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What Is Strategy? Understanding the Value of Strategy and Its Application in Your Practice
K. Mortensen
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This presentation explains the concept of strategy in simple terms and explores why strategy is important, how it can foster great leadership, and how it can be applied to your practice and customized to your needs.
1. Introduction
Running a business without a strategic direction that is well understood by everyone on your team is like commanding a ship with no navigational equipment and no knowledge of where you are going. You can still get up, put your oars in the water, and go somewhere—you just don’t really know where you’re headed and have no idea if you’re even remotely close to your destination. The same is true for business. Even if you seem to be profitable, you must understand why, both in terms of the reasons for your success and what you intend to do with the fruits of your labor so that you are perpetuating a positive cycle.
Strategy is essentially an organized approach to getting what you want. It is a plan. It is an understanding of what it is that you do and what you want to be and focuses on how you plan to get there.1 In veterinary medicine, there are countless ways of focusing the efficiencies of your practice and a myriad of approaches you can take to become the practice you have envisioned. Defining success and building a roadmap to get there, however, is often the barrier to entry that prohibits many practices from achieving the growth they could potentially have realized. Equally as important in defining what you want is knowing what you don’t want or, rather, what you don’t intend on achieving so that you aren’t sidetracked easily in your quest for your given objective. Beyond identifying the goal, strategy is the act of knowing, as a business, how to ask for what you want from your team and from the marketplace at the appropriate time and in the appropriate manner.
2. Leadership
Two of the most important attributes of effective leaders are the ability to predict and to delegate.2 Mastering the art of strategy and designing and implementing a strategic plan in your practice are essential in supporting these attributes. You plan so that you can identify an objective and measure your progress against that objective. Measurements are data, and data drive the power to predict.
Consider the importance of prediction in your current environment. To manage cash, you need predictions to set an annual budget. To set an annual budget you need to be able to predict revenues. Predicting revenues requires an understanding of costs, caseload, and the amount of business you think you can generate. To support that caseload you have to plan on the appropriate level of service you can offer, the number of veterinarians you need to satisfy a flow of business, and the number of technicians they’ll need to support the workload. Then there is the matter of space and inventory. In short, there is no end to the need of accurately predicting revenues, and your level of understanding of where you currently are and identifying and describing where you want to be are essential in supporting this capability.
The second prong of leadership is delegation. This is essentially the art of describing your end goal to someone else and helping them to understand their role and level of accountability in reaching this final goal. Great delegation is creating enthusiasm for the task and harnessing the synergy of your team and its capacity to work as a group toward a common vision.
3. Knowing What You Want
A mere 7% of employees today fully understand their company’s business strategies and what’s expected of them to help achieve company goals.3 In short, it is likely that your team has little knowledge of the ultimate goals for your practice, how they fit in to the picture, and how they can assist with the overall effort. Even of greater concern is whether you as a practice owner can adequately describe the goals to your team to get their buy-in, create enthusiasm for the process, and engage them in moving the practice forward in a focused direction.
Easily one of the most challenging questions you will face in life and in business is identifying what you want. You know the answer of course: more. More clients, more caseload, more money, more time, more support—more. Right? Or is it less? Less accounts receivable, less stress, less turnover— less. Or perhaps it is a mix of the two: less of the bad, more of the good, and always as soon as possible. Whatever the case may be, it is the “knowing” that will likely present the greatest challenge, and that is where strategy begins.
If you interview each of your employees and ask them what they want it is likely that few will have a definitive answer. The reality is that when you fail to identify what you want someone else will decide for you. If you allow this to happen in your practice you give up the ability to manage your own destiny. As a business owner or manager, it is essential to understand what success means from the viewpoint of all stakeholders in your organization. When the definition of success is clearly understood, the plan for achieving the desired outcome can begin.
Understanding what you want personally from your practice and what is desired by your team as a whole can be explored by conducting a SWOT analysis. SWOT simply stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are exercises in evaluating the internal organization, and opportunities and threats are external forces that exist regardless of the internal situation.
By conducting this exercise and evaluating these areas, you reveal truths about your organization in terms of issues that need to be addressed and competitive advantages that need to be exploited. You’ll also unveil areas of business that deserve more focus and represent your greatest opportunities for success.
4. Understanding Your Competitive Advantage
Your success as a business is inextricably linked to your competitive advantage— knowing what it is and honing in on your strengths to capture more market share and revenues. Conducting a SWOT analysis will give you the foundation for understanding your current situation and evidentiary support for why you should pursue a given set of objectives. As you consider your position relative to your SWOT analysis, it is imperative that an understanding of your competition and marketplace are thoroughly explored.
Your ability to succeed depends largely on the arena in which you are prepared to compete and how well you can establish your strengths within that defined arena to give you a competitive advantage. In other words, what is it that sets you apart from your competition in the minds of your customers that drives home the value of doing business with your organization?
To assist us in understanding the competitive arena, we utilize Michael E. Porter’s Five Forces of Competitive Position model, which was described in the Harvard Business Review article “How Competitive Forces Shape Strategy.” Porter identified in this article the following forces that govern industry competition:4
- Threat of new entrants:5 Consider how easy it would be for a new practice to enter your market.
- Bargaining power of suppliers:6 How advantageous is the position of your suppliers?
- Jockeying for position among current competitors:7 How loyal are your current clients? Do you consistently make adjustments to try and win them over from competing practices? Have you introduced new services or specialties?
- Bargaining power of customers:8 Are your customers in a position to demand a lower price or particular service? Are they dictating in any way the manner in which you do business?
- Threat of substitute products or services:9 Are there alternatives in the marketplace that your customers could pursue that would take the place of the services you offer?
Ultimately, these areas are designed to assist you in truly evaluating the competition in your marketplace. Consider the amount of time you currently think about your customers. Do you ask them for feedback? What are the outcomes of the services you provide? Is the patient experience being assessed on any level? [...]
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Affiliation of the authors at the time of publication
Inova Partners, LLC, 193 Coy Road, Weatherford, TX 76087
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