You can increase your profitability and competitive superiority dramatically by focusing on the highest-leverage-producing “drivers” of business growth. Last Wednesday, in Message #1261, I talked about one of these key drivers: your marketing. Today, let’s look at another one: your strategy. Because the easiest and fastest way to instantly transform your business results is to change the strategy you follow.
I’ve said that for 15 years. A contemporary of mine, Tony Robbins, also says it, but in a slightly different way. He says it’s probably the biggest overlooked fact of business life.
Most companies, by the way, are not strategic. They are tactical. They are most worried about just generating revenue to fill their overhead needs, to make payroll, to get them through the week, and to get them to the next month. They are not trying to engineer a business approach that maximizes — at all times — not only their revenues but also their positioning, their growth, and the value of the asset they create in terms of their business.
But this can all be accomplished just by changing strategy.
Strategy is the master purpose your business is all about. It’s different than your business model. Strategy is the explanation of the entire operating approach your business is following and why and how every element of it integrates, advances, and contributes to the big-picture outcome that you’re after.
How do you change strategies?
First, by understanding the strategy that you are currently following. If it is a reactive one, you’ve got to adopt one that is proactive and long-term.
Next, you’ve got to figure out what it is you’re trying to accomplish, build, and sustain with your business. You’ve got to determine what big operating approach will get you the greatest outcome in the fastest period of time on the most enduring basis.
Once you figure that out, you’ve got to think through your tactics. These are the actions or vehicles that help deliver the strategic result you’re after.
What actions, what activities, what concepts, what approaches will deliver your “big-picture” strategy best? By that, I mean what are the moves and maneuvers that will achieve the big outcome you are after?
Well, suppose your strategy looks like this:
“I’m going to bring in a lot of customers at breakeven. Then, we’re going to give them a great experience. Next, we’ll upgrade them to more expensive and more expansive repurchases of our products.
“We’re going to resell those products to them over and over again. We’re going to add new products as we grow the relationship with them.
“Then we’re going to introduce other people’s complementary products to them.
“We’re also going to take our existing products and develop new markets and new applications for them.”
If that sounds like your strategy, I want you to do three things:
1. Look up the definition of “strategy” in the dictionary.
2. Look up the military definition of “strategy.”
3. Look at your current business operations. Because I will bet money that your operations are being run tactically. By that, I mean all you have driving your business is a commitment to “advertise.” To throw up a sign outside your store or send out a few catalogs.
This is not a strategy. This is a tactical way to operate a business.
Instead, try the following:
* Make a list of the highest-performing, most-impressive, successful, and formidable companies you know of, inside or outside your industry.
* Think about what their “big-picture” strategy really is. What is it they’re trying to do with all the tactics they mount?
* Think through how they are doing or accomplishing this. That’ll clarify for you the difference between strategy and tactics. After you’ve done this exercise for 100 companies, ask at least a dozen of your friends to do it for you for 10 or 15 companies they know.
Then, you can break down a couple of hundred strategies that you’ve identified and evaluate which ones you can borrow and combine to forge your own ultimate business strategy.
But you can’t really build your optimal strategy until you first understand what you’re trying to accomplish and you work backward from that. Like a programmer who’s trying to create a powerful piece of software, you’ve got to know what it’s supposed to look like at the end — when it’s functioning. And there are a lot of different factors that enter into that.
Ask yourself, “What am I comfortable ending up with?” For example, do you want a huge company with a lot of management problems, a huge staff, and a lot of overhead requirements? Or, would you rather accomplish the same amount of volume (or at least the equivalent bottom-line profit) with one-fourth the effort, one-half the people, and one-third the capital?
There are many different ways to “skin a business-strategy cat.” You’ve got to decide on the best method for you and then follow it, using tactics only if they help you reach your ultimate strategic objective.
Changing your strategy will make a huge difference in your results and outcome. I have seen a change in strategy — properly implemented, managed, and perpetuated — triple, quadruple, and even improve results 10 times.
It drives a whole new power and force throughout the enterprise.
It animates the spirit of everyone involved (yourself included) and everything you do.