The term strategy is one of the most commonly used terms in a business setting. Yet, many business owners aren’t entirely sure what strategy actually is. Let's answer the question: what is strategy?
To make matters even more complicated, there are different levels of strategy that you need to be aware of if you want to ensure you reach your goals.
In this guide, we’ll explain what strategy is, go over different levels of strategy you need, and share tips to help you come up with your strategy. We’ll also share three common pitfalls to avoid when working on your strategy.
What Is Strategy?
Chances are that your business has a strategy. But do you really understand what a strategy is?
If you don't understand strategy, you're not alone. According to a study quoted in Harvard Business Review:
One study reports that 70% of leaders spend on average one day a month reviewing strategy and 85% of leadership teams spend less than an hour per month discussing strategy.
Strategy can be seen as this vague term. In reality, the strategy definition is rather simple. Here are two definitions:
- It can be defined as a general direction for a company or an organization to help them achieve a desired future state that results from a detailed planning process. (Management Study Guide)
- It can also be defined as actions that managers take to achieve company’s goals.
More broadly speaking, strategy is integrating the company’s activities and using and distributing the company’s resources in a way that'll help the company reach its goals.
A well-thought out strategy is made up of three levels:
- The corporate strategy that considers the company as a whole.
- Within the company you've got various business units. Each has their own strategy that supports the company’s goals.
- Each business unit has its own teams. These also have their own strategy that supports the business unit strategy and the company strategy.
Let’s take a closer look at these different levels of strategy to get a better idea of what they encompass.
Different Levels of Strategy Explained
As mentioned earlier, there are three different levels of strategy that you need to consider if you want to successfully achieve your goals:
1. Corporate Strategy
At the very top we've got the corporate strategy. This is the strategy of your company or organization as a whole. It defines your company’s or organization’s goals and how the company supports the business units that make up the company.
A few examples of corporate strategy include:
- developing strong internal relationships between different teams
- creating a shared set of company values
- raising necessary funding from investors
- developing company’s mission, vision, and purpose
- creating and developing the structure of internal teams
- determining the best use of resources throughout the company
- developing company’s policies that benefit not only the C-level executives but also employees and customers or clients
You can learn how to write vision and mission statements in this tutorial:
2. Business Unit Strategy
Immediately after the corporate strategy, we've got the business unit strategy. This type of strategy deals with the practicalities of succeeding in individual markets. Although specific to individual markets, the business unit strategy still needs to tie in with the corporate strategy.
For this particular type of strategy, it’s a good idea to start by gathering everything you can about your competitors in the area. Start with a SWOT analysis.
You’ll also want to identify gaps in the market and how your company can fill those gaps. Finally, you’ll round out your business unit strategy by identifying your unique selling point to strengthen your position in the market.
Beyond that, it’s a good idea to always be on the lookout for different ways to create new opportunities in the market.
By developing a strong business unit strategy, you can effectively motivate your employees to work harder because they'll know what they're working towards.
Also remember that if you've got a small business that operates solely within one area, your corporate and business unit strategy will often overlap. They might even be the same.
3. Team Strategy
The last piece of the puzzle is team strategy. As is the case with the business unit strategy, individual team strategy needs to align with the corporate strategy and the business unit strategy. By making sure that it does, you’ll ensure that all levels of strategy are working in sync with one another. You’ll be more likely to achieve your goals.
For this level of strategy, each team should have clearly defined purpose and boundaries. It’s useful to have a set of key performance indicators that the teams will use to measure the success of their strategy.
At the team level the strategy should encompass:
- supplier and stock management
- quality control
- and the use of standard operating procedures
How to Come Up With Your Strategy
Knowing what strategy is and the different levels of business strategy is only half the battle. You also need to create your strategy. Here’s how.
1. Outline Your Mission and Vision
As mentioned earlier, your strategy is rooted in your mission and vision for the company. Your mission statement states what your objectives are and outlines the approach you’ll take to reach your objectives.
An example of a clear mission statement comes from IKEA:
to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.
But your vision statement explains the future position you hope your company or organization will one day occupy.
Take a look at the IKEA's vision statement to get an idea of what it could look like:
To create a better everyday life for the many people.
2. Specify Your Goals
Based on your mission and vision, you need to specify your goals. Don’t forget to account your business stage into this process as well. If you’re just getting started, your goals won’t be the same as if you've already been in business for 5+ years.
For example, if you’re just getting started, your goals might include:
- raising brand awareness
- launching your product line
- occupying 1% of the local market share
Contrary to that, if you’ve been in business for several years, your goals might be:
- expanding your product line
- branching out into new markets
- hiring more employees
No matter how long you’ve been in business for, don’t forget to apply the S.M.A.R.T framework when setting your goals. In other words, make sure that your goals are Specific, Measurable, Achievable, Results-oriented, and Time-bound.
Learn more about S.M.A.R.T. goals in this article:
3. Define Your Strategy
The next step is to define the strategy that you’ll use to achieve your goals. For example, this might be launching a website that showcases your product line or establishing presence on social media, and similar.
4. Outline the Tactics You’ll Use
Once you’ve outlined your strategy, it’s time to get specific. That’s where tactics come in. During this stage, you’ll specify the exact steps and course of action you’ll take to achieve your goals.
This might look like:
- conduct market research to identify audience’s pain points
- write copy for website
- find a shipping company that offers affordable rates
5. Specify Your Key Performance Indicators
How will you know if you’re on track to hit your goals? By specifying key performance indicators. KPIs are simply metrics that you can track to measure if your goals have been achieved or not.
Sometimes, they’ll be quantitative, like calculating your market share or profit margin. Other times, they’ll be qualitative. For example, your website copy is either written, being written, or not even started.
To learn about Key Performance Indicators (KPIs) in more depth, study:
6. Monitor, Analyze, Tweak, and Adjust
Lastly, don’t forget to monitor and analyze your strategy. This is the only way to see if the strategy is working. Based on that, you can tweak and adjust your strategy as necessary to ensure you’re on track to meet your goals.
Three Common Strategy Pitfalls to Avoid
So now you know what strategy is and how to create your business strategy. But as you do so, be careful to avoid these three common strategy pitfalls:
1. Don’t Mix Up Strategy and Tactics
It’s all too easy to mix up strategy and tactics. After all, both are used to answer how you’ll achieve your goal. But they’re not the same thing. Generally speaking, tactics are more tangible than strategy.
- Strategy is more abstract in that it's the action plan that'll take you from point A to point B.
- Tactics are the specific steps you’ll take on the road to get there.
For example, your broad strategy might be to establish a presence on Instagram to raise brand awareness. The tactics then outline the specifics such as how often you’ll post and what type of content you’ll share.
You won’t raise your brand awareness simply by creating your Instagram profile and filling out your bio. You also need specific steps that you’ll take in order for your prospects to notice you.
2. Forgetting to Tie Your Strategy Back to Your Goal
As you’re working on your strategy, it’s easy to get a flood of new ideas. But those ideas can actually distance you from your original goal. Avoid this by keeping your goal front and center and focusing only on what will move you closer to achieving your goal.
3. Not Using Insights
Insights tell you if your strategy is working or not. They can pinpoint if any part of your strategy needs to change or adjust. Without insights, it can take you a lot longer to reach your goals because your strategy and tactics got irrelevant or were never working in the first place.
Besides that, insights can help you form your strategy in the first place. By observing the business landscape, marketing trends, and your competitors, you can learn what’s working, what’s needed, and what’s missing. From those insights, develop the right strategy for creating your offers and promoting them and developing your company culture and organization policies.
The Best Place to Find Creative Business Assets With Unlimited Use
As a part of your business strategy, it’s a good idea to always have creative business templates at the ready. That’s where Envato Elements comes in.
Envato Elements is a subscription-based marketplace with a compelling offer. For a low monthly fee, you can download unlimited presentation templates, stock photos, fonts, and more.
Envato Elements is the best value for any business owner out there today. Plus, you can try out a variety of different designs as you work on your next project.
You don’t have to waste time creating everything from scratch. Instead, use professional templates from Elements to create documents such as:
- attractive presentations
- modern annual reports
- marketing strategy plans
- sleek fact sheets
- and more
As you can see, a flat-rate subscription to Envato Elements gives you access to every template you need to present your business in a professional manner.
And if that's not enough for you, there are a ton of templates available on GraphicRiver as well, one of which is certain to meet your needs.
Create a Fool-Proof Business Strategy
The term business strategy is often confused with goals, vision, and tactics. But in reality, business strategy stems from and encompasses those three things. Once you understand what forms the basis of any business strategy, it becomes much easier to create and define it.
Use the tips in this article to create a fool-proof strategy for your business and to avoid common pitfalls that can lead to failure instead of success. Happy strategizing!
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