Here’s What Happens When You Have a Stellar Company Strategy.

 Here’s What Happens When You Have a Stellar Company Strategy.

A good strategy is worth its weight in gold. Here are five reasons leaders need to take strategy very seriously in their organizations.

Having a good strategy is critical to your company’s success. But are you aware of the specific advantages of a clear and compelling strategy? These five benefits show why leaders should not just pay lip service to strategy.

1. Shared priorities

The first thing to do before any long journey is to figure out where you are going. Therefore, job number one for any CEO is to determine and communicate the strategic direction of the organization. Without this clearly communicated direction, employees will be left to their own devices. They will pursue their own individual, managerial, or departmental goals, which may not be in sync with those of the organization.

With a well-defined strategy in place, everyone is following the same North Star. All departments use a common vocabulary and can define the objectives suited to arriving at the right destination.

2. Informed decision making

Once employees know where the ship is heading, they can direct their efforts toward helping it get there. One challenge for the CEO is to balance the greater knowledge lower-level employees may have of particular situations with the bigger-picture strategy that the CEO is trying to implement.

Is it easier to transfer the strategy down to the lower-level employee or to transfer all the domain-specific information of each employee to the CEO? Once a company reaches any significant size, it’s almost always easier to communicate knowledge of strategy than to communicate knowledge of detailed operational issues.

With this in mind, having a good strategy empowers employees to make decisions at the lowest level possible. If you’ve done a good job, all employees can make strategically sound decisions – the same ones that their boss or you would make in the same situation.

3. Nimble resource allocation

Resource allocation is often a tradeoff between competing alternatives. If employees don’t understand the company’s strategy, they won’t know how to best spend its money.

For instance, many CEOs emphasize growth over profitability as a long- or mid-term strategy. Growth means investing in new ideas, products, and resources to boost productivity. In this context, employees can make fast spending decisions that fuel growth – but only if they understand the financial goals as part of the overall strategy.

4. Differentiation from rivals

A good strategy sets you apart from the masses. Strategy is a continuous project for leaders, whether it’s during the early stages of a business, when launching a new product, or when venturing down a new strategic path.

This is about business model design. You must focus on your product and market, and always ask critical questions about how your business is different: Who is the customer? What problem are we solving? How do we make money?

Regardless of what stage your company is in, you need to spend a lot of time working on the strategy. As Jim Schleckser of the Inc. CEO Project says, “If you get the business model right, your life is easy. If you get the business model wrong, your life is hard.” Uniqueness – those things that set you apart as a company – will not just inspire your employees but will also send a clear message to customers about why they should do business with you.

5. Future orientation

Finally, if you look at strategy as an ongoing endeavor, it keeps you focused on the future. This is one of the most vital aspects of serving as CEO. If you’re not setting the course and constantly looking at the road ahead, the company can easily become derailed and not perform as expected.

Even in a business with a well-established strategy, reserve at least one full day every quarter to review and think about strategy and some time every week to review how the quarter is progressing. At other times, when things in the business or market are changing rapidly, the right answer may be to spend several days focused on this role. Only then will you be able to craft a strategy that gives you these benefits.

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Joel Trammell

Joel Trammell is the cofounder and architect of CEO-S, an operating system for the chief executive. Joel is a previous CEO of private and public companies and the owner of Texas CEO Magazine. He is the author of The CEO Tightrope and, most recently, The Chief Executive Operating System (with Sherif Sakr).

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