Companies often talk about “business models” when discussing their plans to generate income and profit. Seldom, however, do they define a business strategy to successfully implement their business model. A well-crafted business strategy helps entrepreneurs establish priorities, focus energies and align the entire enterprise.

An effective business strategy outlines the specific actions an organization will take to secure new business from target customers. It includes an analysis of the current market factors, which affect the demand for your product or service, as well as a competitive analysis of companies presently in the “space.” The business strategy also summarizes competitive strategy, paying particular attention to strengths and weaknesses of the company’s total product or service offering.

The business strategy describes the specific type of new business your company is seeking, what results should be expected, and how the company plans to compete against existing competitors. It details how your company plans to get there, identifying the who, what, when, where and why to executing the strategy.

Sharing the vision

It is vital for your business strategy to be followed by everyone in the organization. Sometimes a brilliant leader doesn’t share the overall vision for the business with key leaders in the organization, which prevents effective execution. Charismatic leaders and entrepreneurs often try to do too much and carry too much of the load. This results in losing very capable employees to other companies that allow them to control key responsibilities in the business.

In other cases, the responsibility for generating new business is given to one or two individuals in the sales department. Their job is to attract new business, while the rest of the organization is focused on manufacturing the product or delivering the service. This “schizophrenic” organization is fragmented in its effort to attract new business because the responsibility has been delegated to one part of the organization.

Not working together

While the sales group is aggressively pursuing one segment of the market, the rest of the organization is implementing policies or procedures that are designed for an entirely different segment of the market. In order to compete at the highest levels, there should not be wasted or duplicated effort within the enterprise. Top-performing organizations are ones that work in alignment, where there are clear roles, responsibilities and ownership by those who are responsible for executing the strategies.

Everyone in the organization must be capable, equipped and motivated to carry out the business strategy. If an employee is not able to fulfill their responsibilities, the organization has the responsibility of redefining their role or moving them to an area where they are best positioned to succeed. It is the responsibility of leaders to place people where their capabilities and talents are best utilized in alignment with the business strategy.

Effective business strategies are “customer centric” vs. “company centric.” A “customer centric” strategy is designed around serving the customer. This is easier said than done, because the organization often finds it difficult to evaluate itself through the eyes of the customer. It is rare for an organization to be able to walk in its customers’ shoes. It is even more difficult for a company to compare the experience of doing business with itself vs. doing business with a competitor. This is where an outside perspective is particularly helpful.

Effective business strategies are measurable and have well-defined milestones so organizations can monitor their success. If a specific business channel is supposed to generate new revenues, but is not meeting its milestone, it is better to know earlier rather than later so contingency plans can be made.

One business strategy does not fit all. Effective business strategies are unique and specific to your company. It is very tempting to identify a business strategy that is working for another company in a different industry and try to implement it in your organization. The problem is that your customers, your value proposition, your marketplace and your company culture are all different. A new business strategy must fit your organization and be suited to your unique characteristics.

Effective business strategies define how you will create “relevant value.” Companies often believe erroneously that pricing is the primary reason they are attracting business. In reality, there is a value exchange that is beneficial to the customer. If a company is able to understand, promote and deliver this “relevant value,” they can be successful marketing to new customers seeking the same thing.

Customer retention

Effective business strategies focus on customer retention. In order for a company to grow, it must keep customers satisfied and continue to create value for old as well as new clients.

Fast growing companies identify market opportunities that haven’t been captured by other competitors in the industry. Leading companies understand where their competitors have positioned themselves in the marketplace and where they may migrate to next. With a well-defined business strategy, a company is able to create uniqueness in a marketplace that is full of competitors.

Effective business strategies are diversified and flexible. Great plans are ones that need to be changeable. They have to be adaptable enough to take into account changes in market conditions, customer preferences and competitive aggression. New business strategies need to be constantly under review and have multiple methods and tactics in order to be executed successfully.

The power of an effective business strategy helps companies turn business models into winning game plans.

Arnold Ng is a new business strategist for Insight Learning Co. Insight works with privately held companies. He may be reached at [email protected]

Entrepreneur’s Notebook is a regular column contributed by EC2, The Annenberg Incubator Project, a center for multimedia and electronic communications at the University of Southern California. Contact James Klein at (213) 743-1759 with feedback and topic suggestions.