For years, corporate leaders and experts have explored the concept of strategy. Despite this, there is no single definition of strategy.
One explanation for this is that individuals interpret strategy differently. For instance, some believe that predicting the future is impossible and prefer to evolve their strategies organically. Alternatively, others may thoroughly analyze the changing market or business climate and then plan for future success.
Michael Porter, a renowned strategy specialist and Harvard Business School professor, highlights the importance of strategy in defining and communicating an organization’s unique position and determining how organizational resources, skills, and competencies should be integrated to gain competitive advantage.
At North Star Consultants, we recognize the importance of planning for market success. To take advantage of opportunities, companies must anticipate and prepare for the future at all levels.
For example, many successful businesses have a corporate strategy that drives their operations. The organization’s business units have their own strategies that their executives use to determine how they will compete in their respective markets. Each team should also have a strategy to ensure that its daily actions contribute to the organization’s success.
We’ll now look at each level of strategy in more depth – corporate, business unit, and team.
Corporate strategy is the overarching strategy of an organization composed of multiple business units operating in multiple markets. It sets out how the corporation can increase the value of the business units within it. It answers the question, “How do we structure the organization in such a way that all its components create more value collectively than they would individually?”
Corporations can do this by developing and maintaining strong internal competencies, sharing technology and resources between business units, raising capital efficiently, developing and maintaining a strong corporate brand, and so on.
At this level of strategy, we’re concerned with determining how the corporation’s business units should interact and how resources should be allocated to maximize value. It’s also important to consider the organization’s design. The organizational structure of your business, its personnel, and other resources all affect competitive advantage and can help you achieve your strategic goals.
Business Unit Strategy
At the business unit level, strategy is focused on competing effectively in specific markets and addressing the issue, “How can we succeed in this market?” This plan needs to be linked to the objectives of the business level strategy.
Competitive analysis, including the collection of competitive intelligence, is a great starting point when creating a business unit strategy. As part of this, it’s essential to consider your key competencies and how you can best use them to meet your customers’ needs. You may also want to perform a USP Analysis to identify how to improve your competitive position.
Note: Corporate and business unit strategies may overlap or be the same in small businesses. On the other hand, if a company operates in numerous markets, each business unit must consider its strategic path.
In any case, each business unit’s plan must be aligned with the corporation’s overall strategy, particularly when the company’s brand is significant.
Within each business sector, the business unit strategy is likely to be the most visible level of strategy. Employees working within each unit should be able to make direct connections between this strategy and their work. When people understand how they can contribute to their business unit’s success, the foundation for a productive and motivated workforce is established. It’s also important to have a clearly defined mission, vision, and values for the business unit.
To successfully implement corporate and business unit strategies, you’ll need teams from across your organization to collaborate. Each team has a unique contribution to make, which means each team must have its own, albeit simple, team-level strategy.
This team plan needs to directly contribute to achieving business unit and corporate strategies, which means that all levels of strategy must work together to ensure the organization’s success.
It’s useful to define the team’s purpose and scope, for example, through a team charter, and to manage it through strategies such as Management by Objectives and the use of key performance indicators.
You must operate efficiently to fulfill the strategic objectives set out at the highest levels of the business; thus, a key element of your team strategy should be implementing best practices to enable your team to meet its objectives. Optimizing supplier management, quality, and operational excellence are key components of developing and implementing an effective team plan.
In a nutshell, strategy can be defined as “Deciding how we will win in the next era.”
There are various levels of strategy in business. Each one has a distinct focus and requires particular tools and skills.
Corporate strategy is concerned with the corporation, while business unit strategy is concerned with a specific business unit or market. Finally, team strategy outlines how a team will contribute to achieving the organization’s overall goals and objectives.
If you want to find out more about how North Star Consultants can help your business collaborate at a new level, contact us for your free 30-minute consultation.