Strategy Toolkit: what it is, what it’s not & 10 questions to test it
In order to define strategy, we have to know what it is and what it is not. Strategy is not about being the best, whether it’s operations excellence, best practices or marketing communication tactics. Strategy is about being different. Differentiations and competitive advantages that can beat market macro forces in today’s New World Marketplace.
Strategy is just as much about what not to do as it is about what to do. It’s a combination of benefits and trade-offs that your brand offers, differentiating you from the competing alternatives in the marketplace. Trade-offs are essential to strategy. They create the need for choice and purposefully limit what the company offers in order to have a clear differentiation and competitive advantage.
Management tools such as technology, productivity, quality, speed, product delivery, benchmarking, best practices, series of one-off marketing tactics, etc, are essential part of improving performance and profitability, but they are temporary competitive advantage and can not take the place of strategy. The more benchmarking companies do, the more they look alike, and while operational improvements and effectiveness will gain profitability, it is short-term, facing diminishing returns with no strategic vision for long-term profitable growth. Sure, we can use fancy words and tools to diagnose, search and forecast. Transferring frameworks into actionable specifics and guidelines, reallocations of resources along with commitment to analytical rigor and constant re-evaluations are all important to strategy. They will help you understand why you have or have not been making money. But they can’t replace the most important part of strategy–positional.
I like and use Michael Porter’s simple definition of strategy: which customers, which needs and at what relative price. What this means is a company must either deliver a differentiating value to its chosen target customers, or create comparable value at a lower price. Either way, you can outperform rivals only if you can establish a difference that you can sustain long-term. Know your competitive advantage, and you will make money. The magic of strategy happens when there is more focus on positional improvements, not just performance improvement. Positioning the company against the right, growing macro trends–where and how to compete by right target market selection–I call that strategic targeting.
A good, solid, differentiating Strategy isn’t easy to understand, let alone implement and go to market. Many great, large consulting firms have used powerful frameworks with analytical rigor with companies, but I believe they are missing an important evolution of strategy which is about the psychology, thinking and feeling of the essence of strategy. The rapid shifts in demographics and cultural values, causes and beliefs among new world customers which have direct impact on a successful winning strategy. This isn’t so much about what has shifted in the budgets—it’s more about what has shifted in consumers and therefore, market forces. The commitment to strategy falls short when leaders do not face the brutal facts about their own biases and past orthodoxies that hold them back from tapping into a profitable new world market. Truth is, leaders of companies have escaped the middle class in their daily lives, and often fail to understand that they can’t escape the rapid changes in the middle class with their strategy.
Here are 10 easy and quick questions to help you get started and test your strategy:
Does your strategy reflect the right strategic targeting aligned with rapid demographics and cultural shifts?
Once you answered who (which customers), is your strategy clear about “where” to compete? (Hint: where to compete can be more important than how)
Once you answered who and where, does your strategy know “when”? (Hint: a good strategy starts with a few crucial positions to gain competitive advantage now, with future options based on market trends/forces)
Does your strategy have clear competitive advantage(s)?
Does your strategy disrupt and beat the market forces?
Does your strategy anticipate current and future trends?
Does your strategy meet your target customers’ unmet needs through profound customer insights? (Hint: you must spend days in the life of your customers to be able to answer this)
Is your strategy contaminated by personal bias of a few leaders? (Hint: a good strategy is outside/in, not inside/out)
Is your strategy deliverable?
Does your strategy have the commitment and conviction of your senior management team?
In my next blog, I will provide you with a value proposition toolkit. While strategy and value proposition are very similar, they have different purposes in any business–both very critical and key to long term success. Stay tuned.
I am available for half day strategy workshops for you and your team, if interested. And you can always email me at farnaz@farnazglobal.com to schedule your complementary call to discuss.
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