Does a perfect business strategy really exist?
For budding businessmen, there are several terms and concepts that seem overwhelmingly complex, and one of them is strategy. In your own experience and opinion does a perfect business strategy is really exist? If so, how are the businesses coping up today.
Hi Knut, I think having a strategy is great but it should always be looked at it as a guideline. Especially in the start-up phase, having a plan is great but so many things change and if you're not flexible enough then no matter how good your strategy, the business will fail. I've changed my business several times before I finally found the right market for my business. I didn't have the money to hire marketing and pr consultants or even do simple advertisement. My strategy came from an old school system, going around, knocking on some (company) doors, send emails, done follow up calls and heavy networking. It involves cold calling, referrals and having a referral scheme in place. I created joint ventures with other companies to help me out and I'm still doing that and it works great for me.
A lot of start-ups or entrepreneurs have great ideas, great products and services but many of them lack the sales side of things. And I'm not only talking about how to sell, up-sell or cross-sell, they lack simply self-promotion or even are afraid of it. Self-promotion however is they key to anybody who wants to succeed in business.
It's important to be out there, meet people, even do the hated cold call or door to door sales (if it fits the business). A lot of people give out about it and say it's no longer the way to go. But with proper planning, research and using all networking styles possible (from social media to live networking events/ joining networking groups) it is a great way to get any business going.
So, to answer your question properly: Yes, you need a strategy but if that strategy doesn't involve the business owner being out there and promoting the company and themselves on an ongoing and constant basis then no matter what your strategy is, it will eventually fail. You need drive, passion and a plan in place to bring customers into your business. If it doesn't work you need to be able to change plans and tactics instantly (basically have plan A, B, C, D and E ready just in case and to make 100% sure, lets have Plan F, G and H as well...ah, heck why not have a plan for the entire alphabet...).
I found my perfect niche market by talking to customers, tweaking my presentations and trainings, trying even different target markets just to see the response...and I failed, several times...had to do a new pitch, was too nervous, market segment was too small, too big, not receptive etc. I think within the last 12 month I've changed tactics at least 10 times before I finally got into the right market about 4 months ago. Before then we were dripping away, making a few sales here and there but nothing really major. This all changed for us when we approached the hospitality industry. And now we're going full throttle on it and it works perfectly for us. We are redefining the way hotels and restaurants/ bars do business and with our approach towards sales and customer service and experience in different industries we bring a complete fresh new look to the table which is exactly what's needed in this industry. I've found my perfect niche by being consistent and not afraid to change when change was required. Our "Still or Sparkling™" workshop is state of the art and helped so far grow sales in hotel restaurants by over 200% plus an added bonus: The servers noticed a massive increase in tips by over 120%. Higher customer satisfaction levels, more sales, more tips...happy customer, happy staff, happy employer :-). We differentiate ourselves by including coaching in all our trainings and workshops, using new techniques, combining consultation, coaching and training in one and it makes a positive difference to our customers. Even our program is not off the shelf and is flexible in the content that our customers require. If something from the program doesn't fit, we can easily replace it or take it out. All our workshops are designed with our customers in mind and a lot of research, consultation and customer interviews are done to make sure we cover all aspects of what the customer needs. And yes, we interview every single person the company want us to train as well as their customers, do mystery shopping etc. no matter how long it takes. But the results speak for themselves. A 5 star training that makes a real difference :-)
The quick answer is NO.
There is no such thing as a perfect business strategy. And this is because the global business environment has grown Volatile, Unpredictable, Chaotic and Ambiguous otherwise referred to as VUCA. What is relevant today may be irrelevant tomorrow. The strategy needs to have the ability to adapt.
The world has become VUCA because technology has made us more globally interconnected than ever. What affects one area of the world shall have repercussions on other areas of the world but in varying degrees. Thus, what we have seen the past few years is that with global interconnection, political, cultural and behavioral structures are coming down and these have an effect on world economies.
Who would have thought that an electoral process in Greece would make the rest of the world hold its breath? Or that the ensuing process would shed the spotlight on the strength and stability of Asia as the next big economic hub? Now South East Asia is on the verge of Integration in 2015.
The explosion of social media has given the consumer the power to influence decisions and strategies with a post, an image or a Tweet. At the same time, this has given companies a cost efficient avenue to explore and expand markets.
The models prevalent in today's businesses were crafted at a time when the environment was more predictable. Change brings about volatility as businesses move to adapt. As the world opens up and technology bridges gaps, new markets are created. These are opportunities which can only capitalized if the business has the ability to foresee change and conceptualize strategies to adapt to the changing business environment.
If you look at history's greatest leaders: Mandela, Walesa, Gandhi and today's most influential businessmen: Bezos, Hsieh, Branson what set them apart is not just their ability to lead but that they are VISIONARIES. They saw the world from a different perspective from their peers and steered their countries, companies in the direction of their vision.
In my opinion, businesses should shift their focus away from processes and tools and align their resources toward developing people. Any company can purchase and operate the same processes and tools but the differentiator will always be PEOPLE. To cope with change, businesses need to TRANSFORM. Change is behavioral. Transformation is behavioral. The root remains grounded with PEOPLE.
Develop people. Find the talent to build leaders who can foresee and adapt to the volatility of change.
It wouldn't matter it it did. Creating a perfect strategy is a fool's errand. Create a good enough strategy, then focus on implementing it well. That's the hard part. Then learn. Consciously and deliberately learn. Learn your customers reactions, your partners concerns, your channels challenges. Create a fix, implement again and learn. How do you think Toyota created the Prius line? The got it wrong THREE times, but each time was a little closer. Now: best selling hybrid line in the world.
Strategy matters. Implementation matters more. Learning matters most.
The business environment, like life, is constantly evolving, so no plan will be perfect. That said, planning is helpful so you consider the variable at play in your business environment, and can consider as many opportunities a possible and how to take advantage of the best ones; also the risks and how to minimize their impact should they eventuate.
So, because of the constant change, I like a planning system that is quick to produce and easy to update. Some years ago I came across APT which stands for Accelerated Planning Tool which you can find on the web at http://thebusinessplanblog.com/about/ .
Even more important is that you, the business owner, are subconsciously aligned with your conscious goals for your business. Until that happens, you won't achieve your goals. Drop me an email if you'd like to learn more about this.
Opposite from others in this conversation I would dare to claim that the perfect strategy exists. I had an industrial design background before coming to business and there are some things I find engineers and business people should be using more often in any start-up business. This simple formula is getting constant feedback from industry and customers and learning how to work with sometimes crazily innacurate and intangible information. Let me explain. I was developing start-up based on wave power technology. My team started with scratch technology with many variables involved. Instead of jumping into infinite hours of hard work doing competitive analysis, calculating power output in different wave length environments, looking for the right market, analysing porter's forces etc we began an extensive networking trying to bring up all information that we knew was true for us. We connected to marine R&D sector, attended various ocean energy conferences, met few industry leaders through our great university alumni network and we surely did try to represent ourselves and our project in all ways possible, by showing presentations and preparing some key figures. As a result, we not only received an invaluable feedback from both academics and industry partners, but also got accepted to Ocean Energy Center in Gothenburg and spread our idea internationally. I was really grateful we did not stick to one perfect plan from the beginning. Our technology has changed and matured radically ! We have later learnt that ocean energy technologies are classified by TPL (technology performance levels) and TRL (technology readiness levels) and that they are followed by one another. In order to be prepared for higher readiness level (testing in real sea environment, for example) technology had to act on high performance levels first. We have achieved high performance when we partnered with one internationally recognized marine consultancy firm in Sweden. And this was done due to our lean start-up attitude. However, in order for us to be really competitive in the market, we needed to achieve the lower cost of energy compared to other renewables (such as offshore wind). It could have been done by reducing CapEx and OpEx. We would have never achieved our goals if we kept working by ourselves. Great industry knowledge prevented us from really big technical risks at really early stage and I also believe it made us competitive among other 151 developers. Only from feedback received we were able to maximize design parameters in the right direction, evaluate our biggest competitors, define business model, evaluate markets, estimate payback time and think about the next steps. To conclude, my tip is to go out, get feedback, and iterate. It's a never ending process.
It depends on how you are defining 'perfect'.
Does perfect mean never have to touch it again and it works forevermore?
No, that strategy doesn't exist - but you probably already knew that, with business in general being such a fluid environment after all. It's close to being impossible to create infinitely true perfection in most anything humans create. We're constantly being reminded of how little me know and when we learn something new, it can change everything that came before it.
Do you think Christopher Columbus in his wildest imagination ever considered even the vaguest the possibility of GPS? Maybe? How would that effect us today? But it was so far out of his reality and he was so used to thinking within the scope of his awareness and environment at the time, that it was probably little more than a fleeting thought - if that.
So any exceptions to everlasting perfect strategy probably won't apply to a business that's asking that question.
But...Can you create a strategy that incrementally moves toward perfection and may even seem like it's perfect or almost so from time to time - until you make another breakthrough? Hell yes, it's possible. Businesses do it all the time.
It takes planning, insights, awareness, forethought, afterthought, inbetween-thought - in other words, a good amount of continuous critical thinking and more.
It requires the assumption that anything you do can be done better and maybe by a different way or method. Baselining, monitoring results, testing and more is crucial to the process.
It builds understanding. As I've pointed out in other answers, understanding leads to higher awareness and control. At some point it all becomes predictability.
And when you can predict the future results of your marketing, you have a perfect strategy. Then in the next second something changes and it's imperfect again - but you're still close. All the variables make it impossible to maintain.
It's like an element with a half-life - or less.
There are many things to consider and reconsider from time to time. Again, you're wanting a 'perfect' strategy, but it's not something where you just snap fingers or look for ways to do as little as possible.
As for a template or concept to base a 'perfect' strategy on, consider this: most businesses think in linear lines of activity. They assume that A + B = C. This is like looking at an industry, seeing how business is conducted and marketed in general, and trying to figure out a new way to do the same things everyone else is doing, but better, faster, cheaper, etc. - that's linear.
A 'more perfect' strategy is to improve that norm, but also look at things outside the norm for what you do. Don't think just within the constricts of what's comfortable for your type of business. Analyze the strategies of slightly different, related, or even completely different types of business and use what can be applied to leverage what you do in a different direction, to a higher level, or with more value or far-reaching effect.
This creates a different, compounded equation: A x B = C or maybe even A x B x C = D because it introduces ideas, concepts, opportunities and alternatives that you'd never realize exist by operating with blinders on.
It can produce an exponential result and redefine paradigms moving you closer to perfection. And sometimes perfection might be doing so well in your business that your competitors can't imagine ever even seeing you on the horizon, much less catching up and surpassing you.
One more thing - you mentioned complexity. Complexity is often nothing more than not understanding or seeing - and accepting - simplicities. Many people want to claim something (everything?) is overly complicated when it's really little more than their viewpoint and unwillingness to embrace change or a new/different idea.
There's a direct correlation between how difficult and complicated something is compared to one's ability to confront and deal with it. If you can't face it, you can't solve it. The more you face it, deal with it, learn about it, figure it out and take responsibility for it, the more able you are to reduce the complexity and handle it.
So many times a client has told me that a system or process or relationship or opportunity I've explained is overly complicated. The effort required is often in direct proportion to the value of the ethical reward. Yes, if you want something easily duplicated, with no effort and that is impossible to defend or protect as a business advantage, that's easy.
And you may further commoditize your business, hurt your brand, break your value proposition and more while doing it. It's also stupid and lazy and insults business owners everywhere who are willing to work hard for success and struggle with it every day.
Maybe that's not important to some in a dog-eat-dog world. But our world is kinda crapping out right now with many potentially devastating downward trends. The time has long since passed when we needed to start caring about others as much (and in some ways more) than ourselves. When are we going to catch up?
No one should have to work too hard to be successful (obviously a relative concept), but when there's little effort, little is learned, retained, respected and available to do better next time. Without striving for a perfect strategy, what do you have to build on in recovering from a crushing blow to your business? Nothing more than what most of your competitors have, too?
What kind of perfect strategy doesn't have a way to protect or rebuild a business quickly in the event of various types of disasters?
The things you learn and continually apply from constantly creating/recreating and perfecting your perfect strategy is what makes it a perfect strategy.
The perfect strategy cannot exist. The reason for this is because we do not have perfect knowledge of the future. There are always things that will change that we have no control over and cannot foresee. Economic conditions, customer behavior and condition of capital markets are just a few things that can impact business strategy and as much as we try we will never be able to precisely predict changes in these areas.
Having said that the best we can do is create business strategy that is adaptable. This is definitely a fine line because there can be a tendency for some companies to be too reactive to changes. Good metrics and feedback loops are required in any strategy so that a company can judge the success or failure with which it executes it strategy.
The bottom line is that while the perfect strategy does not exist, the closest thing to perfection we can create is one in which the strategy can change as changes in the marketplace occur.
Business strategy is a complex and nebulous concept. On an academic level the answer is there can only be a perfect business strategy for a set point in time. As soon as the strategy is divulged to the market there will be market responses and the "perfect strategy" is no longer perfect. But it may still be a good and profitable strategy. The important thing is that you have a comprehensive strategy by which all your activities are driven from. Any strategy, wherever it might fall on the continuum from useless to perfect, must be constantly reviewed and edited. In reality, everyone has a business strategy. Some people and companies formally document it while others carry it around in his or her head. Some people limit the idea of business strategy to the product and/or sales & marketing cycle. Some firms need the business strategy to be more comprehensive to include capital planning, human resource management, and more. To some degree what constitutes business strategy is heavily dependent on the business a firm is in. With that said, regardless of industry, I am a proponent of comprehensive strategic planning that is reviewed and updated quarterly.
No, there is no such thing. Your business strategy will change with the economic conditions and trends. If not, you will fail. Staying fresh and viable means that we must keep current. Your product or service will change do to advancements in your field or industry. Why would you remain static?
When in business, you will be re-inventing yourself and your service from time to time to meet the needs of your clients or to capture more market share.
Each industry is unique to a certain extent and you must remain competitive to thrive. Look back on what you were doing when you started your business. Are you doing the same thing? Have you not improved or changed anything in your business strategy?
I would suggest that you examine your business strategy and seek to determine if it is complete and thorough enough to reach the goals and objectives you have set for your business this year. What needs to change?, Why does it need to change? Also, what will you have to do to change things, etc?
Most business owners seldom realize that change is good. It forces you to apply yourself, it makes the business challenging and creates opportunity.
Embrace a business strategy that you believe makes your firm different and better than your competitors.
I wish you the greatest success in growing your business.
John E. Stanojev, RFC
Capital Insurance & Investment Planning, LLC
There probably is not a perfect business strategy for the long term (however you choose to define the long term), but a business strategy is PERFECT in the short term (again, however you choose to define short term). I am not trying to be cutesy, but my bottom line is that a strategic plan is absolutely essential, but it needs to be understood that it will not be perfect and will change over time.
My mantra is that one must have a long term goal (3 - 5 years) but a short term focus. I coach business owners and they are typically trying to do so much and are so busy, if they do not go through this exercise, they are probably doomed to failure. "Doing the right things at the right time" (although always a theoretical objective) can only be done if you take your long term goal and work backwards to today -- perhaps the next 90 days -- and have the comfort that what you have decided to do in the next 90 days at least makes sense, and are the right things to do to reach that longer term goal.
I think people hate so much taking the time to determine a business strategy that they jump at any rationalization to not do one. I have heard many entrepreneurs that say specific plans are too constraining. Even someone saying that it is impossible to have a perfect business strategy provides rationalization for ignoring it. I am a firm believer that the only way to be able to easily adjust to future change is to make minor shifts in a PLANNED direction. If all you do is react based on your gut feelings at the time, your chances of making the right moves are much lower.