If I asked you what your strategy is over the next 2 to 3 years, what would you say? Would you, like so many business owners, CEOs and government heads tell me what you aim to achieve or would you actually describe a strategy that details how you will get there?
People often confuse the two and as a result their business suffers – they think they have a strategy whereas they actually have a goal. Not knowing the difference can have a big impact on your business.
Everyday we hear politicians talk about their strategy to reduce the deficit or to win the war on terror. We hear sports coaches and managers talk about their strategy to win the vital game that’s coming up.
If pressed for more information the politician might talk about their aim to reduce the deficit by increasing taxes, by making corporations pay the tax they owe, by reducing unemployment and so on. The coach may talk about their aim to execute an attacking game from the start to put their opponents on the back foot and command an early lead.
Interviewers thank the politicians and coaches for sharing their strategy with us and we move on to the weather forecast. But they didn’t answer the question – they haven’t shared any strategy – they’ve shared their aims, their goals and that’s something quite different.
When is a strategy not a strategy? When it’s a goal.
Of course you need goals – targets to aim for. If you didn’t then you couldn’t measure the progress that you were making. The government needs to have a goal to reduce the deficit by a certain percentage and the coach to win a certain number of games during the season.
These goals describe what you aim to achieve but not how you will achieve them. (And to expand by saying you’ll achieve your aim by, in the case of the politician, increasing tax or reducing unemployment isn’t a strategy it’s simply breaking down the main goal into further goals.)
What’s missing is a detailed breakdown of how that goal is going to be achieved – what’s missing is a strategy.
During the early stage of my career I was an engineer for an electronics distributor – basically a reseller of products manufactured by other companies such as Intel, Motorola and Hitachi.
The company had taken on a new ‘line’ – a new manufacturer – and needed someone with the technical expertise to present it to prospects, support their engineers and get the products designed into their hardware. These were complex parts and my background in designing silicon chips was perfect and I started the job on the day my new employers launched the line.
My new employers won the line because for the previous 10 years there was only one distributor for this manufacturer and, without any competition, complacency had set in and the business was flat. We were the new kids on the block and direct competition to a company that essentially owned 100% market share of the distribution business in the UK.
The manufacturer set goals that my managers agreed to and sales were given product training and told to go and find opportunities in their customer base. 12 months later my employers were told that they were coming close to losing the line. Every quarter we would have uncomfortable reviews with the manufacturer who needed to know why targets were being missed and what we were going to do about it.
My manager didn’t know what to do. The aim had been to simply go to all of their hundreds of customers and supply the products to those who needed it. But those who needed it were already buying it from the competitor and my employer wasn’t allowed to simply undercut and take the business away from them. They had to find new customers so the manufacturer’s overall business grew. My manager was also responsible for Motorola which was the 2nd biggest line in the company after Intel and so this new line was an irritant and not worth his time and effort.
For around 18 months I’d responded to the sales team taking me in to their customers to present the line in the hope that it would generate business. I’d travelled all over the country, presented to many different technology companies and we’d won some business but not nearly enough. We had around 5% market share.
I was young and new to customer support and sales having previously been a pure engineer in Marconi and so I assumed the sales teams and managers would know how to win business and grow the product line. Having finally lost my naivety, I developed a strategy that I thought would grow the business, stop us from losing the line and possibly me from losing my job. I presented it to the MD and directors and it was approved.
2 years later I left the company having grown the business to 35% market share and having just won a European award for the best design-ins of their flag-ship product line. All the regional offices across Europe adopted my strategy and it was our competitor who was being beaten up by the manufacturer.
The difference was the strategy.
In the quarterly reviews I referred to earlier, the focus was only on the targets – revenue, profit, number of design wins, volume of products shipped and so on. It was all about what had been achieved in the previous 3 months and what you aim to achieve in the next 3 months. If the sales guys hit their targets their managers were happy, if they didn’t the sales guys would talk of things like customer projects cancelled, projects delayed, unsuitable product features or uncompetitive pricing.
But because the focus was only on targets, when they were hit or when they were missed there was no real understanding of why. And because of that, no real understanding of how to exploit what was working or address what wasn’t.
If, as many corporations and government bodies do, you simply set goals without a well defined, coherent strategy describing exactly how you will achieve them, then if you hit them it’ll be more by luck and you won’t know how to build on your success. More worryingly, if you miss them then you won’t know why and won’t know what to do differently. And saying enough customers didn’t buy enough of what you’re selling, doesn’t answer why.
If you create the right strategy that will achieve your goals then you’ll know that making that strategy happen will result in your goals being met. Then you can focus your efforts on successfully implementing that strategy.
Create the right strategy, successfully implement it and you will achieve your goals.
Create the Right Strategy
Work backwards from your goals and break the journey down into quarterly, monthly and weekly milestones and define what needs to happen for those milestones to be met. For example, break down annual revenue goals into markets, the ideal customers in those markets that are the right size for your business, the average spend of those customers, how many customers you’ll therefore need, how many you have who should spend that amount and how many new customers you need to win, how long it will take to convert these customers, how you will attract and convert them, how you will deliver what they need and so on.
Don’t forget to assess that you have the resources and capabilities to do this and that you are prepared for what may stop you. This analysis is vital and your findings may well result in you having to revise your annual goals. Make them challenging but not unrealistic.
What you’re doing is breaking down the goal into a flow of what you need to do and how you will do it – you’re creating a strategy.
Implement the Right Strategy
Now that you know what you need to do you need to create metrics that you can measure to know that the strategy is being implemented as planned. So, for example, having defined the number of prospects you need to convert you need to estimate how many you need to attract in order to hit that conversion rate. Your strategy should detail how you’re going to attract and convert these prospects and the metrics you measure that by, will tell you if you are on course or not.
Having defined these weekly, monthly and quarterly metrics and how you intend to meet them you can stay focused on them knowing that meeting them will result in you achieving your annual goals.
Stay focused on what you need to do and adapt your strategy as necessary to stay on course and successfully implement it. Now you will know as you go if you are going to achieve your end goals or not. And the big difference here is that if you do meet your goals you will know exactly why and be able to build on it and if you don’t you will again know exactly why and be able to do something about it.
The end-of-year results will come as no surprise and with no alarms because you will know the results you are going to achieve and why.
This is the difference between a strategy and a goal.
Create and implement the right strategy and you will meet your goals.
Do you have the right strategy and metrics in place to meet your end-of-year goals?
Having this in place will give your business a strength of certainty – of knowing where it is aiming to get and how to get there. Does your business have this strength? Download my free report, ‘How Strong is Your Business?’ to find out.