Do you have a simply-stated differentiating strategy?
If you asked each member of your leadership team to write down, in his/her own words, what your strategy was, how confident are you that they would match?
As a leadership coach, I ask the individuals on my clients’ leadership teams to do this exercise. Everyone then reads his/her version to the group. After having done this many times, my overall observations are as follows:
- Most are not strategies (more on this below)
- The number of unique strategies is roughly equal to the number of people in the room.
- When, on the fortunate occasion that two or more folks have written down similar thoughts, they do not differentiate your offering from alternative products/services.
Try this exercise at your next leadership meeting. Be prepared for a lively discussion.
Five “strategies” to avoid
Unfortunately, even with a lively discussion, the outcomes of most strategic discussions are not useful. Here are the individual “strategies” that come up most often from these discussions (according to HBR article below):
- Stated outcomes – product quotas, revenue targets, etc.
- Mission and values statements – who we are and what we stand for
- Generic industry benchmarking – 2×2 matrix where your company is up and to the right
- Annual operating plan – spreadsheet-driven conversations
These are all important things to have for your company to grow and prosper but none of them is a differentiating strategy.
How to craft a killer strategy
Coming up with a winning strategy involves deliberation, debate, and decision. The team decides what to do and, more importantly, what NOT to do. It is about choices. A strategy is an evolving plan that helps to drive customers to you by giving them clear reasons to choose your product or service over alternatives. (e.g., Southwest, Zappos, IKEA, Amazon, Apple).
A strategy minimally meets the following criteria:
- Who we will serve and who we won’t
- How we will be disproportionately better at serving our core customers and how will we be decidedly worse at serving non-core customers (usually the least profitable or worse)
- Why our most profitable and loyal customers choose us over alternatives
Please note the explicit use of the word “alternatives”. In today’s fast-paced world, you cannot just focus on beating your direct competitors. You must have a wider lens and longer view or you risk being the next Blockbuster or Zune (iPod competitor) or newspaper publisher.
IKEA buying TaskRabbit (online “handyman” service) is a great example of a company that sees the longer view and changing market conditions. The population is aging and possesses tremendous wealth. While some may find the IKEA experience appealing they do not want to “ship”, unpack and assemble their own furniture. This is potentially a huge untapped market for IKEA. Time will tell if it pays off.
“.….most executives struggle to understand the implications of not making effective trade-offs. In companies that poorly execute strategy, a staggering 60% do not even link their strategies to their budgets, guaranteeing a disconnect between commitments and resources. By contrast, in companies that successfully execute strategy, 76% limit the number of strategic initiatives they focus on and 64% actually build their budgets around their strategy.”
The above quote from an HBR article emphasizes the point of making choices. Here iis a link to the article – Executives Fail to Execute Strategy Because They’re Too Internally Focused.
Feel free to forward this to anyone you feel would have an interest.
Be Exceptional! – Bill
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