Strategy BEFORE Systems - Here’s why…

Think about the backbone of your business for a moment. Are you confident it's strong enough to withhold all of the systems and tools that you're going to build on top of it? I mean, if you've watched any of my videos on this channel, you'll know that I hark on about the importance of building systems inside your business. However, there is one critical component that you really need to have in place before even contemplating building systems inside your business. Otherwise, they're just going to be ineffective. And what we're going to do in this video is we're going to be talking about exactly what that critical component is, how you go about putting inside your business. And I'm going to give you some real life examples of when they were in place and what those businesses did and how they flourished and when they weren't in place. And unfortunately, what happened to those businesses? Let's not waste any more time. Let's get on with the video. So let's dive straight in. I've mentioned extensively on this channel that business systems are crucial to your business and they are. However, you need to have this foundational layer that comes before implementing any of these things. And that foundational layer is business strategy. Now, before you click away, let me give you an example of how business strategy can really dictate what business systems that you have inside your business. Otherwise, you might be building the wrong business systems entirely in your business and the business will fail. So at CEO Entrepreneur, we get a lot of business owners that come to us for help on how to scale their business effectively and efficiently. And one of the business owners that came to us was a clothes factory business owner. She had a clothes factory that essentially took orders from high street retail stores, manufactured their clothes and shipped it back to them. And when she came to us, she had 100 people on her factory floor and she said, Tama, we've got 100 people on the factory floor. We've got just a few people in admin. I'm completely burning out. We don't have the right systems in place. We really need to scale because we're getting in even more orders than we can handle. We need to expand our factory floor space. We need to hire more factory workers. We need to buy more machines. And we need to basically implement the right systems to automate some of these processes and to actually do a whole bunch of things to make it effective and efficient. And I said, hang on a minute. Slow down. Let's have a look at your business strategy first. And what happened was quite interesting. When she went and had a look at her business strategy, it changed her entire business model and the systems that she was going to build and the machines that she was going to buy and the factory workers that she was going to hire. She didn't need to do at all. And I'll talk about exactly what happened towards the end of the video. But before I do that, I want to break down exactly what business strategy is because there's a quite a lot of misconceptions about what it is, but be also, it will make you understand how that change made a significant difference inside her business and potentially yours as well, because you might be building the wrong systems inside your business or hiring the wrong people. And we want to make sure that we have that foundational layer of what business strategy is so that we can then synchronize it with the business systems that you're going to build and implement. So let's have a look at business strategy right now. A lot of people, when they think about business strategy, they think about, Hey, you know, I've got a product or a service. I know what my market is. I'm going to sell as much as I want to. And here are my goals of what I want to achieve in my business in the next couple of years. That is not a business strategy. A business strategy is essentially your roadmap of how you're going to go about achieving your vision and your mission and the objectives in your business. How are you going to do it? It's almost like a sat nav saying, turn left, turn right here, take this different diversion because there's big roadblock here and there's a lot of traffic. There's an accident here. And there are potential challenges and obstacles in the way of how you're growing your business and how you basically navigate your way through these obstacles and challenges. It's essentially a roadmap for your business and you need to understand how your business model is going to operate, what the market trends are, what the challenges are, how you're going to innovate and all of the above in terms of what your business strategy is. A very, very simple way of looking at it is almost like a jigsaw puzzle. Now without the jigsaw puzzle picture that's on the box, you're not going to know what you're going to actually put, you know, with your jigsaw pieces and how you're going to put them together. Your strategy and your vision is that picture. Overall, this is the end result of what I'm going to achieve. And you know that you're going to have to look at all of these jigsaw pieces and put them together in a way where you're going to be able to actually get a finished puzzle at the end. You provided the final piece in the jigsaw puzzle yourself. And you know that here are some edges and that's how you start. And you know, you put them together and how you go about doing them. Now your jigsaw pieces themselves are your systems. These are the different processes and systems that you have inside your business. And what you want to do is you want to be able to put them together to build that overall picture that aligns with your overall vision and business strategy. And that's what a lot of people get wrong. They think that their business strategy is a set of goals and it really isn't. So we've talked about business strategy and how this mysterious foundational element needs to be in place before implementing systems, but nothing really drives home a point more than seeing it in action, right? So let's have a look at two bigger case studies before we go into the example business that we had, which is a much smaller example, but let's look at two really well-known businesses and how the wrong business strategy ended up making the wrong business systems being implemented inside the business. And then how one particular business went out of business and the other one completely flourished. Let's have a look at the first one. And that is Kodak. So Kodak was in the past a very big name in photography and they had all of the right business systems when they were flourishing and when they were basically dominating the photography market in terms of producing films and pictures, they invested all of their systems into hiring chemical engineers for film processes, you know, developing manufacturing plants, chemical processing plants, and developing the right systems to make these efficient and robust, and maybe not touchable in a way. However, they missed a point that digital photography was coming in and they completely ignored that market trend. And what they did was they focused themselves down even more and they doubled down on building even more factory plants and hiring more chemical engineers because they wanted to get the most out of film processing. But unfortunately they were building the wrong systems. The company went out of business and it went bankrupt because their strategy was the wrong strategy where market trends were clearly showing that digital photography was on its way. And had they made the shift to digital photography, they would have been able to have a much better business. Another example is Blockbuster Video. Now Blockbuster Video also was in the home video business where they used to rent out DVDs and videos and they did not keep up with the market trend of going to streaming and digital. And what they did was they doubled down their systems and processes in terms of like, you know, okay, let's hire things online and let's send the video and let's do all of this. But again, they were building the wrong systems based on the wrong strategy of what they were trying to do. In contrast, when you look at Netflix, they were very, very similar. They were doing video rentals and DVDs online. However, they noticed that streaming was the next big trend and they invested a lot of their business strategy and then hence their business systems towards making sure that they had the right streaming infrastructure and how they then started developing those business systems in terms of keeping up with the strategy, which was let's switch to streaming rather than having this old business model in place. And the rest is history, of course. These are some examples of where business strategy really formulates the right business systems. If you are going to develop film, you're going to need to get chemical engineers and you're going to need to hire all of these people. You're going to need to develop, you know, factories with chemical processing and film and all of these kinds of things. And you're investing in the wrong business systems to start off with entirely. Whereas actually you want to be looking at the right business system in place. Another example of a successful one is Amazon. Now Amazon started off very much as an online bookstore, but they knew very early on that they wanted to dominate the online retail market. And that's essentially what they did. They build systems to have the right logistics and infrastructure so that they could deliver things in the quickest way possible. They made sure that they built the right systems in terms of the right online store, the actual marketing processes in terms of making sure that they had the right urgency and how people clicked on things. They optimized their online website. They optimized their CRMs and their way that they handled customers and relations. And all of these systems that were put in place was not just for an online bookstore, but very much for an online retail store that could actually sell absolutely everything that they had. And that was the strategy from day one. So you can begin to see how business systems can really change things. One last example, Apple. Apple is all about premium, innovative, high end, easy to use products and services that they have. And you can see all of their systems align with that exact same thing. Even when you look at their retail stores, you go in and you have an amazing premium experience that is done by people that keep things really simple and how to deliver that packaging. When you open the packaging, every business system that they have and their designs and the products and they have, all of this is tied down to their fundamental strategy, which is premium simplicity, innovative, and having all of that in place. Great, Tama. I've got it. Business strategy. Very important. Okay. But how do I go about building the right business strategy and aligning it to my systems? You better tell me. Glad you asked. So the first thing that you need to be looking at is making sure that you've got the right vision and mission for your business. And I've got a video up here that talks about how you go about developing the right vision. And another video up here that actually takes you through developing your mission. But once you do that, what you want to be able to do is to really understand your market. What is the problem that you're solving? Who is your customer? What does your customer need? What is your customer afraid of? What is it that they really, really desire? Who are your competitors in the market, whether they're direct or indirect competitors, and how do you make yourself uniquely stand out in that marketplace? And by looking at all of these things, you begin to formulate a really solid strategy about what the market trends are, who your business competitors are, who your customers are going to be, and how you're going to provide your product and service in a way that really makes you stand out. Once you do that. And once you've got the right business strategy, we have a business strategy playbook when you come and join our firestarter program or in other ways that you work with us, but essentially that's kind of what you need to be looking at. So once you've developed the right business strategy, how do you really then tie that into implementing business systems? So to understand how business strategy can really influence the systems that you build, let's go back to the example that I was talking about earlier in terms of the clothes factory. Now, when she first came to us, remember she was basically saying, I need to build more systems to improve the factory floor. I need to buy more machines. I need to expand the factory floor space. I need to hire more workers, et cetera, et cetera. But when she started looking at business strategy, one of the business models she looked at was, Hey, we've built a web-based app that takes in orders from the high street retail stores and pushes it down to the factory floor space. We could just as easily take those orders and actually push them out to other local and regional factories and outsource that. And that changed the entire business model. She no longer needed to expand her factory floor space. She no longer needed to buy new machines. She no longer needed to hire more factory workers, the systems and processes that she needed to develop changed quite radically. So not only did she save herself a whole bunch of money, but she now needed to hire app developers and the systems and processes that she needed to actually develop and optimize were taking in these orders and then deciding how to effectively and efficiently outsource to the right factory based on supply, demand, cost availability, all of these kinds of things. And as you can see here, had she gone down the previous road, she would have potentially have been building completely different systems. Maybe that business might have worked, but not to the same way that this business could really scale because she didn't need to invest so much more of her capital or any more of the business systems that she was doing. So you can begin to see how the wrong business strategy can read you to building the wrong systems. So what I want you to do right now is begin to start thinking about your business. What is your goal for your business? And do you have a strategy for that particular vision and goal? What is it that you want to be able to achieve for your business in the next three to five years? And how do we get there? What are the potential obstacles? How are you going to make yourself really stand out? And then how are you going to then start looking at different systems that can then help you achieve these goals? For example, again, if you're a restaurant and you're looking at actually making sure that you've got the most effective customer experience, part of the systems that you want to be building is making sure that you've got the right booking systems and the right CRMs and the right point of sale systems and making sure that you're hiring the right people, but then training them so that the processes are effective and efficient. Are you going to be a fast food restaurant or are you going to be something that's more about fine dining? Because then that is going to affect the way that you build systems in terms of how you manufacture and produce your food at either a mass production level or at a quality level. And these are going to need you to have different systems put in place. So as you can see here, strategy really needs to come first before you start looking at implementing and building the right systems inside your business. And you really need to take a step back, have a think about your mission, have a think about your goals and your objectives and have a think about your marketplace, your customers, your competitors, all of these things. And then how are you going to make yourself stand out? And then once you've decided that, then start looking at what kind of business systems you need to put in place and what processes you need to document. Hope that's been useful for you. If you haven't watched the video on this channel about business strategy, here it is right here, click on that link and you'll be able to go to it and actually watch it. And it will break down business strategy in a lot more detail so that you can go about implementing it. Thanks. See you next time.