Top 10 Elements of an Effective Business Strategy

Written By: Eric Kimberling
Date: December 22, 2021

The discipline of business strategy and business planning has become more important than ever in the 2020s due to recent changes and general turbulence in the business world. With the amount of change, the discipline of a robust business strategy is making somewhat of a comeback. It's become more important than ever to be unique in the marketplace.

Here are some questions to consider while trying to get ahead:

  1. How can we execute better in the marketplace?
  2. How can we create a better customer experience?
  3. How can we produce a better employee experience?
  4. How can we beat our competitors?

All of these questions are things that organizations need to value and focus on, especially considering turbulent economic times and business environments. Today I will outline the top 10 elements to consider when defining your business strategy for 2022 and beyond.

1. Goals and Objectives

The first tactic sounds obvious - define goals and objectives for the coming years. Intuitively, I think most organizations and leaders can identify basic strategies, goals, and objectives of the business however, the problem is most organizations either don't articulate it well.  Often leadership does not plan around those goals and objectives effectively.

It's absolutely critical to understand this foundational number one element, which is to define what the goals and objectives are for an organization and what the team should be focused on.

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2. Conducting a SWOT Analysis

Number two is conducting a SWOT analysis. If you recall from business school, just as a quick recap, SWAT analysis stands for:

Strengths

Weaknesses

Opportunities

Threats

It is important to always be aware of strengths and weaknesses especially in the context of goals and objectives that you've set as an organization, which was the number one thing on our list. This is going to help enable organizations to define the best strategies and opportunities for the business.

Now, the O and T in SWOT analysis stands for the external factors, these are opportunities and threats. These are either positive things like opportunities, economic or market opportunities, which could be macroeconomic. It could also be elements that are outside of our control, but those are external factors that might undermine our strategic abilities and capabilities.

One thing I'll note about SWOT analysis is it's usually easy to come up with a laundry list of things that fit into each of those four categories. The key is to prioritize aspects that are relevant, aligned, and most likely to enable those goals and objectives within the business strategy.

3. Functional Strategies

Now, once goals and objectives are as an organization is clearly defined and SWOT analysis identified internal strengths and weaknesses, it’s time to turn to specific functional strategies that support these topline business strategies.

For example, we can look at all the different capabilities, functions, and departments within the organization, such as:

All these different functions within the organization should all have distinctive strategies, goals, and objectives that align with and support those bigger picture goals and corporate-wide objectives. This process will ensure that every part of the organization is contributing to those goals and objectives and addressing the SWOT analysis findings in a way that is always united.

While the functional strategies might be defined in somewhat of a silo, to begin with, ultimately these tactics will be designed to support other pieces of the organization. Within a functional strategy, a session can be somewhat of a reconciliation process with other chunks of the organization that might have slightly different views of how to contribute to the overall goals and objectives.

4. Creating a Culture and Change Strategy

Our current world is changing so much, the economy and the business world are constantly trying to catch up. This challenging business climate is forcing many organizations to change to a more extreme degree than they may have in the past.

The magnitude of change that organizations are facing, in general, is much more than they were about 10-20 years ago, which is why it's more important than ever to have a clear change and cultural change strategy.

These initiatives are somewhat related, but they're also worth noting separately. Overall change strategy focuses on ensuring that the organization and internal team can adapt to the new shifting in strategies or behaviors. They understand what the changes are, they embed those changes within their day-to-day processes and responsibilities, and ultimately all the things that align with that general approach.

Cultural change is somewhat related but it's worth pinpointing that it can be a separate standalone workstream within a change strategy. The reason for that is that most organizations are facing cultural changes because of their overall transformation.

For example, standardizing to a common operating model, or perhaps globalizing and pursuing global markets and adding new offices, companies find that now they need to create a communal operating platform to maximize efficiency and to optimize the customer experience.

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5. Business Process Management

One of the most effective strategies within business development is the concept of business process management. To start, the current operating model, end-to-end business processes, and workflows are very important to understand and analyze. More opportunities to improve means a better chance of it being effective.

Business process improvement is one common strategy that we see organizations facing in 2022. There's a variety of toolsets that can be used to help with business process management. Certainly, there are business process modeling tools, but also important to embrace analytical tools that can help evaluate where the processes might need to be improved.

For example, things like business process mining tools will showcase any breakdowns, bottlenecks, and inefficiencies. There's also the traditional Lean Six Sigma approach, which is focused on continuous improvement and identifying where the breakdowns in processes are occurring.

There are several different tools available that enable business process management, however, it's important to recognize general business process improvement as a critical business strategy for 2022.

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6. Integrating Technologies

Most organizations we work with as clients have found that, as they've grown up and evolved as a company, their technologies have become more siloed. One of the key business strategies that organizations are facing today is to have better visibility into their operations and integrate their technologies in order to understand the business more holistically.

Even with multiple systems, several tools, and numerous processes, there should be integrated into the business processes and data management strategies to ensure smooth information sharing throughout the organization. Having an overall digital strategy and roadmap that allows you to integrate those technologies is a key business tactic for 2022.

7. Human Capital Management

Many industries today are facing labor shortages. Others are suffering from what people are calling the “great resignation”, where masses are quitting jobs or moving to other jobs. There's a lot of displacement in the labor market in general across the world, which is why human capital management is so important.

It's more important than ever for organizations to be able to attract the right talent, retain that talent, and keep employees motivated and engaged. To achieve this, there needs to be effective HR processes and technologies to help support the overall employee experience.

This is where human capital management and HR technologies can help enable your business strategies regarding employee engagement, less attrition, and higher employee satisfaction. For example, HR tools can help recruit, identify the right talent, and ensure a more effective cultural fit.

The bottom line here is that it all starts with your recruiting processes, but it also continues through performance management, onboarding of employees when they first start, clear and achievable job expectations, and a defined career path. All that can be automated in some ways or enabled by HR technologies and HCM technologies.

It’s critical to recognize that human capital management is more important in 2022 than in recent years.

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8. Supply Chain Management

Supply chain management is one of the biggest pain points for organizations throughout the world. It's also one of the significant challenges customers. Supply chain strategy specifically depends on unique operational strengths and weaknesses. Remember that SWAT analysis we talked about earlier? Ensuring that companies recognize where the strengths, weaknesses, opportunities, and threats are as it relates to your supply chain is a fundamental part of defining digital strategies.

It is also important to understand to leverage new processes, technologies, organizational structures, and strategies in general, to ensure that we've enabled a better supply chain. Supply chain management should be a key part of any business strategy for 2022.

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9. Business Intelligence and Analytics

One of the most valuable currencies that organizations have in general is data. It's data they capture about their customers, data they understand about the market, internal data about the operations, and financial data. All that data that organizations are sitting on can be a gold mine that will enable healthier business strategies in 2022.

Just to give you a couple of examples, organizations that can better predict customer behavior are going to win in the marketplace. Emerging technologies such as artificial intelligence and machine learning and effective data management and activation strategies can be a significant competitive advantage. Leveraging this information and automation processes can predict customer demand, which is especially important within the current unpredictable world that we live in.

Another example is multinational organizations that have operations throughout the globe. If you can pull together all that data and have clear visibility into what's happening throughout global operations, you're going to be one step ahead of your competition.

These are just two examples of how data and predictive analytic tools can help ensure a strategic advantage going into 2022 and beyond.

10. Strategic Alignment

Now the most important thing on our list is the 10th element of an effective business strategy, and that is strategic alignment. This element is really focused on ensuring that the alignment is in place with everything we've talked about so far. All those nine strategies ultimately need to be aligned within the business. What I would argue is that even more important than ensuring the right or the best strategy is having an aligned strategy.

A company can have the most brilliant and innovative business strategies, however, if the organization is not aligned and committed to activating these strategic initiatives, they become irrelevant.

It is ok to achieve perfection in nine areas, as an imperfect strategy that has alignment throughout the organization is going to be more effective. With that said, throughout these nine things, we want to think about it in the context of that number one thing, which was what are our overall goals and objectives are as an organization.

If thos goals and objectives are clearly defined, all those other eight things we talked about beyond that should all be aligned, that's why number 10 on our list is overall executive alignment and strategic alignment. It is to make we're all on the same page and all rowing in the same direction. We want to ultimately reduce that friction and those headwinds that come from not being aligned, which is what most organizations struggle with.

Resources

I hope this has provided some guidance on how to define your business strategies for 2022, as well as what some of those most important strategies are. For more information on how to better the alignment, you can check out our 2021 Digital Transformation Report which features best practices and additional guidance on technology-agnostic reviews.

Please reach out to me directly if you have any questions regarding these specific strategies or if you have any additions to my list. I am happy to be an informal sounding board as you move through your digital transformation journey.

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Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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