Strategic Business Decision Making
Strategic decisions are long term, complex decisions made by senior management. These decisions will affect the entire direction of the firm. An example may be to become the market leader in their field. Tactical decisions are medium term, less complex decisions made by middle managers.
Key Learning Points:
- State your mission
First and foremost, every strategic business decision you make should directly service your current mission. A mission should present a significant, but achievable, challenge (or set of challenges) that you can reach in the next 3 to 5 years.
- Keep the health of your organization top of mind
As Peter Drucker says, “Culture eats strategy for breakfast.” This phrase often gets misinterpreted to mean that culture is more important than strategy. Instead, it actually suggests that a company’s culture catalyzes strategy. In other words, culture—the shared beliefs and values within an organization—sets a powerful foundation for strategy, and in fact can become the strategy itself. If you neglect your culture—the stuff that makes your company truly unique—you run the risk of undermining your strategic objectives.
- Make strategic planning routine
There’s no such thing as random acts of strategy. And strategic planning isn’t a one-time event, either. You’ve got to create a rhythm of success. This means planning for 3-to-5 years down the road, then establishing annual planning sessions to line up the year with your long-term goals. Use quarterly planning sessions to line up each individual’s priorities with the company priorities and review progress toward your objectives. In this way, you can be certain that everyone is in line with company goals, and you’ll be able to adapt quickly if unforeseen conditions demand it.
- Narrow your focus
Focus on what you do well and where you excel. There are innumerable books and plenty of gurus who define strategy, and you should explore their ideas. But ultimately, you, the business owner, are the most qualified person to set the strategy for your business. This is because your strategy is unique to who you are.
- Involve your existing talent
Not all business decisions can be made collaboratively with your staff, but when you set your annual goals, mine your talent. Involving your entire team in the strategic planning process increases their personal investment, and it drives organizational alignment, ensuring a higher probability of success.
Each year, as you set your goals, include your entire company. Take what you learn from that session to the final planning stages with your upper management and pay close attention to what you discover. Collaboration will not only reinforce your culture, you will discover powerful insights about your company that you would have missed otherwise.
- Remember to measure your efforts
Tie your planning to metrics that will allow you to determine whether or not your effort truly achieves your goal. Having clear, measurable goals will allow you to establish milestones that you can tie to your annual and quarterly objectives. As you track your progress toward your milestones, you can adjust your tactics as necessary. Without clear milestones, it’s nearly impossible to know how well your tactics are really performing.
Celebrate your victories! Milestones have the added benefit of creating a reason to celebrate. If there’s a powerful cultural advantage to collaboratively setting the vision for your company, there’s an even more powerful cultural advantage to celebrating success.
- Go offsite
Some decisions can be made in a board room over a box of pizza. But when you and your top advisors meet to chart the course for your small business, there’s good value in taking the decision off site. And this isn’t just for big companies; offsite strategy planning is important for every business, even solopreneurs.
When you step out of the demands of the business for planning and strategy, you remove those distractions that seem to keep your attention at bay: customer demands, management issues, finances, etc. This is one tangible way you can step away from working in your business and truly work on it: that’s the explicit purpose of the offsite. Leave your mobile device at home. By physically stepping out of the business, you’ll find an added level of clarity and focus that you can’t get any other way.