B2BBoDStrategy

Strategy for StartUps and Others, Part-1

Any organization, whether non-profit or for profit, whether small or large, whether a startup or a well- established and mature business, without a strategy it would drift away from its vision, mission and of course from its customers too (yes, non-profits have customers too: they are called and they are the ‘beneficiaries’ of the non-profit).

 

Strategy in Ghanaian StartUps?
What prompted me to write this article, was a recent posting on the success of World Bank’s programmmes in Ghana and my recent personal discussions from some StartUp founders who have approached me for guidance.

Reading this May 11th 2016 news- item: http://www.worldbank.org/en/news/feature/2016/05/11/ghanas-young-entrepreneurs-get-a-boost-to-their-businesses about the success of World Bank’s eGhana Project, a Project that finished almost 2 years, one finds the World Bank boosting about a company (AdroIT Bureau Ltd) which if you google it, (i) it seems dysfunctional, (ii) the founder of the company (according to World Bank writing) appears as to be the Administrative Assistant of that company instead of a senior executive and (iii) the current Directors -at least on LinkedIn, do not seem to be connected with that company of the World Bank’s ‘success’- story.

My discussion with a few Ghanaian founders –and that is my own personal experience and thus personal reality- who have come out of various Ghanaian incubation programs and trainings, lead me to think that these people were made to believe that a sexy app is good enough to succeed, without getting into account or giving them any notions of Business Strategy.

That example of the World Bank is representative of the perceived signs of success for Ghanaian incubation programmes. But, if you basically ‘keep’ someone in training for a few months/ years and then they are ‘thrown’ into an irksome sea of un- or under- employment, then Business Incubation has failed for the African Business Landscape. I hope I am wrong, but I think that a lot of it, it is because those incubatees are not made aware of the proper notion(s) relating to Business Strategy and what that entails. Given the statistics that almost 9 out of every 10 StartUps fail, that implies that 9 out of 10 incubatees in Africa will be back to jobjunting. Maybe, training those people in strategic thinking, might change these statistics for the African business reality.

What is Business Strategy?
Simply put, Business Strategy is a plan of action designed to achieve a long-term or overall aim under conditions of uncertainty. The word Strategy is a derivative from the Greek word στρατηγός (= a military general), a composite of the Ancient Greek words στρατός (=army) + ηγώ (=to lead); i.e. the Leader of the Army.

In practical terms: a Business Strategy is all about your Customer, since they are the source of income to your organization, i.e. about remaining competitive and making profit. It is also frequently described simply as long-term business planning. How you define your business strategy will determine the direction of your business and obviously what it will look like in the future.

Business Strategy can be implemented at different parts and levels of an organization. For example:

  • at Corporate (Organization- wide) Level
  • at Country Level
  • at Business Unit Level and
  • at Team Level of course.

 

How do you create a Strategy.
Almost everyone will tell you to do a SWOT (Strengths, Weaknesses, Opportunities & Treats) Analysis. Don’t misunderstand me: SWOT is a valuable strategic tool (actually one of many), but you will need first to collect relevant data- input for any analysis. And I have seen very few Startups who have done an Organizational Capacity Assessment and I have even met a lot of founders everywhere who are not even aware of what OC (Organizational Capacity) is. OC is one of the 2 processes which will help define the SW-part on the SWOT analysis.

OC is the process that helps an organization to assess their operational capacity, its strengths and all organizational areas that need improvement. These are areas like:

  1. Human Resources: what are the skills and level of experience needed and how many employees do we need?
  2. Material and Physical items: e.g. computers, furniture, warehouse, raw materials etc.
  3. Financial: how much money is available, predicted and actual cash flow, possible Lines of Credit, etc.
  4. Knowledge/ Information: e.g. data collected, how they are organized, stored and retrieved.
  5. Assets: physical assets owned by the organization, possible licenses and patents, etc.

Sometimes, people refer to it as Organizational Capability and because capacity and capability are so closely related, for the moment, just ‘assume’ that they are the same.

The other process that helps define the SW-part on the SWOT analysis, is OD which stands for Organization Development or Organization Design depending on your geography (Europeans tend to use the later while in the US ‘D’ stands for ‘Development’) and how you were introduced to the topic. Even practitioners argue about which one is the correct one. The classic definition of organization development is:

Organization Development is an effort

  1. planned,
  2. organization-wide, and
  3. managed from the top, to
  4. increase organization effectiveness and health through
  5. planned interventions in the organizations “processes,”

using behavioral-science knowledge” (e.g. applied sociology, organizational analysis, etc.). This definition comes from the book: “Organization Development: Strategies and Models” by Richard Beckhard (1969):

According to the OD Network (a US OD Professional Association), OD interventions tend to be inclusive methodologies and approaches to strategic planning, organization design(?), leadership development, change management, performance management, coaching, diversity, team building, and work/ life balance.

Organization design –to clarify that too- is the process and the outcome of shaping an organizational structure, to align it with the purpose of the business and the context in which the organization exists. A lot of people view Organizational design as an organizational development intervention. As I indicated earlier, the discussion on what OD stands for, is still open and the jury is ‘still out to lunch’.

A lot of HR people (even the ones I have met in Ghana) tend to confuse the OD as the process of setting up employee trainings and see it as part of the HR discipline. OD is different skillset and discipline on its own. The best OD practitioners are those who have a round view of operations, have been former Line Managers or Senior Executives and they have honed their professional experiences with a solid understanding of organizational behavior theory (and practice).

Unfortunately, a lot of StartUp founders undervalue the importance of OD, seeing it as a matter of common sense, instead of seen that OD provides a development platform or a framework to support any products or new technologies being created by their StartUp. Setting up an OD Framework in a StartUp required a lot of time and it is a long- term process. But, it is the process that -most likely- will define the values and culture of your organization

I hope that at this point you got the awareness of what Organizational Capacity and OD are and why they are the first cornerstones in building a Business Strategy for your organization. Obviously, you can google more about these topics.

 

StartUp Strategic Planning
Strategic Planning is an organization’s process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy; it also entails monitoring and control mechanisms for guiding the implementation of the strategy. Strategic Planning is a management activity that sets priorities, strengthens organizational operations, ensures that employees and all other stakeholders are working toward the expected mission results, and assesses the organization’s direction in response to any internal or external changes. It helps an organization to take the decisions and action in the way that would shape its future.

The Strategic Plan is just the document used to communicate within the organization in a consistent manner, all actions needed to achieve those goals. The plan is intended to provide discipline and structure, while allowing for flexibility. So, in practice, plan should be revisited quarterly –if not monthly for a Startup at a given growth phase-, and all assumptions and priorities and tactical decisions should be continuously updated.

The main components of a strategic plan are usually:

  • A High- Level strategy
  • The tactics –i.e. the actions to taken to support the given strategy
  • The milestones, responsibilities & actions that are measured to define success.

Areas where the strategic planning should concentrate (partial list) are:

  • Marketing & Branding
  • Sales, including a clearly defined pricing strategy
  • IT and information flow and organization of Data
  • Competitiveness positioning
  • How to get more customers and maintain existing ones (customer royalty)
  • Financial items and relevant Risk Management.
  • Legal and Compliance issues- actually the whole GRC ensemble (GRC stands for Governance, Risk management, and Compliance)

These are the elements & other process that help define the OT-parts on the SWOT analysis. There is no clear empirical evidence, or research or Case Study that relates or proves that having a Strategic Plan and Planning process is the Key to success. But, most seasoned business practitioners will tell you that you can’t succeed without these.

Caution 1: Excellent Strategic Planning and a super Strategic Plan do not guarantee success for any StartUp without accounting and planning for the execution of all these and their monitoring. It’s like paddling only on own side of a boat.

Caution 2: Do not confuse Business Planning and Strategic Planning which unfortunately a lot of StartUp founders do. Business Planning is about who (people) and what (i.e. product or services to be created and offered) of a business. Strategic Planning is about the how & when.

 

In Conclusion
A Business Strategy is something that needs to be supported by a whole set of Strategic Planning activities. And like everything you plan, you need to enable its execution and you need to monitor its success.

And Strategies along with Strategic Planning and Execution activity should be in a constant cycle of re-evaluation, monitoring and improvement.

Thank you,
Spiros

About the Author: Spiros Tsaltas, a Top-Tier PR & Management Consultant and a former University Professor (RSM MBA, CUNY, etc), Spiros has hands-on experience on setting up all sorts of Startups both in the US and in Europe. He is an active transformational leader and strategist with extensive experience on Boards of Advisors & Boards of Directors. He is currently assisting a couple of Ghanaian companies with the setup of their Boards.

 

© 2018 Spiros Tsaltas and  © 2018 HireLoyalty