an excerpt from What Bosses Want authored by Gary V. Nelson & Bonnie L. Nelson, founders of the NBOGroup.