Developing a business strategy often begins with a mission statement about a business’s aims in the future. However, if a strategy is too futuristic it may be too abstract for employees. A strategy should motivate your team right now.
Nike’s mission “Bring inspiration and innovation to every athlete* in the world” may sound forgettable but the addition, by Nike co-founder Bill Bowerman, of “If you have a body, you are an athlete” really captures everyone. Nike’s company values: Innovation, sustainability, diversity, and community are all included in the statement.
It is better to define your mission when your purpose and vision are clear. Spell out why you exist and what you want to achieve and then work out how. You will need to define your company’s objectives and plan how you will achieve these, considering the resources available and the environment in which your business operates.
Fitbit’s mission was to empower and inspire you to live a healthier, more active life. Fitbit’s mission statement communicates clearly with the user what the tech company does and how it does this. The kicker, however, is in its explanation of why—empowering people to live healthier, more active lives. This is inspiring for employees, who are investing their time and energy in driving the company forward, and also for consumers, who will feel confident they’re buying from a brand with clear benefits for them.
Even sports clubs need a business strategy. Older members drift away and clubs need to attract new members. The popularity of individual sports changes over time even if we are all participating in sports more than ever before. We need to introduce new sports activities to keep the experience of visiting a sports club fresh.
There are numerous frameworks to assist in formulating a business strategy, such as SWOT and Porter’s five forces analysis, but these only provide a starting point.
SWOT analysis is a traditional planning method for evaluating the strengths, weaknesses, opportunities, and threats of a business. It involves identifying the factors that are favorable and unfavorable to achieve your business objectives. Is your technology strong (S) but your customer service unsatisfactory (W)? Can you take advantage of the pandemic (O), despite the possibility that the pandemic has changed the market requirements (T)?
SWOT analysis allows you to develop a plan of action to focus resources on your strengths and opportunities, and to work around the weaknesses or threats that could prevent you from achieving your business objectives.
Porter’s five forces
The Porter’s five forces model (P5F) looks at the industry structure and analyses it in terms of the state of the competition. P5F includes – the risk of being replaced by other products or services, the threat from established players, the likelihood of new entrants, and potential shifts in the bargaining power of suppliers and customers.
P5F is an important tool for assessing whether new products, services or businesses have the potential to be profitable. It works by identifying how each force affects your business so you can assess your position and work out how to take advantage of your strong points and tackle any weaknesses.
The UK Lawn Tennis Association (LTA) has been aware for a while that tennis is not the easiest sport to learn. The combination of a steep learning curve and the need to buy equipment limits access for new tennis players, especially new players living in cities where space for tennis courts is limited.
Padel is an easier sport to learn and requires less space for the facilities. Padel has been a huge success in Spain and can be a route into tennis as well as being a fun sport in its own right. The LTA formulated a strategy to bring Padel into the UK and to make itself the governing body which it achieved in November 2020. In the terms of P5F, the LTA eliminated the possibility of Padel becoming a substitute draining support for tennis and simultaneously increased the number of potential players to which Padel/Tennis is relevant.
Another example is Pixellot. Pixellot had the innovative idea of using Artifical Intelligence (AI) and algorithms to automate the production of sports videos. This can produce a more exciting video for fans and a more useful video for coaching staff. An engaging video needs to follow the action and edit out the inevitable downtime. The algorithms are specific to each type of sport and can decide when to include a long shot, to show the disposition of the team and the ball, and when to zoom in to an individual player, to highlight the player’s skills.
Pixellot realised that the market for selling their technology to traditional broadcasters would be limited. However, if clubs installed permanent cameras in their stadiums and grounds they would create a completely new market for automated video production where conventional broadcasting was too expensive to consider. In terms of P5F, Pixellot eliminated its dependence on traditional broadcasters, who were effectively suppliers to Pixellot by selling its own cameras to clubs. This allowed clubs to produce videos for themselves at low cost and created an entirely new market for Pixellot’s software.
Traditional manufacturing businesses have focused on unit profitability. Nevertheless, a better strategy doesn’t simply equal a better gross margin. People based businesses are more complex. For sports clubs the biggest cost is typically the cost of employing people – players, coaching staff and administration. Clubs need to keep happy their highly skilled employees.
This isn’t just a case of paying staff more. Employees are attracted to clubs that pay well but they don’t necessarily become more productive if you pay them more. There are many other factors that will influence performance and motivate your workforce – for example, the ability to work flexible hours, from home, and to take vacations.
According to a PwC report titled “Millennials at work – Reshaping the workplace,” corporate social values when choosing an employer are more important to millennials than other age groups. The report states that “millennials want their work to have a purpose, to contribute something to the world and they want to be proud of their employer.”
Another stream of ideas, popularised in Daniel Pink’s book “Drive”, is based on the belief that people are largely motivated by social purpose. They want to work for organizations that are doing something useful for the greater good. These theories also highlight the importance of being able to learn on the job and to have autonomy over how you do your job. People don’t want to be treated like robots but do want a say in how they work.
As a result of these new ideas there has been a shift to strategies that directly relate to the motivation of people. For a sports business, how you treat employees, fans and customers is the most important consideration when formulating a strategy. Be clear on what it is you are trying to do and define your higher purpose both today, and in the future.