Lessons in Leadership: 5 Principles for an Effective Business Strategy

By Andy Sio
November 16, 2017

Transforming a small start-up into a big business, or a mid-size enterprise into a huge company, is no simple feat. The statistics, for one, don’t look good, as research suggests that only about a 0.10% of companies will ever reach the lofty goal of $250 million or above in revenue. In other words, a lot of businesses simply stay small.

However, just because other companies might have tried and failed to take the next step towards success, doesn’t necessarily mean that you need to give up. Countless organizations have been able to make the transition from start-up company to fully-thriving organization before. All they needed to get them on the right path to success, was a business growth strategy.

Unfortunately, a lot of brands consider “business strategy” to be nothing more than an interesting term. That’s why “strategy” continues to be one of the most over-used and under-recognized words in business. In today’s article, we’re going to introduce you to the basics of an effective business strategy, and outline the 5 principles every leader should know.

Business Strategy

Five Key Types Business Growth Strategy

There are countless different types of business strategy out there - depending on what you hope to accomplish in your company. For instance, here are just some of the most common strategies that most organizations will consider:

  1. Market Penetration Strategy: Perhaps the simplest business growth strategy for any company to use, is one that focuses on selling more of an existing product to the same customers. You could also think about finding new ways for customers to use your product, such as using vinegar as a cleaning product, for instance.

  2. Market Development Strategy: Another option is to think of a way that you can sell more of your existing product to similar market. For instance, if you know that people in your local city love your product, then there’s a good chance you’ll be able to enjoy similar penetration by moving your focus to surrounding cities, or your entire country, if you’ve got enough resources to accomplish such a feat.

  3. Alternative Channel Strategy: Some companies choose to grow their business by thinking of the different ways that they can sell their products. For instance, if you have an existing retail store, you might decide to sell your products online too. After all, most people today do their shopping over the internet. Giving your customers a different way to access products, such as through software as a service, or a rental model is another example of how you can expand with a channel strategy.

  4. Product development strategy: Yet another form of classic growth strategy, product development involves creating new products that you can sell to your existing customers, as well as possibly new markets. Generally, you’ll want to introduce new products that appeal to your existing audience, as it’s often much easier to sell to a current audience, than trying to market a new one to a new range of people.

  5. New products for new customers: Finally, the state of the market means that you’ll have to take the leap and start developing new products for new customers. For instance, Apple pulled of this strategy particularly well when they decided to start selling the iPod alongside their computers.

The Business Strategy Principles All Leaders Should Know

No matter which business growth strategy you choose, the key thing to remember is that collaboration is key. Giving your product and brand the scope it needs to evolve means getting everyone in your organization on the same page, at the same time.

Once you have all the right members of your company working together on a cohesive strategy, you’ll find that you’re capable of achieving a lot more, in a much shorter space of time. After all, multiple minds working together is always going to be better than a single product manager struggling to get things done!

With that in mind, here are just some of the business strategy principles that you should keep in mind as you adjust your path to success.

Focus on Differentiation

A lot of companies assume that creating a business strategy is about finding a way to be the “best” in their industry. However, the truth is that it’s not about being the best, but being unique enough to capture the attention of your target audience.

Many business leaders compare competition in their industry with a sort of sports league table - assuming that there can only be one winner. However, the diverse nature of consumers in today’s world means that there can be several winners in any marketplace. All you need to do is give your customers a reason to keep coming back to you.

Know Your Industry Before You Start Your Strategy

A company doesn’t exist in a silo. Every brand is part of a larger sector, or industry, and each industry has its own distinct characteristics and structure. The structure of your specific marketplace, and the position of your company within that industry will determine exactly how profitable you can be, and what you need to do to maximize your chances of success.

Before you begin trying to build the business of a lifetime, make sure you understand where you stand. Think about your industry, and the competition in the sector, and then make choices based on how you can compare yourself to other offerings in your space. The more you understand about your situation, the better you can compete.

Profit Comes First

Ultimately, running a successful business with an effective business growth strategy isn’t about how quickly you can expand - it’s about how much profit you can earn for your brand. “Growth” isn’t so much a strategy in itself, as a byproduct of good strategy.

Rather than simply telling yourself that you want to be bigger, make sure that you’re measuring the right things to determine whether your strategies are having a positive impact. In other words, look at your profits, your balance sheets, and your conversions, then use them in your product planning systems to make stronger decisions.

Focus on the Customer

While profit is key to a successful business, you also need to put plenty of weight on the knowledge that you have about your customer base if you want to get great results. A clear insight into who you’re going to serve, and how you’re going to serve them will help to influence your decisions all the way from feature prioritization to product strategy.

A great company knows how to connect the outside world to their business one step at a time. That means having a good value proposition, an excellent product that’s aligned to the pain points of your customers, and a strong focus on your goals. Remember, you can’t be everything to everyone. Instead, you’ll need to narrow your ambitions and focus on the sector that’s most relevant to you.

Once you know exactly who your customer is, you’ll be able to establish a user persona that you can share with the other members of your team through the right process management software. That way, everyone will be on the same page.

A Great Business Strategy Requires Constant Evolution

Having a solid business growth strategy in place doesn’t mean that you’re done working on your company. At the end of the day, no matter how timeless you consider your strategy to be, the truth is that competitors change, the needs of customers evolve, and your marketplace will adjust to suit different technologies and trends. If you want to be prepared to continue competing in the sector no matter what else happens, then you’ll need to make your strategy flexible.

Develop a business growth strategy that allows you to keep moving, and make sure that everyone in your industry has the ability to enter their thoughts and opinions into the mix when the occasion calls for it. The right collaboration software can help with this, and business process analyses can make sure that you’re responding to business pain points as efficiently as possible.

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