What is Strategy?
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Strategy and strategic planning are getting a lot of hype lately. It get's made to be overly complicated and unattainable for the the average entrepreneur. In 12 slides and 8 steps you can start working on a strategy that works for you and your business model. Strategy is not a one size fits all solution!
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What is Strategy?
- 2. Strategy is… 2 • Systematically making the right choices • Based on current conditions • Shaped by Values • Informed by Vision • A detailed articulation of Mission • DIFFERENT FROM TACTICS!
- 3. • Intended to bring about a desired outcome • USUALLY this is competitive, i.e. builds or maintains competitive advantage • CAN also take other forms, e.g. “Exit Strategy" Systematic Choices 3
- 4. Competitive Advantage • It’s what you do better than anyone else - • Where does it come from? – Transaction-cost based view of the firm – Resource-based view of the firm – Knowledge-based view of the firm • From economics – “free” markets have zero profit: Perfect information, no transportation costs, no interventions, no monopolies, no externalities 4
- 5. Position Your Best Resources: • Perfect Information - Information Asymmetry • Transportation Costs - Resource Deployment • Interventions - Lobby For Policy • Monopolies - Virtual Monopoly Power And then look outside your business to: • Externalities - Avoid Negative and Capture Positive Competitive Advantage Sources 5
- 6. • “No battle plan has been written which survives first contact with the enemy”– Gen. Dwight D. Eisenhower • What is your market and “the” market look like for buyers and sellers? • Who is your competition? • What are your capabilities? • Is there money moving in your market? CURRENT CONDITIONS 6
- 7. • Values are shaped by your aspirations for yourself and the business. • Values provide the basic frame work of what you are and are not willing to do. • Strategy without values is like an architect designing a house without talking to owners. REMEMBER: Strategy is about choices not tactics! SHAPED BY VALUES 7
- 8. It’s important to be able to be able to communicate your vision and subsequent mission in a way that allows people to KNOW, LIKE, and TRUST you. Also answers these: • What do we do? • How do we do it? • Whom do we do it for? • What value are we bringing? 8 Informed by Vision and Articulated by Mission
- 9. PORTER’S GENERIC STRATEGIES Get familiar with the basic positions: 9 PremiumNiche Feature Differentiated Cost Leader NarrowMass Market Cost Function Primary Attribute Price- Value Leader
- 10. • Terms are often used interchangeably • Strategy changes more slowly • Strategy directs, or at least suggests, tactics • Strategy comes from the home office (and may be painful – “go take that hill…”), tactics are embedded in the strategic context (“given that we’re going to take that hill, how will we go about it?”) DIFFERENT FROM TACTICS 10
- 11. What are you shooting for? • Economies of scale • Diversification • Vertical Integration • Expand product lines for existing customers • Expand markets to include new customers There’s always contra-strategy for fun! EXAMPLE STRATEGIC TOOLS 11
- 12. 1. Decidewhatsuccesslookslikeforyour business. 2. Decidetheoutcomesthatwillgetyou there. 3. Getsystematicaboutyourdecisions. 4. Pickaplaceinyourmarkettocallhome. 5. Delivervalueviainnovation,cost,or anywhereelseinPorter’sMatrix. 6. Don’tskimponthedifferentiation. 7. Record,Evaluate,andAdapt. 8. RinseandRepeat. 12 Conclusion: 8 Steps to Strategy