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Strategic Planning and Management Insights

Facebook's business strategy pays off big.

[fa icon="calendar"] February 22 / by Anthony Taylor

Facebook and Mark Zuckerberg know what they are doing when it comes to a business strategy that works - They went against conventional wisdom when starting off and focused on acquiring users instead of jumping straight into revenue generation. This long term strategy has allowed them to gain huge amounts of market share and become the de-facto social network .

Most recently Facebook made headlines for another huge strategic win by purchasing Instagram for a billion dollars, and at a point when it was making zero revenue. At the time, the move did not make sense to investors or analysts who might not have been privy to the strategic plan for the future. Now, with Instagram creating millions in revenue, the move turned out to be a big money maker rather than a crazy investment. 

"Barclay’s Paul Vogel pegged Instagram’s Q4 revenue at $276 million, and now projects that Instagram will “eclipse” $1.3 billion in 2016."

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The rationale on Facebook's end seems sound. They used scenario planning to determine different trends in consumer preferences and established where the most amount of users and rich content creation was to be. They made a strategic purchase to get more eyeballs and increase their own capacity and content.

Not only do they effectively cross sell their normal advertisers from Facebook onto Instagram (98 of the top 100 Facebook advertisers use Instagram as well), but Instagram itself reduces the risk of the Facebook investment portfolio and contributes to added value on the Facebook platform.

Read the full article from Business Insider on Facebook's purchase of Instagram

Though Facebook might be playing at a much higher level when it comes to purchasing ability, smaller organizations can also use scenario planning to determine different alternatives and realities for opportunities to make strategic investments. As part of the strategic planning process. your leadership team can look at trends in your industry to identify, evaluate and select options for your strategic growth.

If you're a small business it might make sense to build out those capabilities in house, or if you have some capital you can look at acquiring additional capabilities to contribute towards your long term strategic vision. What's most important is figuring out what changes might happen in the future, and how you can get ahead of those changes to add value to your company and be more competitive with your strategy.

 

 

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Topics: Strategic planning, Business news, strategy case studies

Anthony Taylor

Written by Anthony Taylor

Anthony Taylor is thought leader on strategy and leadership. He's a published author on the subject of entrepreneurship and strategy, Anthony can be found doing keynotes in both French and English. You can connect with him on Twitter @anthonyctaylor and have him work with your team on your strategy and organizational development.

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