Why is business strategy so crucial?

As a business leader, you’ve likely spent considerable time crafting plans for success. But how much of that time is dedicated to strategic development? Do you follow a clear process, or do you dive in and adapt as you go?

For many business leaders, action often overshadows strategy. A Bridges Business Consultancy study found that only 20% of leaders review strategy implementation monthly, while 25% do so just once a year. Just 7% of organizations excel in strategy execution, and only 28% have an effective measurement system in place.

This is a huge, missed opportunity. Without a strategy, you’re not running a business; you’re working without direction. A strategic plan is the backbone of success, giving you the confidence and clarity to turn your vision into reality consistently.

No surprise that top consulting firms have dedicated teams for strategy implementation. But it doesn't have to be daunting or time-consuming. This article covers a framework and mindset that, with a little upfront effort, can help you develop a robust strategy. This strategy serves as a living roadmap, guiding you to success through every twist and turn. 

When you do this right, you’ll have a new sense of confidence everyday that you’re making progress, you’ll understand why you’re doing what you’re doing, and you’ll have a clear concise story to describe your strategy to any audience.

To truly harness the power of strategy, we need to delve into some of the major components that make up an effective strategy. Let’s explore the key elements that will lay the foundation for your success.

Ok, so what are your top ideas to help my strategy?

1) Know what strategy is, know the components, and how they work together.

The first crucial piece of advice I have is that as the leader, you have to be crystal clear on what strategy is, the different components, and how they work together. A lot of leaders get caught up at this point because the first instinct is to dive straight into tactics.

Tactics are specific actions that will be done to achieve the strategy. Examples include marketing campaigns, website design, social media, discounts and promotions.

A proper example of how strategy and tactics work together is this:

• Strategy: Expand market share by targeting a younger demographic within 6 months.
• Tactics:
  • Launch a social media marketing campaign on platforms popular with younger audiences.
  • Partner with influencers who appeal to this demographic.
  • Offer exclusive promotions and discounts for students.

This is a good basic strategy. It includes the crucial parts of the plan such as what the goal is, how we're going to get there (what to do and what not to do), and when we expect to have first results (good or bad). The what is expand market share, the how is targeting younger demographic, and then when is within 6 months.

The strategy, though, is not the tactics. This is hard to overcome, if it takes time to get used to this that's OK. Even now I sometimes find myself jumping straight into tactics and have to remind myself that strategy is different. It seems simple, however this step is critical because once you can mentally keep things in their proper place, it will allow your brain to keep track of everything and you will begin to see the bigger picture faster.

There are other components of strategy too such as resource allocation, detailed planning, and more. I'm not covering everything in this article, the point of this article is to give you the mindset and skill to know how to place each component whatever it may be. Once you have the mindset, the rest becomes easy to fit into the plan.

Now, if you're thinking one of the following things I wouldn't blame you. I've thought these same things at one point or another:

1. I don’t have time to do this, I need to start getting results now.
2. That’s too simple and it’s not needed. We already know what we’re working toward.

I’ve learned to overcome these thoughts even as painful and slow as it might feel because inevitably what happens is this:

1. You end up spending more time on the project because you didn’t have a good plan and some, or most, of the results end up being meaningless.
2. You miss critical pieces of information that can drastically alter your plan. Using the example above again, this would be like assuming that you can expand market share by running more advertisements when really you should be focused on demographics. But, because you didn’t spend time on the strategy, you went down the wrong path.

Investing time upfront to ensure a thorough and clear understanding of your strategy and its components can significantly boost your chances of success down the line. This foundational clarity will steer your actions and decisions, keeping you aligned with your ultimate goals and paving the way for meaningful progress.

2) Make sure each strategy is clear and specific.

Over the years, I've realized that we can only accomplish one or two major initiatives within a year—those pivotal actions that truly make a difference. These are the milestones that, when you reflect on them, define the success or failure of the year.

Here's what I want you to concentrate on when setting your strategy: focus on what truly moves the needle. It's crucial because you don't want to waste time on efforts that won't make a significant impact. Forget the minor details; hone in on the elements you know will drive real change and build your strategies around those key areas.

And yes I did mean more than one. In each of these critical areas you should have a strategy set up. I've found it to be absolutely true that what gets measured gets improved so you need to have multiple strategies, one clear and concise strategy for each of your key goals.

Now, sometimes it can be challenging to nail down what exactly the critical goals and objectives are (Hint: try using the '5 Whys' method I discuss later), however, a general rule of thumb is that regardless of what goals you choose they should be SMART goals. If you’re not aware, SMART stands for:

• S – Specific
• M – Measurable
• A – Achievable
• R – Relevant
• T – Time-bound

Most importantly, when crafting a strategy ensure it has a specific, measurable objective and a clear timeline. Relevance is key too obviously, but be mindful of the achievable aspect—sometimes, aiming too low can stifle growth and innovation.

As a leader, it’s your job to push the boundaries without venturing into the realm of the absurd. For instance, aiming for a 10% market expansion might be reasonable, while targeting 50% could be overly ambitious. Striking the right balance is crucial: you want to challenge your team without alienating them. Remember, a little discomfort is where growth happens.

But, how do you know when you've got a good strategy defined? You’ll know you’ve nailed this when you can explain your strategy in a simple and quick manner, much like an elevator pitch. Picture this: you step into an elevator with the CEO or a crucial investor, and they ask:

“How are you going to hit your sales targets this year?”

In the 30 seconds before they reach their floor, you must succinctly lay out the key elements of your strategy. Your explanation needs to be clear, concise, and captivating, making them eager to learn more. This is how you should approach strategy—clear, specific, and impactful. Leave the details and tactics for later. If they’re interested, they’ll continue the conversation off the elevator. Always remember, your strategy is the vision; the tactics are the actions to get there.

3) Start at the top.

The next piece of advice is to start as broad as possible with your strategy. Think top-down, not mid-down or bottom-up. A common mistake—one I’ve made myself—is starting too low with the strategy. For instance, setting a goal like opening five new locations this year might seem like a solid objective, but is it truly the right move?

To avoid this pitfall, I recommend using the Five Whys methodology created by Sakichi Toyoda, the founder of Toyota Motor Corporation. This technique involves asking "Why?" five times to identify the root cause of any issue, ensuring your strategy is truly aligned with your core objectives. So, using our example:

• I want to open 5 new locations this year – Why is this important?
• Because then we can expand our market share – Why is this important?
• Because then we can attract new customers – Why is this important?
• Because new customers will give us new sales verticals – Why is this important?
• Because then we can leverage our team resources more effectively – Why is this important?
• Because then we can increase our profit margins.

So, by doing this exercise, you can see that we’re starting pretty close to the bottom of what really matters to the company at this moment. We got all the way up to increase profit margins.

Now, if it turns out that profit margins are the most important thing then you should start there with your strategy and then you can explore all the ways to achieve that. This is what going top down means. It means getting all the way to the very top issue and focusing on that first.

Hopefully you can see by this example that if we had started in the middle and focused there, we might have totally missed things that could drive the ultimate goal of increasing profit margins.

Maybe, for example, it would be better to implement new software for the team to use to increase their leverage. That is something that would have never come up had we not done this exercise because we would have been set on increase market share or open 5 new locations.

I hope you can start to see why top-down strategy is so important. It ensures you’re focused and won’t waste time and resources on tasks that won’t move the needle.

Furthermore, this approach is beneficial even if profit margins aren’t directly under your purview. For middle managers, it’s a powerful way to align with senior executives by demonstrating a clear line of sight to profit margins. This level of thought and transparency is appreciated, fostering meaningful discussions about how your work contributes to the company’s overall objectives.

For business owners, this method ensures you’re zeroing in on the key areas that matter most, conserving resources for what truly drives success. If you have investors, this strategy helps align your efforts with their expectations, similar to how you’d align with a team of executives.

4) Put the plan into action with resource allocation.

Next, let’s explore how your strategy becomes a powerful tool when it’s time to put your plan into action. There are two main ways this unfolds:

Firstly, having a clear and concise strategy makes it easier to communicate overall expectations, goals, targets, and general parameters—such as what to do and what to avoid. It helps your team, or even just yourself if you’re working solo, understand the big picture and the ‘why’ behind the work.

Secondly, a clear strategy empowers your team to achieve results that you might not have reached on your own. By seeing the bigger picture, they can come up with innovative ideas or different approaches to achieve better results, or even save time and money.

One of the best advantages of a well-crafted strategy is its high-level focus, which leaves room for flexibility and adaptability. This is why diving straight into tactics isn't advisable. Instead, define the overall goals and broad parameters, and let your team work their magic.

Over time, you'll probably find (like I did) that it's critical to the company ecosystem to have the leader (you) focused on the top level ideas while the team handles the lower level tasks. Said another way, delegation is key and the strategy is the key tool for delegation.

A great strategy also provides ample opportunities for feedback, allowing you to pivot quickly if needed. If problems arise, you can target the specific areas of the strategy affected and swiftly analyze how that might change things, thanks to your thorough understanding of high-level connections.

For example, if your team suggests that targeting an older demographic might be more effective than a younger one, you can immediately assess how this impacts product design, marketing campaigns, and more—all while keeping the overall goal of increasing profit margins in mind. This enables you to shift resources and assign tasks swiftly and with clarity.

5) Tell the story, build confidence over time.

My final piece of advice is to harness your strategy and the process behind it to craft a compelling narrative about why you’re doing what you’re doing. As a leader, it’s vital to exude confidence in your work because that confidence will be contagious.

Leverage your strategy to tell this story. When done correctly, every component of your strategy will be transparently laid out for all to see. High-level topics? Covered. Detailed aspects? Right there. Feedback or proposed changes? Instantly clear which parts they impact, allowing for meaningful discussions.

A well-defined strategy shifts the focus away from you and onto the strategy itself. This has numerous benefits. It facilitates objective discussions, removing the need for personal defenses and making constructive criticism easier to accept.

When changes are necessary, they’re not tied to you personally, which is crucial because consistency breeds perceived competence. Flip-flopping can be seen as indecisiveness, while a consistent, well-thought-out strategy process maintains your credibility because you're not changing, the strategy is. You're deploying the same proven successful methodology as always.

Everyone wants their leaders to make the right calls and look good doing it. While perfection is unattainable, a solid strategy process can position you as the storyteller and guide that knows how to take on challenges and get results. Over time, this approach will earn you respect and confidence from others, as they become confident in your ability to consistently and methodically create successful strategies that can pivot, adapt, and meet their goals consistently.

Next Steps:

The unique advice I've shared comes from years of experience. Keep it in mind as you navigate your business journey. With practice, you'll begin to see beyond tactics to opportunities, connecting the dots faster and achieving more consistent success.

If you’ve found this article helpful, please take a few seconds to share it with your network. Also, consider following me on X—I love engaging with my community there and would be delighted to answer any questions you might have.

Finally, I want to mention one more thing if you’re eager to go further improving your strategy skills. There are frameworks available that some of the top consulting groups use to streamline this strategy process. On this page, I have put together a package that contains custom frameworks that I have adapted and used myself as well as my unique instruction on how to achieve everything in this article and more using the custom frameworks. Please consider purchasing it, if you want to get ahead and move fast this is the best way to do it.