Businessess Strategy by Brian Tracy

The “Principles of Effective Strategy”

To succeed, put these seven principles to work:

1. “The principle of the objective” – Success requires having a firmly established goal. You must know how you will accomplish it, and your employees must know what they are supposed to do. Alexander’s goal was to become ruler of the world. That required defeating the Persians and getting rid of Darius. Alexander communicated his battle plan and strategy to his generals, so everyone would know what actions to take.
2. “The principle of the offensive” – Napoléon Bonaparte said, “No great battles are ever won on the defense.” To succeed, go on the offensive with “new products, new services, new processes and new ways of doing business.” Alexander knew the only way to defeat the Persians was to take the fight directly to them. To beat your competitors, do the same to them.
3. “The principle of the mass” – Generals defeat enemy armies by massing their forces “at a critical point at a critical time.” Alexander beat the Persians by creating a breach in their lines that he could exploit. In business, take advantage of this principle by delivering the best products or services in your niche. Don’t expand into other product or service areas until you lead your niche market. According to Bill Gates and Warren Buffett, the most important element in business is focus. Always focus on the products and services that your company does best.
4. “The principle of maneuver” – Generals who prevail outmaneuver their foes, just as Alexander outmaneuvered the Persians. Expert strategists remain flexible; they consider “what might happen” and plan accordingly. Be ready to “move forward, backward and sideways in the market, if necessary.”
5. “The principle of concerted action”– Teamwork is paramount. Alexander knew he could count on his troops because he trained them to be the world’s most disciplined soldiers. Promote a culture of teamwork where employees always speak of “us, we and our” and see the company as a “logical extension of themselves.”
6. “The principle of surprise” – Alexander surprised the Persians and kept them off-balance. Do the same to your business rivals by introducing innovative products and services and by using novel strategies and processes.
7. “The principle of exploitation” – Once you achieve your goals, don’t stop. Keep moving ahead to exploit your advantage. Your competitors will do everything they can to make up lost ground. Stay on the offensive.

Five Critical Strategic Questions

Strategize to improve your company’s return on investment, secure a new position in the marketplace, exploit opportunities and spearhead new actions. To carry out strategic planning, ask: 1) What’s your current situation? 2) “How did you get to where you are today?” 3) “Where do you want to be in the future?” 4) “How are you going to get there?” and 5) “What do you need?” That is, can you identify the assets, such as “skills, resources or money,” that you require for achieving your goals? Strategizing includes conceptualizing an “ideal future” for your company and working backward to figure out the steps required to achieve that future.

Strategic Planning Principles

Include everyone who will directly implement your strategic plan in the process of formulating it. The senior executive “ultimately responsible” for implementing the strategy should participate in the entire process. Otherwise, this executive will have no investment in the strategy and may prove reluctant to fully support implementation. Corporate strategy concerns “products, services, customers, markets, finances, people, technology and production capability.” Whatever your focus, make sure your goals are clear. Communicate them to everyone in your company and to your shareholders, stakeholders and consumers. Follow four strategic planning principles:

1. “Specialization” – Focus on what you do best. If you expand beyond your core products or services, move only to an “adjacency area” – a new product or service line that expands your core business.
2. “Differentiation” – Separate your firm and its offerings from your competitors.
3. “Segmentation” – Target the ideal customers most likely to buy your goods.
4. “Concentration” – Apply your resources where they will do the most good.

“Formulation and Implementation”

The Kepner-Tregoe consulting firm suggests a five-phase plan for creating and implementing strategy:

1. “Strategic intelligence gathering and analysis” – Use only the best data available.
2. “Strategy formulation” – Include a time frame and an endpoint. As you formulate a plan, catalogue your “current, modified and new products.
3. “Strategy master-project planning” – List and prioritize all your projects. “This pool of projects is your master plan for the strategy.”
4. “Strategic implementation” – Put the proper structure in place. Align your strategy with your organizational structure, and communicate your strategic plan.
5. Monitor your strategy – Update as necessary.

“First…think about and agree on the foundation principles of your business.”

Everyone in your organization must team up to make your strategy work. The business units must integrate their actions. Offer incentives tied to the strategic initiative to motivate employees. Implement the necessary controls to keep everyone on track.

The strategy you choose determines who your rivals will be; their responses will require further strategizing. Make the effort necessary to ensure that your customers view your products or services as their best choice.

“Driving Force”

Consultants Benjamin Tregoe and John Zimmerman stress the importance of identifying your driving force, that is, your primary strategic concept and your “quantitative principle.” This force is the “point of the spear” of business planning. Each of these factors can be a driving force:

• “Product or services” – Align your offerings to fit the scope of your market.
• “Market needs” – Provide what consumers want.
• “Technology-driven driving force” – Structure your business by using the latest technology.
• “Production capability” – Ensure that you possess the capability to keep up with your projected growth. Ikea, for example, constantly creates more and improved furniture for greater numbers of consumers in markets that keep growing.
• “Method of sales” – You could use “retail, wholesale, direct mail, Internet, distributors or manufacturer’s representatives.”
• “Size and growth” – For example, automaker Toyota’s motivating force is to consistently increase its market share. As sales grow, Toyota applies “economies of scale” to lower production costs and increase profits.

“KWINK”

Sometimes, the most important strategic insight to embrace is “knowing what I now know” (KWINK). This means honestly accepting that certain initiatives – no matter how much you want them to do well and no matter how extensive their sunken costs – aren’t working. When you identify dysfunctional or underperforming products or services, ruthlessly discontinue them or divest them.

“The most successful men and women in the world seem to be those whose values are clear to them. They refuse to compromise them for any short-term gain or advantage.”

To move forward, you may have to abandon products or functions that worked in the past. Having to divest should never make you cautious or lead you to think small. Be ready to create an entirely new market if you find a promising niche, product or service. When Netscape introduced its web browser – which reshaped the video rental business, consumer viewing habits, film and television distribution and audience polling – it fearlessly unveiled a “new product for unknown customers.”

The Importance of “Your Corporate Mission”

Strategy should carve out and delineate the path to accomplishing your mission, whatever it may be. Stating a crystal-clear mission requires knowing “your values, your vision…and your purpose.” Use a specific and measurable mission statement to spell out your goals to everyone in your organization.

“Get the facts. Get the real facts. Not the apparent facts, the hoped-for facts, or the obvious facts. Get the real facts based on analysis. Facts don’t lie.” (Harold Geneen, ITT)

You can start with a generic mission statement as a model and insert your company specifics. A generic statement might read: We will provide the finest example of our product to the correct market to create significant improvements in our consumers’ professional and home lives. We will always upgrade the quality and functionality of our offerings and never stop seeking out, finding and selling to new and ever-more loyal consumers. We will increase our market share and profits by at least 20% annually.

“Peter Drucker once said that, even when a business is starting out at a kitchen table, if the business does not dream of world leadership, it will never be a big success.”

Your strategy should reflect your company’s qualitative – never quantitative – values and foundational principles, such as “integrity, quality, customer service, innovation, entrepreneurship and profitability.” Your strategy should also support your vision. The right strategy can make your vision – however ambitious – a reality.