Change is also an opportunity. But how do you recognize the right opportunities and how do you take advantage of them? Should entrepreneurs plan everything well in advance, and if so, what makes a good strategy? Petra Wolkenstein has been going through strategy processes with her clients for years. She has something to say on this topic.
Isn’t corporate strategy about setting priorities and managing budgets? Do we need to plan everything in detail every time?
The first thing you have to do is define what you mean by corporate strategy. Writing a strategy on a long paper and then saying it will last for three years – no, we don’t live in those times anymore. Most things are not that long-lasting because everything changes quickly. But having a strategy process where you look at the issues in an analytical framework and decide on that basis what direction you want to go in, derive goals from that and then also engage your people on that is an absolute must. The only thing is that the whole thing is not rigid, but adapts.
Why do entrepreneurs need strategies?
For entrepreneurs, a strategy process means thinking things through. Different variants are thought through: one considers what the customers want, where the competitors are, and what the most promising business areas are. All this valuable knowledge is processed in the strategy process.
„The main added value of the whole process is the analysis and the derivation of realistic goals and measures.“
If something suddenly changes, like with the COVID-19 crisis in early 2020, you have a base to build on with the previous strategy framework. So it’s more about this tool, the analysis behind it, making decisions and deriving goals, than it is about having a paper.
So it means designing the living, comprehensive strategy of the company. How can the strategy work?
There is another effect of the strategy process. You can involve several people at the management level or key people in the company, get their opinions, and gather all the knowledge. And because they were involved in the goal setting and the strategy – they are fully on board and good at then implementing it. People identify with it better because they helped shape it because they were heard because something was discussed together.
There doesn’t have to be a joint decision, but if there are elements that have been brought in, then the employees are more supportive of it. They developed it together. That’s what a strategy process does with all the people involved.
Where do you start when building your corporate strategy? Can you do it alone or do you always have to involve an external view?
Where to start with a business strategy:
- Basically, you always look at what services or products you are currently offering. Who are my competitors? Which customer groups do I currently have? What is my current turnover and contribution margin? The basis is the analysis of where the company is at the moment down to the core competencies.
- In the second part, we determine what we are good at. This includes the core competencies and capabilities.
- The third part is to look at trends. What are good target groups, and what are good product areas? So where is the potential?
Once everything is clear, then you start to put those three pieces together and evaluate what the strategic directions are. As I said, the most important thing is to look at it in the first place. You should also involve the right people in the company.
Do you need external guidance? No, you don’t. You can do anything from the basics to a high-level strategy if you have a bird’s eye view. The trick is to have a framework in which you can properly analyze all the individual elements.
So why do entrepreneurs bring in outside strategy experts?
This is what happens
- when there is a major upheaval, or
- when people are dissatisfied with how the company is functioning.
In special situations, such as the Covid 19 crisis, an expert is often called in. The specialist helps with a strategy revision, the strategy review. Fast-growing companies may also bring in an external expert for the first time when creating the annual strategy, to speed things up. These are typical projects we do.
How does strategy development work? Is it different for everyone or does it depend on the industry?
Branchenspezifisch und unterschiedlich sind meist die Business-Modelle. Unter Business
Industry-specific and different are usually the business models. Business models are defined as a business model that answers the following questions:
- How do I address my customers?
- How do I deliver?
- What do I do myself and who do I commission?
- How do I charge: Billing models.
There are up to 300 business models, but there are probably a maximum of 10 main business models, and these are just different industries. These are the parts that also go into the strategy, that are a bit industry-specific, otherwise, a strategy process actually runs in a relatively standardized way.
„The differences are not necessarily in the industry, but rather in the complexity.“
If I have a company that has only one product, then it’s a one-product strategy. But if it’s a company that has several different business units? Then it becomes a bit more complex. Then you have to weigh what we focus on, and what we’re more interested in.
Konsultori will soon be 10 years old. That’s a lot of projects. What makes a good strategy?
A good strategy has two elements. One is to be flexible, but to know where you want to be in five years. The second element is to create a good battle plan from today’s perspective on how to get there. And that battle plan is flexible enough to be constantly adjusted.
„There is nothing worse than relegating the strategy paper to the desk drawer and not living.“
It’s about nailing down that long-term view and always finding ways to get there and prioritize.
What is the difference between a strategy and an action plan?
The next step is to have a target system so that a strategy also works and arrives in everyday life, in the results of the company. What are our goals for this year? What are our goals for next year? That is then broken down into individual blocks of measures.
That is action planning. That’s also important work to do. People need to know what’s at stake this year, over the next 12 months, what the individual-rounded major issues are that we need to take care of, and what needs to be done about them.