— February 21, 2018
Last week, I met with an old client who shared with me his company’s latest strategy pack. The document, prescribed by the Group Head Office, was 126 pages long and full of analysis, charts, tables, graphs and action plans.
There was also one page in the pack entitled, Strategy Summary, which comprised a chart containing the following:
- A three-year sales goal;
- Three ‘strategic priorities’, which were, in reality, performance objectives for the company’s three main sales channels;
- 6-8 high-level actions underpinning each of the three priorities; and
- A sales value for each priority.
“I’m not happy with this document,” he told me, “But it’s what the Group wants. The trouble is, though, that it doesn’t feel like a strategy to me.”
He was right. The company’s strategy summary was missing the critical element of business strategy development – an articulation of how the business will win.
You can only create a coherent set of strategic actions once you are clear on how you will succeed in the future. That clarity, based on an understanding and diagnosis of your ongoing competitive position, provides the ‘true north’ that allows you to assess and select from alternative action plans, builds alignment across your functional teams, and allows your managers to make daily decisions that will add to, rather than detract from, your competitive position.
Herb Kelleher, the founder of Southwest Airlines, described his company’s strategy like this: “We are the low-fare airline!” These six words transformed the airline industry, as Kelleher and his team removed unnecessary ‘luxuries’ such as seat allocation, free in-flight meals and business class sections. Each of these services would have diluted the company’s ability to become “the low-fare airline” and, over time, would have inhibited its ability to grow and prosper.
Your way of winning may not be about lower costs and prices. You could win, for example, by offering the very best, most desirable product (Ferrari, Apple), the fastest and most hassle-free customer experience (Amazon, McDonalds), the most outstanding customer service (John Lewis, Singapore Airlines), or your organisation’s ability to create bespoke, personalised solutions (IBM, McKinsey).
In fact, the possibilities are endless. The key to a great business strategy is understanding the dynamics of your market and your organisation to find a way of winning that:
- Enables competitive superiority. Are you able to build a series of advantages that your competitors, both current and future, find hard to replicate?
- Creates customer resonance. Are there sufficient numbers of customers you can reach that will be engaged by your competitive approach?
- Fires your financial engines. Are you able to turn your advantages and customer interest into profitable growth?
Are you clear on how your business can win in your chosen markets? If not, start a discussion with your leadership team about how you can build a better understanding of your customers, competitors and markets so that you can create a way of winning that builds your competitive superiority, generates genuine customer resonance and fires your financial engines.