What is your business strategy?  Do you know what a strategy is? 

It turns out, whether or not you know what a strategy is, your business has one.  It might be as simple as “muddle through” – a strategy that might be described as “react to whatever seems important at the time”.   Sounds like a strategy that results in bailing water.  While this may keep the boat afloat for a while, wouldn’t you rather have a more winning strategy?

Step One: What is your goal?  You can’t have a winning strategy if you can’t describe what your winning goal is.  For example, it might be to target an increase in sales or profit.   Or, it might be to successfully launch a new service or product, as measured by sales and profit.  Notice the word profit keeps coming up?  If you don’t have a goal, any strategy will get you there.

Step Two: What are your resources?  You need to understand what your strengths and weaknesses are.   Your strategy will ideally take advantage of your unique strengths, and if need be find ways to shore up your areas of weakness.  Be realistic, because you don’t want a strategy that assumes a “miracle happens”.

Step Three: Who are your target customers?  What unmet needs are you going to fill?  A good strategy is focused.  A good test is to ask “which customers are not in your target?”  Understand the attributes for target and non-target customers.  Focus your strategy on the target.

Step Four: Who are your competitors?  These competitors have the same target customers, and they want to beat you to the goal.  What are your competitor’s resources and what are their strategies?  Sometimes competition comes indirectly from alternative solutions.  For example, your customers may be doing it themselves instead of buying your service.

Step Five: What is the playing field?  You, your customers and your competition are all on this playing field.  If someone changes the rules of the playing field, shouldn’t you know?  For example, if you own a dry cleaner, you know that certain chemicals were recently banned, and at the same time, “green” is in.

Step Six:  What is your strategy?  A strategy uses your strengths (and if needed shores up a weakness) to satisfy your target customer’s unmet need better than your competitors can to meet your goal, given the rules of the playing field by…fill in the blank.

Take Starbucks Coffee.  What was their initial strategy?  It was to grow by securing a quality source of coffee and staff to target a growing upscale consumer with a more luxurious coffee experience (not just a cup of coffee like brand-X), and consequently be able to charge a highly profitable premium.  Did Starbucks follow this strategy?  Generally yes – however, recently their CEO determined that they had drifted away from this strategy as a sacrifice to growth when they started installing automated espresso machines.  As such, some of these machines are now going away.

Notice that “tactics” are not a strategy.  Tactics are the steps one takes to implement your strategy.  Don’t get the two confused.

So, what is your strategy?