blog

A good strategy starts with a well-defined business model

by Vicky Lalwani
20 Apr 2016
5 min read
Share this article:
A good strategy starts with a well-defined business model
In an upcoming series of articles, I’m going to cover topics on:
 
  • How to create an effective strategy
  • How to go about implementing it in an organisation
  • How an organisation’s culture can impact strategy
 
We all hear the word “strategy” every day when talking about clients, businesses, goals, plans, delivering outcomes, etc. Most often, you’ll hear people asking things like:
 
  • “What is your growth strategy?”
  • “What is your digital strategy?”
  • “What strategy are you going to use to deliver that project on time?”

 
What does that all even mean? Is strategy a business case? A project plan? A scribble on a whiteboard? A process? In fact, it can be all of those things.
 

Someone once told me that... “strategy” meant a conniving plan to do something that no one else knows about – perhaps it is.


A strategy is a high level plan with a set of actions that aims to achieve one or more short, medium or long term goals. Simply put, it answers the question - what is the best way to achieve ‘X’?
 
But here is the kicker – how do we go about defining what ‘X’ is?
 
Let’s take a step back – a strategy needs to be based on a business model. A business model is always (and has to be) defined by the ‘Who’, ‘What’ and ‘How’ – and this forms the core of your strategy.
 
For example, a digital agency’s business model could be defined as:
 
“To offer enterprise clients a suite of digital marketing services with the highest level of quality that meets their business and customer requirements, by creating and growing an agency team of talented designers and developers.”
 
So let’s break this down:
Who = Enterprise clients
What = Digital marketing services with the highest level of quality
How = Talented designers and developers
 
You may wonder – “how do you measure this goal?” Good point. Since revenue is an easy measurement, you could start with “Make $3 million a year by offering enterprise clients...”
 
So now let’s go back to defining ’X’.  You can start to frame and analyse as follows:

  • What is the best way to achieve $3 million revenue? And is this realistic?
  • What is the best way to achieve new Enterprise clients? Is there a demand from this audience for what we offer, and can we service them once we seal the deal?
  • What is the definition of ‘highest level of quality’?
  • What is the best way to achieve new talented designers & developers and how do we retain them?
  • Do we need other resources such as Account and Project Managers to service our customers?

Using the above you can now generate various answers to these questions:

  • How do we go about pricing our services to meet our revenue goal and ensure it is market competitive?
  • What sorts of digital marketing services should we be focusing on?
  • What methods and processes should we implement to attract and win enterprise clients? And is there a demand for our above mentioned services in this sector – or should be targeting small businesses instead?
  • What is our marketing plan to make enterprise customers aware of our services?
  • What is the process to achieve high levels of quality? What tools and resources do we need to measure this? Do we need testers?
  • What is our billing model and systems? (the tool used to measure your success)
  • What is the best way to attract talented staff that align to achieving our business goal?
  • What is our hiring and on-boarding process?
  • How do we ensure we can retain talented staff for the long term?
 
By answering the above questions, you start to create a set of actions - all of which align to your core business model. This set of actions starts to form your business strategy.
 
The key is to get the set of framing questions right – if you start on the wrong foot there, then the answers that define the actions may not result in the outcomes you ideally expect.
 
Say for example, if you frame a question like this:
  Instead of:
  • What is the best way to achieve new talented designers & developers and how do we retain them?

Note, that we moved the “staff retention” part of the question.
 
With the first question above, you will create some great action plans to get on board new staff. However, you do not necessarily consider the staff retention strategy and that could cost you in the long run.
 
Don’t be afraid to get someone who is not biased on your business model to hear your strategy for feedback. A devil’s advocate is sometimes the best thing to either motivate your strategy further or see a different point of view.
 
Someone once told me that they thought the word “strategy” meant a conniving plan to do something that no one else knows about – perhaps it is. Sometimes a strategy can be clever / innovative / different / or (dare I say it) Machiavellian depending on the outcomes you are trying to achieve.
 
Take 15 mins to step back and scribble your business model on a white board – does it address the Who, What and How? If it doesn’t – then rewrite the model until it does.
 
Now go strategise that!

Share this article: