24 October 2017 category: strategy & business planning
At a recent seminar that I conducted for the Chartered Institute of Management Accountants we had a lively discussion about the impact that a strategy can have on a business.
At the beginning of the session, I asked participants “How many of you have been involved in producing a strategy for your organisation or any clients?” The show of hands revealed 95% of the audience had never been involved in producing a strategy and were consequently initially sceptical about the power of an effective strategy.
We reviewed examples of organisations that not only take strategy seriously but managed to articulate them brilliantly. It was agreed that Starbucks, Virgin Atlantic, Google, Microsoft and many other competitive businesses do an excellent job of setting the tone for their organisation with a formal strategy that includes vision and mission statements. They used vivid statements, such as:
to nurture the human spirit (Starbucks)
to help people throughout the world to achieve their potential (Microsoft)
where people love to fly and people love to work (Virgin)
The participants also agreed that a poorly formed strategy almost certainly had an adverse effect on performance and Marks & Spencer and Ryanair were particularly singled out for their uninspiring vision and mission statements.
to be the standard against which others are measured (Marks and Spencer)
to offer the lowest fares possible on all routes (Ryanair)
After looking at many examples, most people appreciated that there was a clear link between strategy and performance and furthermore, they believed that they could predict future performance of an organisation by examining their published strategy.
Above all, it became very clear that there was a difference between organisations that produce a strategy because they think it is the right thing to do and other organisations that produce a strategy because they think it is a task which needs to be performed. For the latter, any old words will do because all they are trying to do is “tick a box”.
Successful organisations only carry out tasks if they think they add value.
So, what is the REAL purpose of a business strategy?
The purpose of a business strategy is to grow your business, improve your business or both!
It is therefore worthwhile pausing for thought before you start producing a strategy, to determine what you are trying to achieve. Keep it short and keep it simple!
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