Here are best practices in developing business strategy:
1. Define a real objective.
2. Identify your options.
3. Evaluate your options.
4. Choose the best option.
5. Implement it effectively.
Let us discuss each of us in detail below:
Best Practices in Developing Business Strategy
1. Define a Real Objective
To develop an effective business strategy, you must define a real objective. Do not confuse the goal with the objective. The goal is what you want to achieve, and the objective is why you want to do it.
It’s easy to confuse these two things. Because the ultimate objective of any business is to make money, many people automatically assume that they should start with the goal of making money. But that is not always true.
In some situations, your goal may be to increase brand awareness, or promote customer loyalty, or reduce costs, or improve employee satisfaction, or advance some other organizational or social goal.
The best way to think about it is this: The purpose of a business is to create a customer. You can then obtain whatever goal you want by serving customers well.
Remember: A customer is the ultimate objective of any business because without a customer there is no business.
2. Identify your options.
There are a lot of things you can do to make money. You can make and sell products. You can provide services. You can invest in other companies. You can buy and sell raw materials. You can trade financial instruments such as stocks, bonds, futures, options, and so on.
The key is to find the best way to get where you want to go from where you are now. If you know how to get there in a straight line, that’s fine. But if not, then you need to be able to identify the options for getting there indirectly.
For example, we know that our objective is to make money by serving customers well, but we don’t necessarily know how to get there immediately and directly. So we look for indirect ways of achieving that goal by identifying our options for achieving it indirectly.
3. Evaluate your options.
Once you have identified the option that looks like it will get you where you want to go most effectively, it’s time to evaluate those options against each other based on four criteria:
- Cost: How much will it cost?
- Risk: How risky is it?
- Time: How long will it take?
- Opportunity: What are the chances of success?
It’s important to remember that evaluating options requires more than just looking at them individually. It also requires comparing them with each other on these four criteria and then choosing the one that has the best score on each one of them.
4. Choose the Best Option
After evaluating your options against each other based on the four criteria listed above, you should choose the option that’s best for your needs and situation.
5. Implement It Effectively
This step involves taking action based on the decision you made in step 4. It involves preparing yourself mentally for implementing this decision as well as making whatever financial, human resources, or other organizational preparations are necessary for implementing it effectively (for example: hiring new employees; setting up new systems; purchasing new equipment; developing new products/services; implementing a marketing campaign; etc.)