Companies need a strategy. This is often said, but few companies have a real strategy. It doesn’t even have to be about topics such as digitalization, new business models, their own digital transformation if the question of strategy is asked. Since many companies without a strategy are more concerned with the day-to-day job without a big goal or plan, this can have long-term consequences on their business success. Since many founders of a company still have problems to define a strategy and do not know which elements basically occur in a strategy, we explain here the 7 most important elements of a strategy briefly.
It is always important to understand that every strategic planning starts with the vision and with every step becomes more and more tangible for the responsible persons.
7 key elements in building a strategy for business
1. Vision – without the vision there is no strategy
The so-called “Vision Statement” is one of the central components of a good strategy. One should clearly think long-term. Where should the journey of the company go and above all explain the vision of the company, where it should be in 3, 5 or more years.
Especially here you should take care to really work out your own core and your own goals and to deal with them over several hours and days. This vision is then the basis for all further steps.
A good example of a vision has Amazon: “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
2. Mission – clarify who you are
In contrast to the vision of a future for the company, the mission statement is the description of what you represent as a company. It describes what makes you unique and how to make customers happy with what you do.
Often vision and mission statement are combined into one. But you should clearly distinguish between describing where you are now, what you represent now and what you are doing to move towards your vision in the future.
A good example of a Vision Statement is Harley Davidson: “We fulfill dreams through the experience of motorcycling, by providing motorcyclists and the public with an expanding line of motorcycles and branded products and services in selected market segments.”
3. Core value – the values of a company
By looking at your core values, you can also quickly define what values you represent as a company and what values you avoid. This is also almost like a guide on how to work to achieve your goals.
Coca Cola has very clear and simple core values:
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it’s up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
Quality: What we do, we do well
4. SWOT Analysis
To achieve goals, it is not only practical to have instructions but also to know where you stand and what your own strengths, weaknesses, opportunities, and risks are. This is exactly the task of SWOT analysis. It systematically illuminates the areas. This works best with as many members of the company as possible, so that any not so obvious weaknesses or strengths can be better identified.
Strengths – Here you describe your own strengths. For example, where you are better than the competition, what advantages you have, etc.
Weaknesses – Here you can find out which weaknesses exist in the company. For example disadvantages, problems, stumbling blocks, etc.
Opportunities – What are the possible opportunities on the market and where are the possibilities for development.
Threats – What dangers can arise on the market and what should be watched out for.
5. Long-term objectives
After you have intensively dealt with your vision, your mission, and your SWOT analysis, you should also set goals. In this document, you try to describe in 3-5 statements how you want to achieve your vision. The plans are briefly formulated so that they are comprehensible. This step also helps to look realistically at how far the vision is realistic or unrealistic.
6. Set targets for each year
Based on the long-term objectives set out in point 5, it is advisable to abstract them on an annual basis. What do we need to achieve this year to achieve our long-term goals? What is the desired progress this year?
Especially these targets should be created according to the SMART principle.
Specific – Simple, clearly defined, and relevant objectives
Measurable – Targets must be measurable and comparable
Achievable – Set achievable goals
Realistic – Targets must be realistic and achievable
Time-based – The goals must have clear start and end points or be delimitable in time.
7. Establish an action plan
The final breakdown of the planning is then at the most concrete level with the action plan. Here you define clear activities for the individual goals in the year. Depending on the complexity of the annual goals, these must be explained in detail. Especially the action plan should be easy to understand for everyone so that employees or business partners can easily get an overview of the
“A vision without a plan is just a dream. A plan without a vision is just drudgery. But a vision with a plan can change the world.”