How Do You Know if Your Strategy is Working?
If you’re typical of management, you’re probably thinking you already understand basic strategy. You pick a market, define your customer, and develop methods to reach your customer. But is management strategy that simple? How do you know if your strategy is working?
The Difficulty with Management Strategy
Deciding what you’re going to do is the easy part, at least for some. Picking a market, studying the customer, and then defining the action steps are the fun part. In fact, vendors have made a wide range of tools to help you with the strategic planning.
We have pro-forma forecasts, balanced scorecard deployment matrices, performance scoreboards, and project management tools to organize our resources. So, with all of these great strategic management tools, why isn’t your management strategy working?
Your Customer Is Only Half of Your Strategy
That’s right, your business is about your customer. However, your strategy must address what you are not going to do as well as what you are going to do. Too often, a company will spend all its time focusing on the future actions necessary to enter new markets, acquire new customers, and build new revenue, and they’ll forget their current markets, customers, and revenue streams. And, what about their current cost structure and expenses?
This is where the company’s management strategy might be a little weak — in the planning area. There are those areas in your business you have to let go of, retreat from, and take resources away from to implement your new strategy. Balance is the key.
How often have you listened to management talk about “great new market possibilities”? About how “the grass is greener” and “the future is so bright”? They might wax poetic about new markets, new products, new possibilities, new directions, and new revenue sources. They only problem is…most of us can’t do two things at once very well.
Your management strategy might detail all the new actions you can take to get from point A to point B but how much thought has gone into the repercussions of those actions? Do you risk your current customer base, your brand, your expenses, and so forth for the sake of “potential”?
It’s easy to think about all the things you could do to open a new market…until you realize you have to reallocate your resources wisely. Few of your departments will readily let go of their current budgets, resources, or way of life to make room for the new strategy that you are laying out. This is a classic buy-in problem.
Management Strategy Is About What You’re NOT Doing
So, how do you improve your management strategy? Focus on what you are not going to do with as much time and effort as you spend on creating all those nifty action plans. Sure, you’ll define your market and your customer like before, but add another step that defines who IS NOT your customer and why.
Because you cannot be all things to all people. Instead you have to focus on where you’ll get the most bang for the buck, the greatest leverage, and your maximum return on investment (ROI). This is what management strategy is all about. It is about what you are not going to do as much as what you are going to do.
Management Strategy Works
If you are expanding into new markets, it’s important to know what established markets you’re leaving behind, so that you can maintain your focus on the markets that will result in a “win-win” situation. Focus is power! To get the power, don’t try to be all things to all people, customers, or markets. Make sure your management strategy describes who your market is not to prevent you from making a classic strategic mistake. So why isn’t your management strategy working?