The answer, without a doubt, is YES. SMEs need strategy and we will develop the reasons throughout the text.
Many times, talking to businessmen they tell me: “ We are clear about our strategic plan. We don't have it in writing, but we all know what we do and our goal is to grow 20% annually ”
Yes, but how? Are you really interested in growing up? Are you more interested in growth or profitability? How are you going to achieve that growth? Have you foreseen the influence of the cooling and the possible crisis that is coming? What investments do you need for it? What will your financial situation be in the coming years? What segments are you interested in and what profitability do you have in them? What competition do you have? Have you thought about how the internet affects your business? And globalization?… and a hundred more questions.
And considering the human aspect, is the entire company equally clear? They agree? What planning is there in the area of human resources? Are there clearly defined and agreed objectives?… and fifty other questions.
All these problems are those of the company that does not have a defined strategy. They are in the market, stumbling from one side to the other without being very clear about their destination or how they are going to get there.
Currently, the environment changes very fast, new technologies increasingly influence the management of companies, phenomena such as the Internet affect the way of doing business, talent is increasingly scarce, globalization is becoming a more important phenomenon…
Therefore, all companies need to be clear about the reason for their company in the market and where it wants to go, when, how and with what human and economic resources. And in addition, the team must be equally clear so internal communication is final.
Many managers and businessmen tell me: “ We have less and less margin. Competitors are becoming more aggressive and we have to sacrifice margin often. ”
This is one of the symptoms of not having a defined strategy.
After a few years in which we have been obsessed with operational efficiency with practices encompassed in total quality such as benchmarking, continuous improvement, Just In Time (JIT),…. We are at a time when many companies offer the same products / services in the same markets and segments, with which prices are increasingly important to differentiate themselves from the competition. This inevitably leads to sectors where the margin is falling dramatically.
We have already identified some problems, but what is the solution?
The solution is strategic direction. It consists of the planning, implementation and control of the strategy.
But what does strategic planning consist of?
Within the process of strategic planning, and after making an analysis of the company, the market and the competition, various alternatives must be developed. After having various alternatives developed, you have to choose the best one.
The strategy is complex and requires making important decisions. It is choosing a path. But after making the elections, the company is clear about the future it wants and what path it has chosen and why.
Quoting Michael Porter " The company without a strategy is willing to try anything ". That is precisely what is to be avoided. If it is clear which path has been chosen, the company is clear about what is important and what is not to achieve its objectives.
But clearly, any strategy must be defined as a series of actions to obtain competitive advantages.
But what is a competitive advantage? It is a positive differentiation from the competition perceived by the client and lasting over time. Some examples of competitive advantages are: a recognized brand, having developed innovative products or services that are difficult to copy, possessing its own technologies, having lower costs than the competition…
If we analyze the definition there are several very important elements:
1. Perceived by the client: We cannot speak of a competitive advantage that is not perceived by the client.
2. Lasting over time: Competitive advantages must be based on lasting points over time and not on ephemeral advantages.
And at this time we must ask ourselves what competitive advantages do we have in our company?
If the answer is not clear to us, possibly we should develop a strategy to achieve them and within it, surely we should contemplate innovation.
