Companies are constantly changing what they do and how they do it. Some companies are more prone to change than others, but even the most stable companies have some level of strategic adjustment.
Companies can adjust their strategy in a number of ways. They can change their product or service offerings, how they sell or deliver those offerings, who they target as customers or buyers, and how they organize and manage themselves.
Strategy can be organizational, tactical, or strategic. Organization strategy refers to changes in how a company is organized and manages itself. Tactical strategy refers to changes in the way a company delivers its products or services. And strategic strategy refers to changes in what the company offers or who it targets as customers or buyers.
The key indicator of whether a company’s strategy is working is whether the company is thriving financially. If the organization is not seeing positive financial results, then the strategy may need some revising.
Growing rapidly
A company that is growing rapidly is likely moving in the right direction. A company that is not growing may be heading in the wrong direction or may be satisfied with its current position.
A company that is growing rapidly may also be spending a lot of money to do so. If the company is earning more money than it is spending, then its strategy is working.
Google, for example, invests heavily in new technologies and projects that may or may not pay off. Some of these projects turn into products or services that generate revenue, however, so its investment in growth pays off in the end.
Amazon spends a lot of money to fulfill orders quickly and provide convenience to customers. This investment likely pays off as customers are likely willing to pay a little more for their purchases due to this added convenience.
Both of these companies are likely growing rapidly and their strategies are paying off.
Has a low burn rate
A low burn rate indicates that the company is using its resources (money, time, talent) efficiently. A company with a low burn rate can spend time planning the best strategy for success instead of rushing to find a solution that might not work.
A low burn rate allows for more time to test and refine a strategy before taking action. This is important because it can indicate that the company has enough resources to maneuver and adjust as needed until it finds a successful strategy.
A low burn rate shows that the company is efficient with its spending and that it has managed its resources well. This can impact the confidence of investors, potential investors, and employees. Confident investors are more likely to invest in the company, which helps it grow.
A high-burn-rate companies may be struggling to find solutions—or may simply be wasteful—which could be hurting the organization’s ability to succeed.
Has strong leadership
A company with strong leadership has a clear vision, strategy, and direction from the top down.
A company’s leaders — whether in the boardroom or the factory floor — must have a clear understanding of where the organization is going and how they plan to get there.
This includes having a clear understanding of what strategies and tactics they will use to achieve their goals. Leaders must also have the moral authority to compel others to act on their orders.
If leaders do not have this authority or do not possess these qualities, then they need to be replaced by people that do. Having “weak” leaders may seem like a good cost-cutting measure, but it can hurt organizational performance in the long run. It also doesn’t help when leaders don’t believe in one another or what they are doing.
Is focused on its niche
Companies that try to be everything to everyone almost always fail. When a company tries to expand into multiple niches or markets, it loses focus.
For instance, a company that makes computer software may try to branch out into hardware or travel services. Or a company that sells coffee may try to sell groceries or office supplies as well.
In both cases, the company would be diluting its brand and expertise, and putting less focus on what it does best. This usually results in lower quality service and product and fewer customers.
Companies that stay focused on their niche thrive because they invest all of their resources into excellence in one area. Customers recognize this quality and keep coming back for more. Business is never too slow because the customer base is cultivated and aware of the quality of the products or services.
Has high customer satisfaction
While companies spend a lot of time and money trying to attract new customers, the most important element of their business is loyal customers.
A company with lots of satisfied customers will have an established base of people who will keep buying from them. This is because customer satisfaction is determined by more than just product quality.
Customer satisfaction depends on how easy it is to do business with a company and how they make their customers feel. Companies that establish a reputation for quality, both in product and service, will see repeat buyers.
In order to achieve customer satisfaction, companies must first understand the needs and wants of their customers and then meet those needs and wants adequately.
Customers are coming back
A company’s customers are the truest test of whether a company is doing a good job or not. If customers are coming back to the company for their needs, then the company is likely providing quality services and products.
When customers come back, it’s an indicator that they’re satisfied with what the company has to offer. A company that has loyal customers is going to be thriving in the long run.
It’s important for every employee to understand this concept, actually. If an employee comes across a customer that isn’t satisfied and decides not to come back, then that employee just lost a potential repeat customer.
This goes for every level of employee, from the lowest-level worker to the CEO. The entire company should be motivated to help customers find satisfaction so they come back again.
The company has high brand awareness
Brand awareness means that people know about a company and its products. People know the company name and what it does.
For example, when people think of smartphones, they think of Apple. Everyone knows Google for search engines, Airbnb for accommodations, and so on.
When people know your company, they are more likely to buy its products. This is because there is confidence in the quality of the product. It is well-known and liked, so why not try it?
Building brand awareness takes time and effort. You have to consistently promote your company and its products to get people to recognize your brand. Advertising is a big way to do this.
This indicator is important because if people do not know your company, then their buying choices will be based on other factors such as price rather than trust in the product.
The company is managing its finances well
A company’s strategy can be determined by the way they do business. Companies that produce quality products at a fair price with good marketing will find success.
If a company is producing quality products and selling enough of them to maintain a healthy cash flow and profits, then they are successfully executing their strategy.
When companies are not executing their strategy well, it is usually due to financial issues. If a company is not making enough money, then they cannot move forward with new projects or improvements.
If a company is spending more money than they have, then they will eventually run into problems. These issues can be indicators of poor strategic planning and management.
Monitoring the financial health of a company can be as simple as checking their balance sheet and whether they are spending more money than they have.
