Militaries used the strategy, operations, and tactics framework for centuries to win conflicts. Business, of course, isn’t war, but it is full of conflict. Turns out that planning framework works wonderfully well for businesses too.
Strategy is all about determining the best goals for the organization. Operations consists of allocating resources as needed towards those goals. Tactics refers to the specific day to day actions taken with the resources to achieve the goals.
This is part II of a four part series (I, III, IV) on how to do this, focusing on strategy in particular.
Setting Goals
So, what are strategic goals?
Good strategic goals define the “why” of a company’s actions. Creating a marketing department is not a strategic goal, it’s an operational goal. Why does the company need a marketing department? To achieve one or more of the strategic goals.
Fortunately, business strategic goals share some commonalities regardless of industry. Please note, these goals are in order of importance for any business.
Survival
A company’s first and most important strategic goal must remain survival. Seems obvious, doesn’t it? Unfortunately, survival gets taken for granted as a goal all the time, while other goals don’t support it. Survival of the company itself must inform and constrain all other business goals.
What does company survival mean? It means that the business spends less than it makes in the long term. Yes, most businesses start up with capital, and go through a period of spending lots to make a little. However, that’s a phase to work past. The business model must be profitable, first and foremost. Never spend money on the business without a specific survival goal in mind.
Keep Current Clients Happy
The most profitable customers are always those a business already gained. Retaining those customers over the long term represents one of a company’s highest priorities. Sales and marketing departments don’t accomplish this. Operations, quality control, and customer service either keep people coming back or drive them away.
Driving clients away endangers company survival. A dissatisfied customer base represents a massive liability to any business. Minimizing dissatisfied customers comes over in the “operations” article, but be aware that doing so is a strategic goal.
Fortunately, this goal feeds right into building a business the correct way, from bottom to top. First, make sure the product or service itself solves real problems people have and solves it well. Then, make sure that solution gets proper support from operations, quality control, and customer service. All of that comes long before marketing or sales.
Expand On Current Clients
A company’s current happy customer base represents the easiest market for new solutions. These goals go in this order because they build on each other. If the company is solvent, then it can afford to put out a quality product with excellent customer service backup. Then, when the customer bought a solution they’re happy with, backed with appropriate customer service, they’re happy and trusting of the company.
If they trust the company, those clients will purchase other solutions they need from the company they already know. Keep that trust, and those clients will both continue to purchase and will give word of mouth referral.
Gain New Clients
This strategic goal comes dead last because if a company can’t manage the previous goals, this one won’t save the business. However, because time passes, losing clients remains inevitable. So, gaining new clients retains its eternal place on the list of business strategic goals.
Again, we’re still on strategy, not operations. How the business will get those new clients goes over in operations. The point remains that in all operations and tactics, the core goals must inform management decisions.
Bad Strategic Goals
Can a company work from bad strategic goals? Yes, and those companies will inevitably fail. So, what are the most deadly?
Profit Before Survival
We see this one as intentional when a company starts up to collect startup capital, pay the startup team a lot of money, and then flame out in spectacular fashion. Neither the business nor everyone who depends on the business will thrive.
However, too many business owners and managers unconsciously prioritize profit over company survival. It’s a bad mistake that has led to plenty of failures. Shareholders make less money if the business fails, so immediate profit ought never trump long term survival.
Punishing Competition
This is business. The objective is to survive and excel, not punish the competition. Taking punitive measures in anger against another business wastes time, money, and energy that could be far better spent on other things. It also makes the company look petty and small minded.
Companies who have tried have died.
Dictating Company Culture From The Top
We’re confused why companies make this mistake. Creating and modeling company culture is part of operations, it’s not a strategic goal. Some owners and managers, however, prioritize dictating a particular company culture over creating delivery systems for their product or solution.
Culture is reasonably easy to model, impossible to dictate. Attempting to dictate company culture burns time, money, energy, and employee goodwill.
Putting It Together
Of course, these are fairly generic goals. We sincerely suggest taking this list to kick around with the management team to make them more specific.
Next week we’ll go on to operations and get into the nitty gritty of how to allocate resources to what goal. Hope to see you then!
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