First, the strategic management process looks at the actual model of your business and determines whether it is a revenue generation model. You must clarify how your business is going to make money and why people would find your product or service interesting.
In addition, you must find out how much demand there is for your product or service and what qualities are demanded. For example, if you are selling TVs, find out what people want in TVs, if you can make a profit making TVs, and in what volume you can make TVs. All of these are strategic discussions that you must undertake when you draw out your plan so that you can actually have a profitable business. Without this clarity, you get stuck in the day to day.
Part two of the strategic management process is identifying your target market — the customers you are selling to. Survey consistently to find out what your customers think. Know where your customers go, what they buy, where they sleep, and everything else. This knowledge is essential to really grasp what your customers need. You must understand what your customers’ lifestyles are like and understand how your product fits into them.
You must have some way to contact your target market. You can use your current customers to survey if you have them. Find out your target market’s addresses, e-mails, and phone numbers. Draw up a survey about your product and find out what they want.
The best surveys must be short to entice your target market to take them. Furthermore, it is best to conduct surveys in person. Have someone call and actually talk to them. Ask them, “If you were running my business, what would you produce or what problem would you try to solve?” People love to talk about this and their answers can give you tremendous insight as to what your target market really wants.
There are rare exceptions of an innovator who is so visionary that the target market would never be able to come up with what he or she decides to produce. For example, Apple’s iPhone is a brainchild of design. Even for products like this, however, surveys are still conducted so that people can give their opinion about what makes sense to them.
Other than surveys, focus groups have some potential. However, they can be extremely inefficient and there is a lot of setup and preparation involved in conducting a successful focus group. If five people turn up, you are really only getting five opinions. To get a real sense of how the market works, you need a volume of opinions. One person’s off-the-wall opinion is not going to help you as much as a thousand people. With mass data, you can formulate a bell curve and analyze your market much more accurately.
The third step of the strategic management process is listening to the data. A remarkable number of companies fail because they do not take heed of the information they collected. For example, if the target market says they want 12 inch TV screens that fit on top of their microwaves in their kitchens and you produce big screens TVs, it should not surprise you if your product does not sell.
Skype is a great example of a company who listened to their collected data. The company figured out that their target market wanted simple functionality more than anything else. They didn’t want it to be fancy or impressive at all. It just had to work. Thus, Skype did not spend any money on sales. Instead, they put all of their resources into making their product work on the technical side and as reliable as possible.
Sometimes companies have to revisit their strategy because the market changes. However, if you are doing well, do not mess with your strategy. If you do notice that your product is becoming outdated in your market or that you are losing a large market share to your competitors, you need to change your strategy up.
However, once you find out an effective strategic management process that works for you, do not try to change it up just because of other companies. For example, when Michael Dell started building computers for people, they were always desktops. The minute that laptops hit the market, however, Dell started fleshing out into laptops and buying different parts.
This departure from their old strategic management process led to hard times. Until they really got their strategy back together again after a couple years, the company suffered. If you decide to change your strategic management process, make sure you do so for the right reasons.