Whether your business is just an idea to talk about with friends or a mature, publicly traded icon of industry, having a clear strategy is essential to survive in a competitive market. To adapt one of my favorite quotes from Ping Fu, it is more important to be clear than to be right.
I’ve compiled the core ideas from my favorite HBR articles on strategy, listed at the bottom of this post (plus an idea that I think is from Jack Welch but I can’t attribute) into the 9 critical questions:
- WHY does the business make money? i.e., what gap in the market does it fill?
- HOW does the business make money? i.e., what are the transactions that generate cash flow and margin for the business?
- What is our specific objective?
- What is our scope?
- What is our competitive advantage? i.e., how are we better, cheaper, or different than the alternatives?
- What is our strategic sweet spot? (see diagram)
- What are the relevant products in the market and their geographic coverage?
- Who are the buyers, suppliers, competitors, substitutes, and potential entrants?
- What forces control profitability? (see diagram)
If the answers to these questions aren’t clear for your current business–no matter how big or small–think about it and spark some conversation. The answers will help you focus and might surprise you.
If you have questions, feedback, or know where #1 & #2 come from, leave a comment!