Effective Business Strategies for your Project
Coping with Change: Developing Growth and Survival Strategies.
How does one deal with change and plan to succeed, even in tough situations? It is important to understand that there usually are pronounced differences between any business’s goals, the strategy to get there, and the management necessary for different aspects of the project. The key to making it all work is to incorporate all of these very different things into a cohesive action plan.
So where is a good place to start the process? A good first strategic move is to clearly and objectively look at your current success with the project. Concentrate only on your strengths, dissect them, then objectively separate and attribute them according to strength of product or service, strategy and planning, leadership or key personnel, and finally… --Luck (receptive marketplace, outstanding new cooperator, etc.). If you need help with this, there are a lot of public-domain resources available to help you with this process. One way to do it is simply to get a white-board or large paper pad and start collecting ideas from your group. Concentrate on collecting the ideas. Discuss, analyze, group, and summarize what you found under a master “strengths” header. Set this aside until you have had a chance to dig into the market analysis, your weakness, etc.
The next step is to evaluate your strengths in terms of strategic logic. Strategic logic has various facets. At its simplest level, it is the concept of looking at the true price of your product, supply and demand within the market, why the market wants your product, and then how you sustainable make a reasonable profit (margin) above the cost of your product or service. To do this, one needs to mine all of the internal and external human-, financial- and market-driven data that is relevant to your project’s success or failure.
There are many ways to do this. In a nutshell, here is a quick summary of the process. Brainstorm individually or in groups, with or without outside cooperators; consider where you fit in the market and how to collect data that gives you solid performance benchmarks. Evaluate the market for your product and the strengths of your organization with the objective of seeing how to build or expand your markets and strengthen the organization. Think about how you can test some of your ideas by accessing additional information or running it by people who use your products, this could range from simply subscribing to an on-line research service to organizing mediated focus groups. Rank your finding by importance and perhaps group as you see fit; put together an executive summary that uses the least number of words to most informatively describe your situation. Then act on what you know, or still need to find out, by developing a plan to use that data in the form of an actionable list.
Another key point is to understand the “role of history” in any business strategy. Often overlooked, a critical aspect of any business-development plan is digging into why similar projects succeeded, and more importantly, why others failed. Over time, various events could have resulted from any number of combinations of human, market or changing technological factors. The more you can recognize, separate and understand them, the better able you will be to gauge what is happening with respect to your role in your market.
The importance of “focus.” What does this mean?
Everyone will have different opinions as to what is important to your operation. This is OK. Concentrate on collecting ideas, get as much input as possible; save the ranking, organizing and setting of action items for later. Encourage people to brainstorm, develop lists of what you do well and why, then how these things reflect your operation’s core values and mission statement. (And if you don’t have a mission statement? Well, this as good a time as any to create one.)
If you are the entrepreneur swimming up-stream in the daily current of “just getting by,” fighting the good fight in your own little world, well, it is pretty easy to focus upon the wrong things. You may want to start to develop regular business-plan reviews or visioning exercises to knock you out of the rut and encourage an environment that fosters positive change.
Learn to be able to step back and take a look at your project and where it is in space and time. So, what does this mean? Space is the space you occupy in the market; time is what is unique to the market right now, as well as where where the market has been and where it may be going. Most folks who are not familiar with this or other “futuring” exercises, approach them with uncomfortable trepidation. In a nutshell, the key is to be the detached observer and be able to take a good hard look, not only at what is going well, but also at the bad uncomfortable things that everyone wants to ignore. It helps to start with some categories for your analysis; for example, human (in-house and out-of-house), financial (internal and external), time and logistics. This is where one really needs to look at what is not working and why; the problems and situations that may be very uncomfortable to address. Setting aside personal feelings from objective thinking is a huge evolutionary step in becoming a business-development professional; and the very crucial first step to becoming a “focused competitor.”
Select diversification in your business strategy. It easy to focus on a single objective. Carefully consider what you are doing from various vantage points. “Diversity” can be achieved in several ways.
For example, if an entrepreneur only makes one product and is completely focused on selling that one product to a particular audience, that person is missing several key factors that could generate considerable sales and income. By focusing on a single product and/or audience, our person has failed to take time to look at the product in terms of adapting it to the needs of other audiences, failing to consider product diversification to exploit market diversity. Exploring diversification usually has the added benefit of exposing new and unique related-product needs and applications.
Another, very different vantage point, could be careful consideration of how this single product is produced. One very sound way to make a business more profitable is to increase efficiency and reduce costs. Another, is to look at what is going into and out of the manufacturing process. For example, our manufacturer may find that a waste-stream is not a waste stream, but a value-added co-product. As a result of manufacturing any product, others are generated; it is worth the time to rank them according to value, and then ascertain why some have more value than others. Look at markets for those products and then target getting your material to the best market, or tailoring it to that market by further processing, what professionals call adding “value-addition” steps. Each step in additional processing is justified by an increase in product value.
Another, seemingly obtuse vantage point, is to consider those value-addition steps we just discussed, and “deconstruct” them with an eye toward substitution or elimination. Again, consider our example entrepreneur and let’s look at the product he or she ships to distributors or end users. If, for example, it is a fully assembled product, what if the product could be shipped with “some assembly required.” Cutting out the costly labor of some final assembly, perhaps shipping in smaller and better-protected cartons, being able to get more units on standard shipping pallets that are easier for truckers and warehouse workers to handle, all add up to a preference for your product, and a more efficient and profitable operation for them. If your product is easier to deal with by your distributors, this is a subtle, but huge advantage over your competition.
Some very well-known and successful companies embrace diversification in interesting ways. Examining highly diversified firms with various product streams, marketing tactics or management systems, will help any entrepreneur develop novel approaches to address their own markets.
The importance of developing vantage points on your entire sector.
I was talking with a fellow business-development professional who is an economist who looks at multi-billion-dollar American egg production and its relationship to the domestic and international egg markets. Our conversation eventually focused on an easily overlooked fact about any business and its markets, and that is, that at any time in any business cycle, whether the overall market is up or down, some players in that market will be successful and some will be serious losers.
Take a minute to think about this. Let’s say that it is an absolute heyday for the X-Widget market. Business is booming for almost all producers, but one or two are tanking. –Why? If you reverse the situation, where the X-Widget market is tanking, most businesses are barely getting by or are going down the tube, but one or two are doing very well and expanding. –Why? The big take away, is that if you accept that this phenomenon is normal, then you can look at the reasons behind the “why” and let these “fundamental truths of your market” guide your strategic thinking.
If one considers this perspective, it reveals interesting facts and lessons from historical events, be it the 1970s Farm Crisis, any stock-market rally or crash, or why one vendor is selling out at the farm market and other folks are having a tough time moving a carrot. In many cases the big difference between the winners and losers in any sector comes down to the reputation of the business, outstanding or consistent product quality, inventive marketing or personal dedication to service, that cements relationships with customers. Look at the reasons behind the “why” and embrace how they can work for or against you.
Embrace innovation; build a strategy based on objectives and tactics.
This is easier said than done. Human beings are naturally content with maintaining a status quo. In business, this has led to monumental miscalculation and catastrophic failure. To enhance personal and organizational innovation it is necessary to create a formal structure (strategy) on how to do so; add to this what you want to accomplish (objectives) and how you are going to make it a reality (tactics).
One approach is best defined by an observation from Peter Blaber in his book The Mission The men and Me: Confessions of a Former Delta Force Commander. Almost Zen-like in its simplicity, but so easily overlooked, Blaber says, "Patterns of thinking, patterns of decision-making, and patterns of history. Once you recognize the patterns that inform the behavior of your enemy, you can adapt to them, and your enemy is toast."
It’s not much of a stretch to see that in business “your enemy” are the things that cost you success and profit.
In this strategy, one can look at internal patterns of behavior and how they influence your project or organization. This is everything that could be wrong on your end of things. This could be employee morale and their ability to contribute to efficiency, communicate within teams, and how internal power struggles create critical communication choke points. Or perhaps the operation has serious problems resulting from internal behavior patterns that impact customers (marketing and customer service).
After an internal self-analysis it is time to look outside. One can then look at “external patterns of behavior” completely separate from your operation, and how do they send tremors through the market? How do these factors influence the direction, strengths or weaknesses of the competition. For example: What are the go/no-go decision switches at critical junctures within a distribution value-chain? Are there ways to anticipate them and ways ensure positive outcomes? What are the decision triggers that compel end-users to spend their money for your offering and not the competition’s product?
Blaber mentions, “patterns of history,” don’t forget the historical performance of your market and the external factors that influence important trends. How does your competition react to changes in the market? How do your customers react to supply/demand and price issues?
You can then put it all together. The result is essentially a very detailed SWOT (Strengths, Weaknesses, Opportunities and Threats) assessment. You now have an internal strengths/weaknesses and opportunities assessment; an external strengths/weaknesses and threats by the competition assessment; and an insightful opportunities assessment that takes into account historical market trends.
To now embrace innovation and build a strategy based on what we have learned for our internal and external analysis, we need to understand our project with respect to our limitations, the picture of our competition and our customers. The final step in this strategy taking what you see and using it to prioritize what you want to accomplish (objectives) and the concrete actions that you are going to undertake to make them a reality (tactics).