Does your SME have a business strategy? Now, more than ever is the time to ensure you have defined a strategic plan and roadmap for your B2B to follow.
Developing and implementing a buyer-driven strategy will help you acquire, retain and nurture your client base. It will be critical to your SME’s restart and recovery heading into 2021.
- What is a business strategy?
- Why is it important to have a business strategy?
- Why is it necessary to create a strategy for B2B markets?
- What is the strategic planning process?
- Developing a business strategy.
- Part 1: Where to focus.
- Part 2: How to win.
- Things to watch out for when developing your B2B strategy.
- Business strategy FAQ
- About Michael Haynes
What is a business strategy?
A business strategy is a framework that provides the ‘running sheet’ for your company. An effective strategy provides clarity and focus to all members of your company as to what it will do and will not do.
In other words, strategy is about where to focus and how to win.
In Roger Martin and Al Lafley’s book, Playing to Win, they state a strategy is ultimately about making explicit choices and then building a business around those choices.
In short, it will define your company’s goals, priorities and key actions.
Why is it important to have a business strategy?
SMEs, particularly in the current environment, may experience limited financial, staffing and/ or equipment resources, along with distribution access issues.
While an effective strategy takes effort to create, it will allow an SME to:
- Identify sustainable and profitable opportunities and avoid pursuing opportunities that aren’t suited to your company
- Stay focused on ‘where you can win’ and avoid doing too much and spreading your resources too thinly
- Ensures any experimentation and innovation is conducted within defined focus areas
- Aligns the entire organisation by empowering employees
- Avoid duplicating efforts and pursuing conflicting agendas
Why is it necessary to create a strategy for B2B markets?
There are a number of unique characteristics and dynamics to developing your strategy when selling products and services in B2B markets. These can include:
- Buyers and users are often not the same
- Greater number of buyers
- Increased use of buying committees
- Greater reliance on research and self-diagnosis
- Long and complex sales cycles
- Expanding subscription economy
Therefore, the strategies your company develops must consider and address these dynamics as they exist in the industries and geographic in which it operates.
What is the strategic planning process?
The strategic planning process begins with defining the goals for your business, along with the strategies, plans and actions by which these goals will be achieved. Hence, strategic planning is about making choices regarding where to focus and how to win.
The strategic plan provides your SME with the roadmap detailing its 3 core outputs:
- What to deliver
- How to deliver
- How to promote to & engage your customers
Developing a business strategy.
The aim of developing your company’s B2B strategy is to identify and document:
Where to focus: What market opportunities (e.g. specific industries, geographic markets, market trends and business customers it will focus on)
How to win: How it will leverage the company’s strengths, capabilities and resources to take advantage of those identified opportunities
Part 1: Where to focus.
Step 1: Gather your learnings from listening.
Synthesize what you learn from listening and gathering feedback across these 3 levels:
Listening to “You”
- The leadership team and board (if applicable) view on the company’s direction
- Your company’s vision, mission and goals.
- Analysis of key metrics: sales and profitability for the industries and markets your company operates in; your company’s key assets, skills and capabilities.
Note: Be sure to obtain cross-functional input from key departments such as finance, marketing, operations, client delivery, customer service/ success.
Listening to “The Market”
This will include an analysis of:
- The market performance of both current and prospective target industries and markets
- Key trends
By completing this analysis, you will gain insights into the profitable industries and geographic markets worth pursuing. You’ll identify the trends and developments your SME should respond to and how you can differentiate and position yourselves against your key competitors.
Listening to Customers
You must analyse the feedback and insights obtained from business customers. Ideally from a range of customers including:
- Those that love you
- Those that hate you
- Those that never bought from you
- Previous customers
By analysing the insights and feedback obtained, you will gain an in-depth understanding of the priorities, requirements, motivations, preferences, stakeholders and purchase decision process.
Tip: Remember we are B2B, so it is critical that you obtain a buyer level understanding.
Here are some suggestions on different ways you can listen to your customers to get the feedback you’ll need.
Get your free guide to deciphering the business buyer
Understand what buyers are looking for and how yo can get them to buy
Analyzing the results
Once you have collated and analyzed the results from this exercise, we recommend conducting one or more strategic, cross-functional, planning workshops to:
- Review and discuss the results
- Determine where to focus (i.e. which industries, geographic markets and business customers you will focus on)
Part 2: How to win.
Step 2: Identify the business innovations required.
Determine which business innovations, i.e. improvements and/or introductions, are required to meet the needs of the industries, markets and clients you are targeting.
There are 5 types of business innovations that you may wish to consider:
- Product innovation
- Service innovation
- Organizational innovation
- Marketing innovation
- Process innovation
Step 3: Determine what pathway your company will use to drive growth.
There are 4 growth pathways to be aware of:
- Growing your overall market
- Increasing market share
- Increasing your prices
- Extending your product offerings
For each pathway, the key is to innovate based on understanding the business customer’s needs.
Step 4: Identify the capabilities required to execute your B2B strategy.
Determine what capabilities your company needs, based on the strategy developed. It is highly likely that you will require one of more of the following:
- Specific knowledge and/or expertise
The strategy developed may require that your SME develop new capabilities and strengths while also leveraging existing ones. Given the high rate of change and volatility that exists, it is quite conceivable that capability gaps will be identified.
How to build business capability
There are 3 options to meeting capability requirements
- Create new processes or systems internally (Process innovation)
- Co-creation with customers (Process innovation)
- Joint venture/strategic alliance with another organization (Organizational innovation)
- Training program implementation (Organizational innovation)
- Business loans, equipment leasing, hiring contract/contingent workers
- Hire new staff
- Purchase systems/equipment
- Outsourcing (Organizational innovation)
- Acquire or merge with another business that has complementary competencies
Step 5: Plan and assign the resources required to execute.
When determining how to meet these capability requirements, also gather input from internal departments such as IT, HR, Operations and Finance.
Achieving Agreement and Alignment
Once you have identified:
- Where to Focus
- The business innovations to be undertaken
- Desired growth pathway
- Required capabilities
You should identify and prioritize the key actions needed to achieve the defined goals. It is highly recommended that this agreement and prioritization be achieved by conducting cross-functional meetings/workshops.
In addition, if possible you should review and discuss both the strategy and the prioritized actions with:
- The SME’s leadership team.
- Any business units and/or individuals involved in their execution for input and feedback.
Things to watch out for when developing your B2B strategy.
Continual “listening” and scenario planning are critical!
As a result of the high degree of change currently occurring across many markets and industries, ensure your SME is regularly listening to its customers.
When major changes or developments are identified, conduct a scenario analysis to provide an understanding of their impacts, and the capabilities needed to adjust your strategy accordingly.
Conduct a regular “review and reset” analysis.
To help ensure your company is adaptive to changing and uncertain conditions, plan to review your B2B strategy at least quarterly, adjusting when neccessary.
During these sessions, it is important to understand:
- The major change, development, disruptions that have occurred
- The potential impacts/scenarios that could arise
- What are the required capabilities
- What strategy changes and action plans needed to respond
Business strategy FAQ
Given the current environment we face, your B2B’s strategic planning should have a forward time horizon of no more than 2-3 years.
No, but you and your team will need extensive skills in strategy and scenario planning, market and customer analysis and business innovation. Our coaching programs will help you fill in the gaps.
About Michael Haynes
Customer Acquisition & Business Growth Strategy Consultant
For over 20 years, Michael has worked with micro-businesses to large corporates alike across Australia and Canada, developing and implementing business growth strategies and programs.