BUSINESS STRATEGY PRINCIPLES EVERY LEADER SHOULD KNOW !!!

1. Business Strategy = compete to be unique, not to be the best

Strategy is not about being the best, but about being unique. Competing to be the best in business is one of the major misconceptions about strategy.

And if you only remember one tip from this list, it should be this one. Many leaders compare competition in business with the world of sports. There can only be one winner. But competing in business is more complex. There can be several winners. It does not have to be a zero sum game – you win, I lose or vice versa.

Within a single industry, you can have several companies beating the industry average, each with a distinctive, different strategy. They are no direct threat to each other. There can be several winners. So the worst possible approach to strategy is to seek out the biggest player in the industry and try to copy everything they do.

2. Business Strategy = compete for profit

Business is not about having the largest market share or about growing fast. It’s about making money.

‘I want to grow my business’ is not a business strategy. ‘I want to grow my business’ is the same as saying, ‘I want to be rich’.

Those things (unfortunately) don’t happen by themselves. Growing is not a strategy, it’s a consequence. When someone includes growth in their strategy, there should be an orange light starting to blink.

That does not mean that you cannot use the word ‘growth’. I use it a lot in the analysis phase – for example, when you talk about growth areas of the business or when you look for growth platforms – areas where you can reach potential that will give you additional profit.

3. Know your industry before you develop your business strategy

A company is not an island – it’s part of a larger ecosystem, an industry. Each industry has its own characteristics, its own structure. This structure and the relative position your company has within the industry determines profitability. Certain industries have a higher return than others.

Your thinking about the industry and industry competition will determine your thinking about your strategy – how you are going to compete within the industry.

The better you know and understand the industry, the better you will be able to determine elements that will make you stand out, be unique and reap a higher average return than the industry average.