How Does Making A Business Strategy Work?

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Strategy is probably one of the most overused words in business.
Most managers use it on a daily or even hourly basis. That being said, quite a few people don’t really know what strategy is or the best way to go about making a business strategy, as it must be way too complicated.


If you have followed a masterclass on strategy in any business school at one point in time, you will hear the summary: strategy is choice, or more basically put, making a choice in a certain industry that you operate in.

Firstly, Who is my client?


It’s basically segmentation- thinking about who you are going to focus on. This is the first important building block of your choice.

Second, How?

An important building block is to figure out how you are going to make your client happy.
A fancy word for this is called a value chain. Basically, your job is to figure out how you’re going to make your client happy in a unique way, so much so, in fact, that this client is willing to give his or her money for what you offer.

One of the key words in this definition is the word unique. Most of us have been growing up in World of Sports. And if I would ask you who won the Tour de France last year, you will probably know the answer. But if I ask you who came in second, it will become much more difficult.

If we look at the world of business, it’s not about being the best, but about being unique. In most industries there is room for three or five players that can have a long-term healthy return.
It is your job to pick and choose where you are going to compete to take that unique spot. So don’t compete to be the best, aim to be unique.

When you are making a business strategy, it needs to be set to last for a certain amount of time. Research shows that, on average, across all industries, a strategy lasts about 7 years. In certain industries like software, you will be in trouble after 1 ½-2 years. Industries like energy, for example, strategies tend to last longer. One of the most important reasons that determine the length of your strategy is the healthiness of the industry and the way your assets are utilized, or put into practice. Investment is also important. If you have to invest a lesser amount, it is more likely that other people will as well.

A good strategy can last for quite some time, so you don’t have to implement a strategy exercise every year, but it’s important to update your strategy every once in a while.

So go out there and start building your strategy! Know who your audience is and learn how are you are going to build it for them to be the best it can be.