{"id":10904,"date":"2020-07-20T18:43:00","date_gmt":"2020-07-20T22:43:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=10904"},"modified":"2020-07-27T19:19:13","modified_gmt":"2020-07-27T23:19:13","slug":"business-continuity-strategy","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/business-continuity-strategy\/","title":{"rendered":"Why a Business Continuity Strategy Means More Profits"},"content":{"rendered":"\n<p>What is business continuity strategy, and does your business need it?<\/p>\n\n\n\n<p>There are two sides to business continuity strategy; maintaining consistency, and leaving room to adapt. It deals with how to maintain your business success over the long term.<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Business Continuity of Strategy<\/strong><\/h2>\n\n\n\n<p>The last component of strategy is continuity. Companies need breathing room to hone their activities and develop <a href=\"https:\/\/www.shortform.com\/blog\/business-competitive-advantage\/\">competitive advantage<\/a> over time. Strategy isn\u2019t a stir fry, it\u2019s a stew &#8211; it takes time for the flavors and textures to develop.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>The richly developed strategies of IKEA or Southwest took years, decades to hone.&nbsp;<\/li><li>Strategies often begin with 2 or 3 essential choices, then adding additional activities to extend the fit.<\/li><\/ul>\n\n\n\n<p>Continuity strengthens a company\u2019s position in three ways:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Branding and customer relationships:<\/strong> customers will know what the company stands for, and what needs they can and can\u2019t meet.<\/li><li><strong>Partners:<\/strong> <a href=\"https:\/\/www.shortform.com\/blog\/bargaining-power-of-suppliers-understanding-michael-porter\/\">suppliers<\/a>, channels, and complements learn to contribute to a company\u2019s advantage.<ul><li>Dell had suppliers co-locate warehouses nearby<\/li><li>(Shortform example: Amazon works with manufacturers to repackage goods in shipping-friendly forms)<\/li><\/ul><\/li><li><strong>Team and internal culture:<\/strong> hiring for cultural fit and <a href=\"https:\/\/www.shortform.com\/blog\/new-employee-training\/\">training employees<\/a> improves. People <a href=\"https:\/\/www.shortform.com\/blog\/make-better-decisions\/\">make better decisions<\/a> that fit company strategy<\/li><\/ul>\n\n\n\n<p>It takes years to <a href=\"https:\/\/www.shortform.com\/blog\/how-to-implement-a-strategy\/\">implement a strategy<\/a>. Switching strategies too often is value destroying, causing whiplash in the org and dismantling of value chains.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Maintaining Strategy<\/strong><\/h3>\n\n\n\n<p><strong>Continuity doesn\u2019t mean an organization should stand still. <\/strong>As long as there is stability in the core <a href=\"https:\/\/www.shortform.com\/blog\/unique-value-understanding-michael-porter\/\">value proposition<\/a>, there should be innovation in how it\u2019s delivered.<\/p>\n\n\n\n<p>First, companies must stay on the frontier of operational effectiveness. <strong>You must assimilate best practices that do not conflict with your strategy <\/strong>or cause negative trade-offs.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>BMW embraced OE improvements to decrease design time, but stopped short of steps that would remove its unique design language.<\/li><\/ul>\n\n\n\n<p>Second, <strong>you must change whenever there are ways to extend your value proposition or better ways to deliver it<\/strong>.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Reuter started with spreading market information through pigeons, then moving onto telegraph and the Internet.<\/li><li>Netflix began with direct to customer movie DVDs, then switched to Internet streaming as soon as it became feasible.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Adapting Strategy to Changes<\/strong><\/h3>\n\n\n\n<p>Unlike what some argue, <strong>a rapidly changing environment is not an excuse to avoid strategy<\/strong>. Their flawed thinking goes: \u201cStrategy requires a <a href=\"https:\/\/www.shortform.com\/blog\/no-one-can-predict-the-future\/\">prediction of the future<\/a>. I can\u2019t predict the future. Therefore, I can\u2019t commit to a strategy.\u201d They try to stay flexible by avoiding commitment.<\/p>\n\n\n\n<p>But <strong>flexibility never allows the company to stand for anything or <a href=\"https:\/\/www.shortform.com\/blog\/become-great\/\">become great<\/a> at anything<\/strong>. The mass of competitors will yield more focused rivals with clear value propositions who will <a href=\"https:\/\/www.shortform.com\/blog\/how-to-get-customers-for-a-new-business\/\">attract customers<\/a> instead.<\/p>\n\n\n\n<p>Says former Ford CEO Alan Mulally: \u201cStrategy is about a point of view about the future and then making decisions based on that. The worst thing you can do is not have a point of view, and not make decisions.\u201d<\/p>\n\n\n\n<p>Great strategies are rarely built on a concrete prediction of the future. <strong>They\u2019re just based on a broad sense of which customers and needs are going to be robust 5-10 years from now.<\/strong> Strategy is implicitly a bet that these needs, and the accompanying trade-offs, will be enduring.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Southwest bet that people would continue to want low-cost convenient transportation.<\/li><li>In-N-Out bet that people would continue to want simple fresh burgers and fries.<\/li><\/ul>\n\n\n\n<p>A strategy is a guiding force that shows you how to adapt to the new world. You know who you\u2019re trying to serve, what needs you\u2019re trying to meet, and your price &#8211; this filters what matters and makes priorities clearer.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Without a strategy, a clear value prop, you don\u2019t know which changes are relevant to your org, and you get distracted by every shiny object. It\u2019s debilitating to embrace every new technology coming your way.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>When Should Environmental Changes Prompt Strategy Changes?<\/strong><\/h4>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>When changing customer needs mean a company\u2019s core value proposition becomes obsolete.<\/strong><ul><li>Blockbuster\u2019s focus on physical stores faltered when customers were content browsing a catalog online and renting for cheaper prices.<\/li><\/ul><\/li><li><strong>When innovation invalidates the trade-offs on which a strategy relies.<\/strong><ul><li>Dell\u2019s cost advantage was neutralized by the rise of Taiwanese Original Design Manufacturers, which let rivals outsource design and assembly to efficient producers.<\/li><\/ul><\/li><li><strong>When a technological or managerial breakthrough trumps a company\u2019s existing value proposition.<\/strong> A truly disruptive technology invalidates current value chains and makes it difficult for incumbents to match because of their existing assets.<ul><li>Kodak was disrupted by digital photography.<\/li><li>(Shortform example: Google replaced physical Yellow Page books, which used to be delivered to people\u2019s homes. Much of the publishing and delivery components of the Yellow Pages were invalidated by the Internet.)<\/li><\/ul><\/li><\/ul>\n\n\n\n<p>Often, though, seemingly disruptive changes can actually be integrated into your value chain without meaningfully changing the industry structure. Many industries adopted the Internet, and the fundamental structure of the industry didn\u2019t change.<\/p>\n\n\n\n<p>Business continuity strategy is one essential part of a business plan. You need a business continuity strategy to plan a future for your business. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is business continuity strategy, and does your business need it? There are two sides to business continuity strategy; maintaining consistency, and leaving room to adapt. It deals with how to maintain your business success over the long term.<\/p>\n","protected":false},"author":5,"featured_media":10917,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45,14],"tags":[102],"class_list":["post-10904","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-management","tag-understanding-michael-porter","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Why a Business Continuity Strategy Means More Profits - Shortform Books<\/title>\n<meta name=\"description\" content=\"Even if a business grows, it should be consistent. This is called business continuity strategy. 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