Establishing an Investment Strategy to Drive Your Business
Regardless of size or industry, one of the greatest challenges all companies face is where to invest in order to grow. IT vendors and solution providers are especially taxed by this burden, as they have so many opportunities from which to choose.
By Diana L. Mirakaj
Growth investment is not an exercise to engage in lightly. It’s also not an outcome that should be left to chance. Moreover, ignoring investments that lead to growth is unacceptable. Of equal importance — and directly tied to investment management — is the formulation of a business strategy.
A business-driven strategy articulates the competencies required for the success of any type of company. To appropriately map your investments with your strategy, you first need to focus on the type of value — or outcome — you want to derive from them. This is often articulated as “ROI,” return on investment, or the product of investments.
The decisions made regarding the technology, market opportunities, products and services that will drive your business requires structured thinking about what your business wants to achieve; what does it want to look like in a future state. This clear understanding of business requirements dictates the plans and investments needed to execute a company’s business strategy. The two are directly connected.
Those leading a company have ownership of the vision that will drive its strategy, goals and objectives. It is their responsibility to clearly define it for everyone else in the organization. Ultimately, it is that well-articulated strategy that will recognize the varying capabilities present, identify growth opportunities, and pinpoint investment needs, as well as balance them all with the desired strategic positioning by adhering to a few basic principles:
- Define what specific competencies must be put in place for you to meet your short- and long-term business goals and objectives. A mature strategy is the most effective way to ensure that all stakeholders understand the specific business needs to help carry out the strategy.
- Formulate the processes that need to be put in place to improve communication and educate team members about each element. Creating an effective strategy requires careful and complete communication, as well as the integration of all strategic goals, imperatives and initiatives, the strategic direction of all technology being utilized, and how technology is developed, deployed, operated and supported within internal and external environments. In other words, everyone in the organization needs to know the company’s direction, as well as their specific role in that process.
- Select what internal and external competencies you need to execute defined strategies. What is the relative priority of stability vs. agility with regard to your business competencies that need to be in place? To prioritize investments, start by defining the type of value that will be created. Enabling stability, agility or both will require different levels and types of investments. In addition, consideration must be given to the nature of this investment mix as it relates to supporting other critical activities.
- Recognize and specify the business value discipline required for success. What is the primary value discipline: operational performance, product distinction or customer loyalty? The path selected will direct the strategy and flow through all levels of the company. Doing so will prescribe the specific business competencies required in a way that guides effective execution and delivery of products and services, as well as consistent delivery of fundamental messaging.
While investments may vary depending on the specific objectives money is allocated toward, what should never fluctuate is the positive outcome funding provides: an expansion of capabilities that increases value creation and strengthens the competitive positioning of a business. Capitalizing on those returns to continually reinvest in your business enables cyclical growth — a repeatable process that should be a part of every company’s vision.