Strategy is all about making choices for the business – what you will do and what you will not do. Do you go for option A or B? You do not have to go for both options because then you have not chosen. Remember, leaders, need a strategy to confront challenges, a pandemic, or uncertain times. This means that you make a strategy to respond to scarcity.
If you do not choose ie. You try to do both options A and B at the same time, you risk failing to execute since you spread your limited resources to multiple options and therefore fail to win convincingly in one of the areas. Many leaders want to do everything in which case they do not go deeper and win.
Strategy is about making choices of how you will win with your stakeholders and customers against the competition. This implies that you must first define your competition, what kind of sector are you playing in, which kind of customers are you targeting, and how have you set up your business so that you are preferred by the customer. Once you find a way of how to win and retain the customers, you will have strategized. Strategy is the kind of thing you plan to deliberately do and how you will do it, to deliver value that is better than the competition.
Business model
How do you plan to make money from your offerings? Which products and services will you sell and how will you charge? How will customers pay you in a way that is convenient and sustainable? That is your business model.
Simply put, the business model is how you create value in a way that is low cost but competitive and distinctive. Take time and think about how to monetize the services you are selling. For example, if I develop a job search application, I have to ask myself how will people pay me money. So, you can start by charging on installment. Or could say the application is for free, but to access premium features, one has to pay. The application could be for free forever, but you plan on making money from adverts. To make a decision, you must first understand the target user, the other competitive offers, and your internal capabilities to make it happen. To create an application that has a global userbase takes more than an outstanding app. You need a marketing budget to push on multiple fronts to create awareness of your offerings. You need sponsors and financiers. About all, you need the support of global media to reach far and wide. However, with the right business model, like freemium (free basic features, customers pay for premium features), you could gain traction through referrals and word of mouth from social shares and comments by satisfied users. You can see how a choice of business model could make or break your business and a key determinant in your success or failure, which must be clearly articulated in your strategy.
Another entrepreneur could have a different approach to monetizing. Your business model could be how to get customers to pay you money in a way that is convenient, sustainable, and maximum value delivered.
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Copyright Mustapha B Mugisa, Mr. Strategy 2021. All rights reserved
