4 tips for developing your business strategy

Do you know your practice’s business strategy? Or, perhaps a more relevant question: Does your practice have a business strategy?

Bhavik N. Patel, MD, of Duke University School of Medicine's department of radiology, and Frank V. Cespedes, PhD, from the Harvard Business School Entrepreneurial Management Unit, wrote an introduction to business strategy for the Journal of the American College of Radiology.

“As the paradigm of health care delivery changes, so does the competitive landscape,” the authors wrote. “Thus, it is imperative for radiology managers to have a clear understanding of what strategy is and is not in order to make the right choices and compete in a changing marketplace.”

This list represents just some of the tips readers will take away from the authors’ analysis:

1. Be proactive

If you don’t define your business, who will? Patel and Cespedes explained that a practice’s management must make some serious decisions early on or risk those decisions being made by outside forces.

“Strategy is about making choices to create a sustainable competitive advantage in the marketplace,” the authors wrote. “Your organization must make these choices; otherwise, your competitors or customers will choose for you.”

2. Know your objectives

Everyone at your business should know what they are trying to achieve. Make the objectives clear, Patel and Cespedes explained, and everyone will be on the same page.

“Objectives indicate the ends that strategy seeks to achieve: the primary goals that will motivate behavior and resource allocations in the organization,” the authors wrote. “Goals can be chosen from a range of possible outcomes: profit maximization, a good lifestyle business, and so on. However, if there are multiple objectives, the hierarchy of priorities should be clear, as a preference of objectives has a big impact.”

Is your practice aiming for specific patient satisfaction scores? Trying to decrease patient wait times? These things need to be agreed on, explained, and prioritized.

3. Study the market

When beginning work on a business strategy, one must always take time to analyze the market.

“In any business, value is created or destroyed in the market with customers and business partners,” the authors wrote. “This analysis requires understanding the industry forces that tend to shape competition. Key forces include the threat of entrants (i.e., what are the barriers to entering the industry, such as capital costs?), the bargaining power of suppliers (e.g., suppliers with differentiated products have more power), the bargaining power of buyers (e.g., volume buyers such as big hospitals versus individuals), the threat of substitutes (i.e., other ways customers can get what they need), and rivalry among existing competitors (e.g., do firms in this market compete on price, product innovation, or service?).”

You wouldn’t want to open your imaging center right next door to the most affordable, positively reviewed imaging center in the city, would you?

4. Learn from the past

To gain a better understanding of business strategy, it’s helpful to examine how certain companies have succeeded in the past. For example, Patel and Cespedes looked at how Southwest Airlines was able to establish a balance between “unique activities” and “trade-offs” that helped its brand prosper.

“Southwest offered frequent short-haul departures between midsize cities at low fares (i.e., a unique activity),” the authors wrote. “Its trade-off was having no amenities or assigned seating. This trade-off prevented full-service airlines from competing effectively with Southwest: they could not offer premium services at such a low cost, nor could they model their operations to that of Southwest without diminishing their brand equity. All of Southwest’s activities fit to reflect its strategy (e.g., the same fleet size, no bag transfers, no first class).”

In radiology, the authors added, a practice’s leadership must also identify what trade-offs will be required to accomplish its goals.