Dirks on Strategy: On testing business strategies Text Size
The following article is an article about stress testing by David Dirks.
"The rush to implement the "next big thing" can often blind us. When you run a business and you're the chief cook and bottle-washer at the same time, who has time to question what looks to be the greatest business strategy ever created?
Stress-testing a business strategy before it's implemented is one way to help mitigate some risk, though you can never eliminate it. Besides, if you own or manage a business, risk is what defines your path to success or failure. Here are a few ways to stress-test your next great business strategy:
- What return-on-your-investment do you need to call your strategy a success? To say "more sales" or "more profits" isn't quite the answer needed here. Calculating and clearly defining the ROI for your time and the resources expended to implement your business strategy is a must, not an option.
- Do you have an exit strategy? I was taught this valuable lesson years ago by well-known business executive and former Orange County Executive Lou Heimbach. His point was that while a business strategy might be great, you'd better have thought through your exit strategy should things fall apart. What's Plan B when the greatest business strategy ever devised goes south? Having thought through an exit strategy can actually give you further confidence to move ahead and lessen the fear of the unknown.
- Is your strategy based on commonly available data or deeper insights? Today's business managers have access to more data than ever. If your business strategy rests on commonly available data that your competitors also have access to, what's your real advantage? True competitive advantage is born out of business insights not seen by the crowd. Solving common customer problems in new and innovative ways is always a sound strategy for market differentiation.
- How deeply committed are you to the new strategy? The power of conviction means that once you've made the decision to move forward, you're not going to break down the minute things get a little tough. When you find a bump in the road, your conviction allows you to figure out how to keep moving forward.
- Is there a detailed action plan? How often have you sat in a meeting where everyone is rallying around a new idea or strategy only to have everyone leave the meeting not really knowing who's going to implement it? It happens every day.
Whether you're next strategy is based on your gut instincts or deep data insights, you'll sleep a bit better if you spend some time stress-testing it first.
This is the second installment in a two-part series on strategy stress-testing. Read part one at recordonline.com/dirks.
David Dirks of Port Jervis is a business strategy and marketing consultant. Visit his strategy blog at growingmybusiness.wordpress.com and listen to his weekly radio show at wtbq.com. E-mail him at email@example.com."
A good article by David Dirks on stress testing.