How to Actually Think Strategically
About Your Small Business

5 Questions Your Strategy Must Answer To Be Effective
By Kuda Majonga

Strategy is neither a vision or mission statement, nor is it a list of objectives.
Though these elements listed above will help you develop your plan, they
will not produce the results that a well-thought-out strategy will. Without a
connected logic and set of principles, the tactical components of your
strategy will pull your business in separate directions, confusing your
progress toward your business objectives. This article will look at how you
might use strategic thinking to support the growth of your small business operations in
a way that reinforces your core strengths.

The Birth of Strategy
Strategy has its origins in the ancient Chinese era of the ‘Warring States Period,’ which
was characterized by political instability and aggressive competition for territory,
among other important occurrences. Leaders and generals of the time were desperate
for ideas and tactics to get an advantage over their opponents and assure victory. The
Art of War by Sun Tzu, one of the most famous texts on leadership and strategy, is
thought to have emerged as a handbook for leaders in this setting. Due to the wide
applicability of the ideas outlined in Sun Tzu’s teachings, the text has since received
widespread praise that extends beyond the fields of military strategy to many other
spheres of life, including commerce and politics. Sun Tzu’s work emphasizes the
significance of careful planning, intelligence gathering, and understanding one’s own
and opponent forces’ strengths and limitations.

It’s easy to believe that strategy is a luxury available only to larger corporations, or
that it requires a room full of consultants to produce. Fortunately, neither of these
assumptions is correct because strategic thinking is a technique that everyone can
learn.

What Is Strategy, Really?

While a mission statement explains what an organization hopes to accomplish
through its operations, it’s not a strategy. Quality of service, and improved relationships
with suppliers, clients, or investors are all useful operational approaches, but they are
not strategies. The vision, which serves as a representation of the future being pursued
through the mission and though it can be essential for inspiring individuals to interact
with the company, is also not a strategy.

When executed properly, business strategy, says Michael D. Watkins, professor at the
IMD Business School and author of The First 90 Days, provides guidelines for tackling
goals and allocating resources across the company.

A good strategy provides a clear roadmap, consisting of a set of guiding principles or rules, that
define the actions people in the business should take (and not take) and the things they should
prioritize (and not prioritize) to achieve desired goals. – Michael D. Watkins

For instance, a company like Dell might decide to lead the market in terms of cost; for
this strategy to be successful, there must be a set of systems to support this decision. In
our example Dell might choose to have a direct sales model, selling directly to
customers to eliminate third-party costs. They might also implement efficient supply
chain management systems to optimize production to improve efficiency. Finally, they
might choose to focus on the business sector to differentiate in the market.

The essence of strategy is an integrated collection of choices made regarding how to
position your company to attain a particular result and acquire an advantage. Because
of this, the choice of tactics—specific activities done to attain the goals—should only be
made after the firm has decided where it wants to position itself for success and how it
will do so. In other words, the mission is concerned with what will be accomplished; the
strategy is concerned with how these objectives will be accomplished; and the vision
outlines why people should care about the goal.

The 5 Questions for effective strategic thinking

A central idea or logical response to the issues and significant concerns of the audience
being served is required for the strategy to be effective. This is distinct from planning, which
will center on carrying out the components of your operations that are under your
control, whereas strategy is concerned with the intended result and the means by which
it will be attained. There are only 5 interconnected questions your strategy must solve
in order to be effective, according to Roger L. Martin and Alan G. Lafley, outstanding
strategic advisors, and Thinkers50 top management thinkers, in their book “Playing to
Win.”

What is your winning aspiration?

A winning aspiration sets in place the outcome your business needs to achieve in your
market or industry. This aspiration is tied to the issues your customers are facing and
how you address them. It involves understanding what success looks like and defining
a clear and compelling vision of winning. In the case of our Dell example, they are
aimed at being a leading technology company providing innovative solutions for
individuals and businesses.

Where will you play?

Who are you serving in your market, and which segment of your market will you focus on?
This question delves into the choices an organization makes regarding the market
segments, geographies, and customer groups it will serve. It involves selecting the areas
where the organization can create the most value and have a competitive advantage.
Dell’s choice to focus on the business sector, is a good example of this kind of
the decision, as it helped focus efforts and reinforce core strengths.

How will you win?

The how-to-win question will help define how your operations will give you a cumulative
advantage. It requires an assessment of what you do best and how to reinforce those competencies

in ways that translate to a competitive advantage. For example, Dell offers competitive pricing, custom options, and
comprehensive support which enables them to cut ahead of their competition.

What capabilities will be needed?

Establishing your core abilities will ensure that your business has a set of internal abilities
that make people in your business more effective at doing their jobs. It involves
identifying the critical organizational capabilities, including people, processes,
technology, and culture, necessary to deliver on the strategy. Organizations must ensure
they have the right infrastructure and capabilities in place to support their strategic
choices.

The more robust your network of capabilities that reinforces how you will win, the more
sustainable your position in the market. Dell’s direct sales model and just-in-time
manufacturing become part of its key operational abilities that support the desired
outcome.

What management systems are required?

This question focuses on the management systems and processes needed to drive and
sustain the chosen strategy. It involves designing the organizational structures,
performance metrics, decision-making processes, and incentives that align with the
strategic objectives. It’s vital to outline what the logic for your strategy is so that you can
determine what would need to take place for your strategy to be successful. In this way,
you will be clearer on what you need to pay attention to when developing the metrics
for how you measure your progress. Management systems will also ensure the
sustainability and continuity of the capabilities required by the business. For Dell, this
would involve the use of an internet-based supply chain management system to drive
production optimization, which results in a 20% increase in productivity and product
quality.

The Less Glamorous Truth About Strategy

To continually enhance your approach, strategy is a process of discovery that is
guided by feedback, trial and error, and other market factors. The strategy process
should be reassessed regularly to be sensitive to changes in the
environment and available knowledge. It is a continual and iterative exercise, rather
than a set-it-and-forget-it activity. Returning to our Dell example, their entry into the
personal computer industry was not dictated by a consulting firm, but rather a
response to an increasing number of consumers approaching the company to
purchase one of their computers. When Dell launched the initial edition of their online
store in 1996 to conduct direct commerce with customers, several systems were in
place to support this move.

Unfortunately, we don’t frequently conceive of strategy in this way; we often gloss over
the how, of results achieved. However, the world of business offers several
examples that demonstrate the dynamic nature of strategy development. All strategies
are built on the principle of constraint adaptability. Consider how the Swedish furniture
behemoth, IKEA, overcame supply and price constraints to become a global cost leader.
It turned to making easy-to-assemble goods to reduce import costs, and it
turned its warehouses—which were initially mostly used for storage—into showrooms
where customers could view the goods.

Your approach to the limits and challenges in your setting frame your strategy; therefore,
as these change, so should your strategy. Otherwise, you might end up in a similar
situation to Kodak, if you fail to stay focused on the advancements in your market. After

being neglected amidst the rise of digital photography, the former leader in photography

now struggles to survive. Kodak lost sight of the way the industry
was moving and failed to develop adequately because they focused too much on
defeating their then-rival Fujifilm. As people, we tend to just analyze one
aspect of success, the point at which something succeeded, rather than all the
circumstances that went into it. Consider all the important elements of your approach
that will affect your success to avoid falling into the trap of hoping for success, by
proactively preparing for it.

Sources and references:
– Michael D. Watkins. (2007, September). Demystifying Strategy: The What.
Havard Business Review. Retrieved from https://hbr.org/2007/09/demystifyingstrategy-the-what
– Roger Martin, Alan G. Lafley (2013). Playing to Win: How Strategy Really Works.
Harvard Business Review Press.
– Sujai Thomas (2022, August 24). How Dell Drives Agile Productive Factories at
the Edge. Dell. Retrieved from https://www.dell.com/en-us/blog/how-delldrives-agile-productive-factories-at-the-edge