Strategy Sets the Scene for Growth

As the world economy improves, businesses will again aspire to grow.

During the recession, businesses have been in survival mode, grabbing revenue from wherever they can, to make sure they can meet their overheads. Clearly, it's crucial to maintain cash flow and remain solvent, or there won't be a business to run when the recession is over.

But this approach is reactive, not strategic. Taking whatever business is available does nothing for your strategic positioning. The business loses focus. It becomes bland and loses its competitive edge because it is not clearly differentiated from other suppliers. As businesses become more alike, the need to compete on price becomes greater. And the result of this is a downward spiral.

Strategy is your choice of how and where to compete. It determines the identity of your business and the direction in which it is headed. Strategy enables your business to compete on its own terms instead of being dragged into a price war by its competitors. Your strategy defines what you won't do as well as what you will do.

A strategy should be original, not a replica of someone else's approach. Your business achieves competitive advantage through a combination of (1) its unique strengths and (2) how it decides to use them. To really differentiate, you need to think creatively about both parts of this equation.

Your strategy establishes criteria for all of the business decisions which are to follow. A new strategy forces a break from entrenched habits and old ways of thinking.

If you're ready for growth, don't get stuck in precedent; get a strategy.

Use Precedent Purposefully

When people are discussing future strategic directions, there is a tendency to default to what has been done in the past. The conversation goes something like this: "What should we do?" "Let's brainstorm some alternatives" "Well, what did we do last time?" "What are other people doing?" "What is best practice in this arena?"

Why does this happen? The people may want to think more innovatively, but something is preventing them. That thing is the human brain. Throughout your life, your brain takes in pieces of information and arranges them in patterns in your memory. As new information comes in, your brain does a search to see how it might fit with other information already stored in your memory. When you look for an idea, your brain goes straight to its store of similar ideas and retrieves those. The "shelves" of your brain are stocked with examples of things you've seen or done or heard of before.*

Your brain offers you a selection of "templates" (or "precedents" in lawyer-language).

This explains why many people find it difficult to think laterally, and why a brainstorm often produces little in the way of novel suggestions.

To make the most of the brain's liking for precedents, search for examples that are "broadly similar" rather than "narrowly similar". You can do this by stating the challenge from a variety of different perspectives, and by experimenting with different levels of abstraction (by expressing the question in a more general or a more specific way).

New ideas often come from unconsciously combining elements of existing ideas. To maximize the likelihood of such a brainwave, you need plenty of examples to work with. Don't just go with the first idea that seems to be workable - map out a whole range of options, and examine the best aspects of each.

Have patience with the process, because new ideas take time to develop.

When creating your business strategy, don't simply default to precedent. But if you are going to use precedent, use it purposefully.