Business strategy in 9 concepts

The world is rich with theories and advice on how to build a better business. The most effective concepts I've learned can be summed up in less than three sentences. Here are nine of them.

1. Strategy can't be divorced from people or tactics. Success starts with a handful of great people. Without the right team of people, nothing of significance is done and strategy remains largely abstract.

2. There are generally three core strategies in business:

A. Be niche or market dominant.
B. Be low cost.
C. Be so special in something that your business is needed.

Here we often talk in terms of niche-centric and customer-centric — dominant in the niche we are in, and highly focused on service to top customers.   

3. For growth areas, the easiest success is close to your current success. A great book on this is "Profit from the Core: A Return to Growth in Turbulent Times" Chris Zook with James Allen.

4. When looking at new areas of growth, consider the following two core questions:

A. Can you win in the effort?
B. Is it worth winning?

5. Before starting any kind of strategy discussion, we look at two questions:

A.    Where are our revenues coming from?
B.    Where are the margins coming from?

Ventures ought to spend 80 percent or more of their efforts on areas that drive current revenues and margins.

6. Leaders must ruthlessly abandon unsuccessful areas and refocus. 

7. Focusing on growing the number of areas you operate in versus focusing on your areas of strength is almost always a bad idea. 

8. Cash coming in must exceed cash going out. Most businesses must constantly focus each month on this core point.

9. More metrics is not better for business. It's very critical that businesses focus on the right metrics rather than get lost in studying more metrics.

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