Every company needs a strategy but too many entrepreneurs confuse their business strategy with their business plan. No start-up can expect to get past first base without a plan. You can’t get a business loan or a support grant from the local branch of Business Gateway without one, but in many cases it need be little more than a short wish-list of outcomes informed by hope rather than hard evidence.
A strategy is different. It should be the beating heart of every business: living, breathing, responsive to change and the collective property of everyone in the company, no matter how lowly their position.
A well-crafted and executed strategy establishes the foundations upon which the business is built, providing each member of the team with a clear understanding of what’s expected of them. It exploits their capabilities, encourages them to identify and deal with any weaknesses and it mitigates risk. It allows everyone to focus on the next immediate priority, helping them to deliver their best performance, to enhance productivity and boost profits. Above all it’s flexible, recognising where opportunities exist and adapting its shape and expectations to pursue them.
Last month Apple filed its latest report with the Securities and Exchange Commission (SEC), in which the inclusion of a single, additional word made tech-industry watchers sit-up and take notice. That word was ‘Services’. Apple is known principally as a manufacturer of products – iPads, iPhones, MacBooks etc – but its Services division, comprising the App Store and subscriptions like Apple Music, iTunes and iCloud, has become its second-largest income stream after the iPhone, with quarterly revenues of $7.3billion.
Tim Cook, Apple’s CEO, told investors: ‘Over the last 12 months, our Services business has become the size of a Fortune 100 company, a milestone we've reached even sooner than we had expected.’
Such an outcome wouldn’t have been possible if Apple had continued to focus on its core business and failed to adapt its strategy to recognise the growing importance of Services. In the experience of Apple and many other businesses, the catalyst for change was digital advancement.
Technology - online, digital, cloud computing and automation - has become central to almost every business, with a recent report from the Hackett Group indicating that digital transformation can reduce transaction costs of finance, procurement and other general and administrative functions of a business by up to 40%. There’s an expectation that every company has a platform and, if you don’t have one, you’d better get one.
Businesses must adapt to the evolving world and the most successful are those which recognise that what made them, will not necessarily make them grow. Business owners can fear ceding control because developing technology requires the importing of technical skill.
Adapting often means leaving your comfort zone, trusting people, taking risks, but that’s what successful business people do. They hire the right talent, put the right metrics in place, lay out the road map and plot the right path. Seldom do they actually drive the vehicle.
MindGenius began with a desktop product but as the internet boomed so did customers’ expectations and we had to adapt with the development of an online product. We responded to the changing market with a competitive relevant offering and, hopefully we’ve secured our future. Moore’s Law dictates that computers and the internet will only continue to develop and it’s important that businesses understand what future developments may impact them, and more importantly, that they have a strategy to respond.
Ashley Marron is CEO of East Kilbride-based business software developer MindGenius