What is a Business Strategy?

By | November 5, 2013
This entry is part 2 of 31 in the series Defining words

If you are an Enterprise Architect then at some point someone will ask you to provide an “IT Strategy”.  I think stockholders or regulators have this on a checklist or something so business executives come asking for it right before it is due.  Sometimes the only clear requirement is “we need it fast”.

The good news is you can turn it right back on them!  IT Strategy, by definition, involves aligning the technology roadmap with the Business Strategy.  Hand it over, buddy!

Then one day IT Strategy pops up on your performance plan.  You don’t get a bonus unless there is a current IT strategy, complete, and signed off by a list of characters that you could never get to agree on anything.  And that brings you to the first issue:  You really do need to get your hands on a Business Strategy and–you guessed it–no such thing exists.  Or perhaps it is a 5,000 page document and you are not on the “need to have” list.  You are not sure what you need, but you need it fast!

So what are we really talking about here?  What is it exactly that we need?  And how do we align to it?

A Business Strategy is a fundamental pattern of present and planned objectives, resource deployments, and interactions of an organization with markets, competitors, and other environmental factors*.  Think…

  1. Scope – aka strategic domain.  Industries, products, market segments, etc.  The corporate mission statement should give a hint.
  2. Goals and objectives – Targets for volume/revenue growth, profit, ROI, market share, etc. for a specific time period.
  3. Resource deployments – Obtaining resources (i.e. funding) and allocating them across businesses, products, markets, functional departments, activities, etc.
  4. Identification of a sustainable competitive advantage – How will the business compete?
  5. Synergy – Making the various parts of the company complement and reinforce each other.

It gets more complicated.  See, there are different levels of Business Strategy that are different in nature:  Corporate Strategy, Business Unit Strategy, and Product-Market Strategies.  All three are key drivers for either determining what the IT Strategy should be or getting it funded.

Obviously, this is too big of an issue for a blog post.  But at least we have started to peel the onion on what a Business Strategy is!

A more concrete understanding of what we need from the Business Strategy (and why) will be important because we are probably going to need to explain it in the form of fill-in-the-blank questions.  Multiple choice questions are even better.

* I quote  and paraphrase from “Marketing” by John Mullins et al, which I obtained from Edinburgh Business School.

 

 

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