By Tim Berry, SBA Guest Blogger
One of the ironies of strategy, especially in small business, is that it can seem deceptively simple when it’s done right. When it works, it seems like it was always obvious. And yet there are people doing PhD theses on business strategy.
It’s too easy to see when it’s done wrong. For example, the restaurant that wants to appeal to gourmet foodie couples but also has a kids’ menu. Or the idea of discount day-old sushi. Or the computer business that touts great service but fails to install and check the hardware it sells, then hounds customers for slow pay.
Strategy is what you’re not doing. My favorite metaphor is the sculptor with a block of marble — the art is what he chips off the block, not what he leaves in. Michelangelo started with a big chunk of marble and chipped pieces off of it until it was his David. Strategy is focus.
Strategy has to be easy to define. I like with my own identity-market-offering (IMO) method, which is pretty simple. But I’ve also worked in depth, during my consulting years, with several competing strategy frameworks, and every one of them works well if it’s applied correctly and executed.
Every business has its core identity. How are you different from others? What are your strengths and weaknesses? What is your core competence? What are your goals?
As an example, imagine the difference between a bicycle retail store owned and operated by a former professional bike racer, and another one owned and operated by a couple with children who like bicycles as a family activity.
Your business is unique. Think about your goals, your definition of success, and of courses your location, your resources, everything that makes you different. That’s identity.
Your identity influences your choice of target market. The bike racer focuses on attracting enthusiasts, offering expensive high-end bicycles and equipment. The couple focuses on attracting parents with kids, concentrating on medium-level bikes, trailers, and family-friendly accessories.
Keep your business focused on specific target markets. That bike racer shop owner has to know his products are too expensive for the families, and the families bother the high-end enthusiasts. The family bike shop can’t scare away its target market with very expensive racing bikes.
Your business offering is your product or service. You can already see with the bike shop example how one shop needs one kind of inventory and the other needs a different kind. That’s strategy at work. Your identity influences your choice of market, which influences your choice of product. Your choice of product influences your choice of market. They have to work together.
Understand that you can’t do everything. The bike shop that caters to families and racers is likely to fail. You can’t credibly offer high-end bicycles at bargain prices in a family-friendly atmosphere. If you say you do, nobody believes you anyhow. So you have to focus. Make this focus mesh with your choice of key target customer and your own business identity. All three concepts have to work together.
Roll Them Up Together
These three things are your business strategy. Don’t pull them apart. Don’t take them one at a time. Don’t ever stop thinking about them. Remember, in planning as well as in all of business, things change. Keep watching for change.
About the Author:
Founder and Chairman of Palo Alto Software and bplans.com, on twitter as Timberry, blogging attimberry.bplans.com. His collected posts are at blog.timberry.com. Stanford MBA. Married 44 years, father of 5. Author of business plan software Business Plan Pro and www.liveplan.com and books including The Plan As You Go Business Plan, published by Entrepreneur Press, 2008.