According to the Merriam-Webster Online Dictionary, “strategy” is a careful plan or method. Another way to look at this is to say that strategy is a pattern of carefully chosen options, choices or alternatives that will contribute to the long-term success of your organization or business.
These patterns of choices are based on your mission and driven by a few key factors that differentiate you from the rest of the pack. These key factors, also called drivers or key success factors, are what you invest in and what you build your strategy around.
A driver-focused strategy helps customers tell you apart from other companies like you. Two companies in the same industry can have different drivers. If they do, then their strategies will look different. If they have chosen their drivers well, and executed a strategy based on the drivers, the business will be successful.
Let’s look at two different strategies for similar companies.
Bank No.1 focuses on commercial customers. Convenience is a key driver. Bank No. 1’s strategy includes providing several special lines for commercial customers at the drive-up window so no one has to wait.
This bank invests time and people in making sure that credit card transactions are promptly and accurately processed for the businesses it serves. Customer concerns about credit card transactions are handled promptly by bank personnel to minimize cash flow problems for customers.
The bank is open from 7 a.m. to 6 p.m. Monday through Friday and from 9 a.m. to noon on Saturday and Sunday. Specially trained security guards are onsite for after hour’s deposits by customers.
This bank has decided that convenience drives its business. Based on this driver, it makes choices to invest in the people, processes and systems that support convenience to its target market of commercial customers. These choices are its strategy.
Bank No. 2 caters to an ethnic, non-commercial customer base. Service has been identified as a key driver.
Strategies to support this service driver for the identified customer base include hiring bilingual employees who speak the native language of customers, Web and written materials written in two languages and customers’ ethnic holidays observed by the bank.
Checking accounts are free. Customers are often not available to bank until the evening hours so most branches are open until 8 p.m.
The local school teaches a third-grade class about money and a bank representative attends the class to help students open savings accounts and set up savings plans. Weekly deposits by students can be as low as five cents.
This bank has decided that service to its target market drives its business. Based on this service driver, the second bank invests in the systems and process that will support service and rejects investments in non-service oriented options.
The choices this bank makes are its strategy.
Because both strategies are driver driven, customers can readily identify a bank that best serves their needs.
Banks that try to be all things to all people don’t differentiate well from one another. Customers will believe that one is as good, or as bad, as the next. These same principles apply to any business or organization.
Understanding what drives the business is critical to successful strategy development. As you develop your strategy, it’s important to make sure your choices make sense and fit together well.
If I’m Bank No. 1, I would think long and hard before removing the evening security guard when I’ve determined that 30 percent of my customers actually bank with me because of this convenience.
Sometimes you can be pulled off course by issues outside your control. Among these can be work force issues, market trends, customer demands or governmental dictates. You may find yourself responding to these with strategies that get you through the day.
If you take the time to go back to figure out the connection between what you actually did and what you said you were going to do, it’s sometimes hard to find any connection between the two.
Here is a place businesses get tripped up. Businesses need to be able to make changes to existing strategy to adapt to changing conditions.
As leaders, it’s your job to make sure the new choices fit with the old choices and into a pattern that makes sense for where you want to go. If you don’t take the time to stop and talk to others in your organizations about the strategies that are emerging you can lose resources as your strategy becomes disjointed.
You can lose key people because they forget why they are connected to your business. You can lose money because you are spending it on things that don’t support your direction. You can lose market share because you’ve forgotten who your customer is.
Strategy is a pattern of choices that business leaders make, alter, monitor and communicate throughout their organizations.
Paying careful attention to a few key drivers while policing emerging strategies for consistency with the businesses blueprint will assure bottom line success.
Joan G. Saunders is a senior faculty member at the Center for Creative Leadership. She can be reached at email@example.com or 329-7856.