SIGNS THAT IT MIGHT BE TIME TO INVEST IN SOME LONG-TERM THINKING

You’ve worked hard to build a successful business, one that you’re proud of, that reflects who you are as a business leader. Whether you started from scratch or took over an existing business, whether you’ve done so independently or within the structure of something larger, you hustled and turned your sweat and tears into something great. Now what?

Since turning independent, I’ve relished the opportunity to consult for companies that couldn’t have afforded to work with a McKinsey, Bain or BCG. The work has a different flavor to it (and, must be honest, is frequently more fun!) beginning with less certainty around the question of: Do I even need a strategy? And how is it different than what I have today?

But Wait: Don’t I Already Have a Strategy?

“But I already have a strategy!” you exclaim. Of course, there’s never been a business leader who doesn’t think they have one. After all, you move with purpose and you’ve delivered results. But if your “strategy” amounts to a description of the business you intend to build or a commitment to tirelessly pursue the opportunities in front of you, you’re missing the full power of a great strategy. And you may need it to get your business to the next plateau.

A great strategy is a roadmap. It is a collection of hard-to-reverse decisions you’re making now in the face of an uncertain future. It articulates what you’re good at, which customers you want and why they’ll choose you, and what you need to build to continue to be successful. A few signs that suggest your current strategy may not be up to the task:

• Your strategy lives in your head. If your strategy isn’t written down, it almost certainly hasn’t been communicated crisply and clearly to your team and other stakeholders. More to the point, it’s not serving the critical function of aligning your team on a common set of objectives and an approach to achieve them. And that means wasted energy, something few small- and medium-sized enterprises (SMEs) can afford.

• Your strategy is a financial aspiration. You want to grow, gain new customers, hit a profit target. These are important objectives and kudos to you if you’ve taken the step of quantifying and aligning your team around them. But if you’re silent on how you will achieve your objectives, your strategy has little power to guide the operational choices you and your team confront every day. The result is endless debates or, even worse, conflicting decisions that reduce your chances of achieving those very same financial aspirations.

• Your strategy doesn’t discriminate between opportunities. Some of the hardest and most important work a great strategy does is tell you what NOT to do. To be effective, it must give you guidance on what to say “no” to. It’s about prioritization, about knowing where the highest return on your teams’ efforts come from, about where the elements that make you unique (more on that below) sync up best with the needs of the marketplace. Without this, your business is at risk of chasing every shiny object.

• Your strategy is silent on marketplace trends. If strategy is a collection of decisions made in the face of uncertainty, great strategy is built on a solid view of what that future could be. Great strategy doesn’t ignore uncertainty or throw up its hands in a “we can’t know that anyway” attitude. Rather, it contemplates the future purposefully, with an eye towards characterizing and minimizing the uncertainty and prioritizing decisions that are robust to a range of possible, well-defined outcomes. The chief mechanism for doing this is through trends – consumer, customer, competitor, supplier, regulatory, political. If your strategy hasn’t explored these, it’s likely the decisions you’re making today won’t set you up well for tomorrow.

• Your strategy ignores competitors. If you’ve been leading your company since its inception, there’s a good chance you’ve been doggedly focused on gaps in the marketplace. You’ve listened to your customers and rushed to fill in the spaces where their needs weren’t being met. This can be a remarkably effective way for startups to find their niche (and trial-and-error here is often the impetus of that happy dance known as the Startup Pivot), but you’re not a startup anymore! In fact, your success at building a business in your space all but guarantees that competitors will be coming your way. So, your strategy needs to address the reality of competition, painting an honest picture of your competitors and their strengths relative to your own, defining your true sources of lasting competitive differentiation and segmenting the customer base in a way that allows you to focus your sales efforts on those most likely to appreciate what makes your business unique.

If one or more of these applies to you, you might be inclined to hang your head in shame. Please don’t! You’ve successfully brought your business to where it is today and that wasn’t an accident. There are times when every leader needs to recognize that what got them to where they are today won’t get them to where they want to be tomorrow. A great leader has the humility to act on that insight.

Reasons To Get Strategic Now

Ok, ok, maybe it’s true that you don’t have a strategy or don’t have one that’s robust enough to lead you to where you want to be. But is now the right time to build one? I’ve noticed a couple triggers that tend to motivate SMEs to (re-)visit their strategy.

• Your team is getting big, bogged down. As your business has grown, you’re finding the need to expand your team and push down decision-making. If that results in inefficiency or lack of alignment, it may be time to invest in strategy.

• You have more opportunities than resources. Success breeds success, but now you have too many opportunities and too few resources to deploy against them. If your most scarce resources (whether that be talent, capital or executive time) are spread too thin, it may be time to invest in getting the prioritization you need.

• Your business trajectory is flattening. As penetration of your existing product or service increases, it becomes difficult to sustain growth. A new strategy can help you identify your next phase of value creation.

• Your market is being disrupted. Something substantial is changing around you – maybe it’s a new trend or a new competitor – and you need to address the shifting landscape. You’ll need to dive into this disruption to make sure you understand it and explore what in your strategy might need to change to minimize the risks and capitalize on the opportunities brought about by this market shift.

Special Considerations for Strategy Formulation in SMEs

Strategy formulation is no small investment for any company, and it can be especially demanding for SMEs when leadership responsibilities are spread across a smaller number of people. While there aren’t special shortcuts – SMEs need to answer the same strategic questions as the big guys – there are ways to shape an approach that prioritizes efficiency and takes advantage of a tight leadership team to make strategy formulation a highly-effective investment. (My thoughts here will be the subject of a future post.)

The tangible benefits of a great strategy include aligning your team and stakeholders, clarifying priorities, guiding investments, addressing threats and uncertainties, and articulating your enduring value creation potential. If you are missing out on any of these, it’s probably time to make the leap.

Are you a small- or medium-sized business owner? How do you feel about your strategy? Do these signs resonate with you? Contribute your comments below and don’t forget to subscribe to get notice of future blog posts.