“By deliberately seeing (new) ways to more effectively reach a broader range of customers, (businesses like)…IBM have seen significant bottom-line results” – David Thomas, Professor of Business Administration, The Harvard Business School.
It may be important to begin with a clarification of terms: What actually does ‘business strategy’ mean? What are its essential components that make it ‘tick’ and remain sustainable? Indeed, how are the ‘components’ intertwined with strategic diversity, thus ensuring the continuity of the ‘ticking process’ leading to business growth and sustainability?
There are a range of suggested ‘components’ put forward by a number of business professionals, entrepreneurs and academics, all of which are arguably key to ensuring sustainability, however I feel that those suggested by Ian Heller, and which I have adapted below, are very pertinent. Heller suggests five components of business strategy – I have added a sixth:
Component 1: The business’s core competencies
The identified core competencies of a business constitute not just the starting point from which the ‘mission statement’ and ‘vision’ of the organisation is developed, but importantly, is that from which the business identifies the corresponding capabilities needed to deliver the vision.
However, for the core competencies to effectively deliver the strategy of the business, they must be designed in response to the following 3 conditions:
- They are directly linked to customer benefits
- They are not easy for competitors to imitate
- They can be leveraged widely to a variety of products and services
All 3 conditions are driven directly by the customer need, followed by the strategic intent of the business to develop a brand, culture, expertise and a range of organisational processes linked to those competencies to deliver those needs to meet customer demand.
Put it this way, Marks and Spencer’s (M&S) mission statement is: To make aspirational quality accessible to all. As a customer, does this surprise me? Not really, because most people I know, like me, vouch for how qualitative M&S products are – particularly their food!! Now have a look at their competencies and see how ‘quality’ is mainstreamed throughout.
Note: A businesses’ core competencies must be reflective of marketplace need.
Component 2: The business’s USP as differentiator from its competitors
Intricately linked to a business’ mission statement, the Unique Selling Point of a business is that which literally distinguishing it from its competitors, its competitive edge, if you may: What is it that differentiates your business from its competition? Why should customers choose you over similar providers?
The answers to these questions are again derived from your customer needs, and the strategic plan of your business to respond to those needs accordingly.
Note: A businesses’ USP must be inspired by, and be in response to, meeting customer unique requirements
Component 3: The industry in which the business intends to compete
A core component of any business strategy is to initially be clear and understand what type of business you are? Are you a consulting firm? A recruitment company? An auditing company? A financial services adviser? Or are you all of the above wrapped into one business? What type of business are you? Why are you this type of business and not another type?
These questions are really all about discovering your business ‘identity’ and involves a great deal of ‘soul searching’, engagement with customers, market analysis to identify the competition, as well as understanding existing gaps in the marketplace, etc
Firmly answering these questions is ultimately driven by what has been identified as a particular customer need and from which the organisation positions itself as the customer-focussed organisation with the capability and expertise to meet those needs off the back of an informed and considered business strategy.
Note: Choosing where to compete for products and services has to be based on personal introspection and interpersonal engagement with the customer
Component 4: The initiatives it intends to implement in connection with its development as a business
What business functions will you need to assist resource your growth strategy as a business? For example, how will HR, Marketing, Finance, IT and OD, live and breathe the competencies, the mission and vision of your organisation ensuring that it delivers to the letter, the needs of your customer?
Note: All business functions must be driven by the mission and vision of the organisation.
Component 5: The business’s financial forecast based on its proposed and working strategy
How will your proposed strategy deliver financial benefits for the business? What needs to be in the strategy to ensure profitable outcomes? Many organisations tend to focus primarily on the budget and from the budget develop a strategy, rather than the other way round. Design your strategic plan first, prioritise according to what the customer needs, and then assign financial values or forecast projected results accordingly. This way, you are more prone to incorporate the key USP of the company into the design of ‘relevant’ products and services driven by your customer base ensuring greater probability of greater returns.
Note: For organisational strategy to deliver financial dividends, it must be reflective of customer need and importantly have the ingrained flexibility to forecast arising customer changes
Component 6: The business’s people or talent
What ‘type’ of talent do you need to source to deliver your organisational vision? Do their behaviours, skills and experiences represent your organisational vision, mission and core competencies aligned to meeting customer needs? This is of fundamental importance as a businesses’ people are its core asset and are to be regarded as the ‘eyes’, ‘ears’ and ‘heart-beat’ of its customers. Indeed, it is the people who are key to ensuring that the businesses’ strategy is relevant, representative and fine-tuned to meet the needs of the customer, thus ensuring the sustainability, growth and competitiveness of the organisation.
Note: A successful business strategy is one that connects with, and has the ‘heart’ of its customers beating through its own people
From an overview of the 6 components to business strategy discussed, and bearing in mind David Thomas’ introductory quotation, there is one common thread running through all components?? – The Customer. Indeed, I prefer to refer to ‘the customer’ as the human person. And herein lies the connection between diversity and business strategy: The human person or the ‘customer’, for which your business vision was initially conceived and subsequently concretised via the 6 components above, is in fact a unique person with diverse needs resulting from the socio-economic and political conditions that interacts with their environment, background, experiences, skills and abilities, which in turn influences their desires and subsequent choices they make with regards products and services. Any business strategy, regardless of the complexity of it, that does not start and end with the customer in mind, is just that – a strategy.
Diversity therefore is the bridge between the workplace and the marketplace – where the customer is located. Indeed, it is the fundamental point of departure for meeting the ‘common denominator’ on which all successful business strategies are built: the individual. Understanding the ‘individual’ customer is the business equation of all equations for achieving sustainability, profitability and competitiveness. This is the formula of all business strategies and the core principle that leads to bottom-line growth and general overall positive results. For when ‘diversity’ is stripped down to its bare essentials, it is really all about understanding and positively managing difference toward creative and productive ends. Its absence or under-development is a gapping hole in any organisation’s business strategy.