In part2 of the small business strategy guide, we cover:

  • Objectives.
  • Roadblocks.
  • The standard strategy process and why it fails.
  • The market analysis process.
  • Value chain.
  • Analysis – the key steps.
  • The deliverable.
  • The need.
  • The competition.
  • The core.

If you missed it, you can read Part1 of the strategy guide here.

What Are Your Objectives?

In broad terms what are you going to need to do to achieve your goals? These are your objectives. They must be quantifiable (1000 of) and time-limited (by August 2023). It is best to start with your goals and cascade downwards, defining objectives as you go.

It takes time to complete this process and it is unlikely you will be able to complete it in one sitting. Keep editing until it all makes sense. Don’t worry about how you are going to achieve those objectives, that comes next. Do not get drawn in to writing down how you will achieve something, that is a tactic not an objective.

As you move through the strategy process you will continually come back and revise the previous step until everything matches up.If you either get stuck or feel you are wandering off at a tangent refer back to your six questions sheet. This should give you the guidance you need on what is important.

Next comes the interesting bit. There will inevitably be roadblocks that could prevent you from achieving your objectives. How will you deal with them?

What Are The Roadblocks?

Many of the standard texts on strategy gloss over this bit (or ignore it altogether). You have your objectives. All you need to do is diligently work towards achieving those objectives day by day and everything will be fine (not). If it was easy everyone would be doing it.

Before diving into the analysis stage. You need to take a hard (and brutally honest) look at what could stop you from achieving your objectives. Take a top-level view only at this stage as more roadblocks will drop out as you dig more into the analysis.

Many roadblocks will be obvious as you probably bang up against them regularly. Again it can be useful to chew this over for a few days. Write down each objective and carry the list around with you adding notes on what key issues limit your progress as you go.

If you are starting a new business this step can be difficult as you don’t have the hands-on experience of the market. That said, you should try hard to identify potential roadblocks. Be entirely honest with yourself. It could save you an awful lot of time (and money) later.

Of course, it is important to remain positive and not get despondent about apparently tough obstacles. Against that it is also vital to not gloss over obvious roadblocks to progress. Where you have limitations, accept them, note them and move on.

Knock your notes into a list with the most serious roadblocks at the top of that list. Now match roadblocks to objectives. Don’t worry at this stage about how you will deal with these roadblocks, that comes later. Based on the analysis stages your roadblock list could change.

The Standard Strategy Process And Why It Fails

The steps in the standard strategy process vary depending on what you read but generally are:

  • Market Analysis.
  • SWOT (Strengths, Weaknesses, Opportunities, Threats) summary.
  • Choosing the objectives to attack.
  • Defining the strategies required to achieve objectives.
  • Define tactics.
  • Make plans.
  • Measurement and review.

The last step includes a feedback mechanism to objectives and strategies so they can be modified depending on results.

So, you consider the issues, decide on which issues are important, set some objectives, decide how you are going to achieve those objectives, take action and measure progress. This all makes sense but it tends to collapse at the SWOT stage because:

  • The analysis lacked focus.
  • The analysis glossed over the real issues faced by the business.
  • There are many possible ways forward. Choosing the best way is hard
  • The world is not linear. You cannot predict what will happen.

The last point is the most important. If you intend to do ‘A’ you could reasonably expect ‘B’ to follow. But, in reality, it could just as easily be ‘C’, ‘D’ or ‘E.’ You make a plan today based on ‘B’ following on from ‘A’ but will that assumption be valid three months from now?

So what’s the alternative? You can’t sit around and wait for events to propel you forward (or sidewards, or backwards). You do need to analyse the situation, that is essential. You do need to decide on what is important. You do need some sort of plan to achieve your goal but the key is flexibility. Rigid plans that do not take account of what might happen (scenarios) are useless. More on that in Part3

The Market Analysis Process

An analysis is the most important part of the process. It is also the most time consuming and requires the most (thinking) effort. Please don’t neglect it as even if you go no further it could give you some real insight that you would otherwise miss. That insight might deliver more cash through the door. It could identify the risk factor that could one day take your business down. It can show your great new business idea is not so great after all.

The problem with the analysis stage is it is easy to wander off track. This is where the work you prepared earlier is important. Reference back to your notes on the why, the driver, deliverable, the need, competition and core. This is your starting point.

Value Chain

Before discussing the analysis steps it is really important to understand the concept of the value chain. Again, this is an issue often glossed over by marketing strategy guides. An example from history may help illustrate what value chain is and why it is so important

At the battle of Crecy in 1346, the French army was devastated by English Longbowmen. At the battle of Agincourt sixty-nine years later the same result. The French army was cut down under a hail of English arrows.

So the question is this. Why didn’t the French decide in 1346, you know what we need some of those longbow things? Why at Agincourt was it not French longbowman against English longbowman? The French did have crossbowmen but their range and speed of fire were much lower than the longbow.

The answer is the French probably did covert the longbow but English archers trained from childhood. Firing a longbow needed skill and strength. Remains of English archers show that years of longbow practice led to physical deformities. The French could not simply copy the longbow and put it into service.

The relationship to a business should be clear. Oh, that’s easy, I will just copy what (insert competitor here) do. The problem is it is never that easy and the reason is their value chain. There is usually something about their systems, materials, purchasing power or the skills of their people that they have learnt over time that means they can do what they do and you can’t. You might be able to copy but not quickly.

The really important point to note is the same applies to you. Your competitors cannot easily copy what you do. Why not? You need to know.

If you intend to start a new business it is really important to identify your value chain. It is true there are some markets with lots of potential customers and unsatisfied demand. ‘Me to’ businesses can survive in those markets with no problem. If you do not intend to operate in one of those markets you need a value chain.

What is your value chain? Whatever it is, strengthen it and protect it. It might not be one thing, it might be the linkages between several things that are important. If you think your value chain is weak or (worse still) you don’t believe you have one you need to work on it and fast.

There is a thought exercise to help known as VRIO. You can read more about it here https://www.process.st/vrio/

Analysis – The Key Steps

So you now have several lists. You should have

The Why

The driver

The deliverable

The need

Competition

The core

You should know your geography and your objectives and you should have an understanding of your value chain. Even if you stop here you should have a much better understanding of your business and where you sit in the market than when you started.

The ‘Why’ and the ‘Driver’ we have dealt with as they feed into your goals. Your goals feed into your objectives. Objectives are matched with roadblocks to progress. It is now time to deal with the rest.

The Deliverable

Start with the core deliverable you identified earlier. You defined it in general terms rather than a specific product. How do you support that core deliverable? Again honesty is the key here. How does your customer service rate? Can potential customers reach you? Do you respond to all messages? What other elements support the core? How strong are they?

If you are delivering a product how is it packaged? What about your administration, your invoicing, your follow up, the way you deal with problems or issues, how do they rate? Initially, you are looking for the simple things you do that annoy the customer. They may seem trivial but they all add up.

With the minor annoyances out of the way, what can you improve? You can’t improve everything overnight so what improvements will have the most impact. Put them in order.

Finally, take a look at how you rate against the 4A’s (Awareness, Acceptability, Accessibility and Affordability). I strongly recommend the book ‘The 4A’s of marketing’ by Jagdish Sheth but in summary:

  • Prospects need to be aware of your product or service
  • It must fit with their needs and values
  • They must be able to easily access your product or service when they want it.
  • It must be affordable and remember affordability is different to price.

Keep your notes for future reference but summarize the key points. What are the positives and what needs attention? Your findings may feed back into your objectives. If you need to go back and make changes that’s fine. It is the way a strategy process should work.

Now dig into the detail. Look at your numbers. What (product or service) have you delivered. Rank them by value and profitability. Are there some surprises (there often are) and if so do you need to modify the assumptions you made earlier in the process.

The Need

Again, start with your initial notes. Then look at the history of what you have delivered and to whom. Try to spot common needs then break down what you have delivered against those common needs. Take the highest value groups and analyse the profitability of each. The highest value/most profitable need groups are your key segments. Do these segments match with your original definition of need? Compare and re-think if necessary.

Check for rising stars. Is there a need group that has jumped in value or profitability in the past twelve months? Perhaps, the reasons behind that change are worth considering in more detail.

Try to think through what problems each of those key segments is trying to solve. Is that what you deliver? Could you tweak what you deliver to better satisfy the basic need? Again, it may be necessary to go back, change what you prepared earlier then go again. Constantly making changes is frustrating but it is also probably saving you money. What are the costs if you take the wrong direction?

What else could your key segments need that you are capable of delivering. How easy would it be to deliver those extras? Feed this information back into your deliverable notes.

The Competition

Now for each of your segments who else satisfies their core need. Remember to consider more than your current competition. Concentrate on the need not the product or service. Who is satisfying that need? Refer back to your original list. Are there now more potential competitors that you need to consider.

When you have your competition take the top two or three and analyse each of them against the 4A’s. Also, analyse their value chain. Where are they weak? What are they good at that you should try to improve? Again, pick only the most important items from your notes.

Review the potential extra services you identified during the need exercise. Who is the competition for those and what is their value chain?

Now take your notes on the deliverable, need, competition and value chain. Take the notes you took on your first analysis of core. Pull those notes into order based on only the positives and you have why a customer should buy from you. This is what you will focus on to deal with roadblocks and achieve your objectives.

Now take the negatives and add them to your list of roadblocks. Finally, take everything you have learned from your analysis and update and refine your value chain

Now to deal with the last step, plotting a (flexible) way forward

Read the full small business marketing strategy guide – HERE

 

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