Your competitive strategy determines what you
will do and what you won't do, and how you will
focus your efforts and resources.
It sets the agenda for all the decisions which
will be made in the course of business. The
question should always be asked "Does this fit
with our strategy?"
Innovation is good - if it's strategic. There's
no point coming up with lots of random ideas -
innovation needs to be in pursuance of the
strategy.
A recent article in Strategy + Business
magazine*, reported that, in a survey of 600
companies globally, about half reported that
their innovation strategy was inadequately
aligned to their overall corporate strategy.
The study found that companies with poor
strategic alignment significantly underperform
their competitors.
Here's an important distinction - "innovation
strategy" is not the same as "competitive
strategy":
• Your competitive strategy is the choice of how
and where to compete, in order to achieve
competitive advantage - choice of markets, how
you will serve those markets differently from
your competitors, and what will enable you to
compete on that basis.
• Your innovation strategy is the choice of how
to innovate in order to carry out the competitive
strategy. The article identified three types of
innovation strategy - "Need Seekers", "Market
Readers" and "Technology Drivers".
The study found no relationship between financial
performance and innovation spending. Success
depended more on how the money was spent.
For innovation to be "strategic", your
competitive strategy must be clear, easy for
everyone to understand and frequently
communicated.
Strategy sets the agenda.
* _The Global Innovation 1000: Why Culture Is
Key_ by Barry Jaruzelski, John Loehr and
Richard Holman, October 25, 2011/Winter
2011/Issue 65
Showing posts with label Shelley Dunstone; innovation; strategy; growth. Show all posts
Showing posts with label Shelley Dunstone; innovation; strategy; growth. Show all posts
Wednesday, February 22, 2012
Monday, November 21, 2011
The Power of Conviction
People often say "The missing link in strategy is implementation". What they mean is that the new strategy simply sits on the shelf and nothing changes.
I have always found this to be most intriguing. I would have thought that people in organizations would be particularly strong on implementation. Entrepreneurs tend to be "doers". They employ smart people with practical skills. They pay these employees to do what they are asked to do, and if they don't do it, they are at risk of being fired. There are plenty of project managers who have the skills to plan and manage the implementation of projects.
If you are going to install a new computer system, you tell all your employees what they are required to do. If they don't do it, they are in trouble. No one has a choice. Everyone has their own part to play, to reach the point where the new system is functioning properly.
So, when it comes to strategy, why is implementation such a problem?
For one thing, a strategy is not an action plan. First you have to define the strategy. Then you work out a plan to achieve it.
Secondly, it's been said that a failure to execute is always due to one of three things:
1. You don't know what to do,
2. You don't know how to do it, or
3. Someone or something is standing in the way.
I believe that with strategy, the first point is usually the main problem. If your strategy is empty rhetoric; just fine-sounding words, it won't have any substance and won't generate any action. If, however, you have a clear conviction that you've come up with the right strategy, you will know what you have to do. You will work out how to do it. Nothing and no one will stand in the way. But if you're not entirely sure about the strategy you've formulated, if you haven't developed a clear vision, if you haven't thought deeply enough about your specific value proposition and how you will differentiate, you won't have sufficient drive to mobilise the people around you to take action on it. You'll have a nagging concern that something's not quite right. A strategy has to feel right. It's partly a logical and partly intuitive decision.
If the thinking is done thoroughly and well, then the doing will follow easily.
Without strong conviction, you're just stuck in precedent.
I have always found this to be most intriguing. I would have thought that people in organizations would be particularly strong on implementation. Entrepreneurs tend to be "doers". They employ smart people with practical skills. They pay these employees to do what they are asked to do, and if they don't do it, they are at risk of being fired. There are plenty of project managers who have the skills to plan and manage the implementation of projects.
If you are going to install a new computer system, you tell all your employees what they are required to do. If they don't do it, they are in trouble. No one has a choice. Everyone has their own part to play, to reach the point where the new system is functioning properly.
So, when it comes to strategy, why is implementation such a problem?
For one thing, a strategy is not an action plan. First you have to define the strategy. Then you work out a plan to achieve it.
Secondly, it's been said that a failure to execute is always due to one of three things:
1. You don't know what to do,
2. You don't know how to do it, or
3. Someone or something is standing in the way.
I believe that with strategy, the first point is usually the main problem. If your strategy is empty rhetoric; just fine-sounding words, it won't have any substance and won't generate any action. If, however, you have a clear conviction that you've come up with the right strategy, you will know what you have to do. You will work out how to do it. Nothing and no one will stand in the way. But if you're not entirely sure about the strategy you've formulated, if you haven't developed a clear vision, if you haven't thought deeply enough about your specific value proposition and how you will differentiate, you won't have sufficient drive to mobilise the people around you to take action on it. You'll have a nagging concern that something's not quite right. A strategy has to feel right. It's partly a logical and partly intuitive decision.
If the thinking is done thoroughly and well, then the doing will follow easily.
Without strong conviction, you're just stuck in precedent.
Monday, August 1, 2011
How to Bake Strategy Pie
I’m a fan of the “Masterchef” cooking show. I like to relax on the couch with a glass of wine and a take-away meal and watch other people slaving in the kitchen.
Developing a strategy for your business is a bit like a Masterchef team challenge. The contestants come onto the set in the morning and they have no idea what they will have created by the end of the day. The teams are given a challenge such as “You'll be making lunch for a law firm” or “You’re doing dinner for the Dalai Lama”. For a moment they stand around in shock, and it is evident that they have no idea how they are going to achieve this. There’s no picture of the finished product for them to follow. Subject to a few parameters, they have free choice as to what they will cook. They find themselves with a basket of ingredients, some of which are unfamiliar to them. They know one thing: by the appointed hour, they must have produced something to “plate up”. As a team they combine their ideas and expertise. Usually they rise to the occasion, and by the end of the day (apart from the occasional culinary disaster), they have produced a delectable meal that they can all be proud of.
Similarly, when you are baking a strategy, you are dealing with inherent uncertainty. At the start of the process, no one knows what the end result will look like. And it’s actually best if no one thinks they know the answer. Everyone has a different perspective to offer. It’s an opportunity to consider many possible futures and directions, and to set the organization on a unique path where it can compete on its own terms. No one knows what the future will hold, but you can make some educated assumptions on which strategic decisions can be based.
The Strategy Pie challenge is to combine the available ingredients so as to make the most of the organization’s resources and “put value on the plate” for your customers.
Developing a strategy for your business is a bit like a Masterchef team challenge. The contestants come onto the set in the morning and they have no idea what they will have created by the end of the day. The teams are given a challenge such as “You'll be making lunch for a law firm” or “You’re doing dinner for the Dalai Lama”. For a moment they stand around in shock, and it is evident that they have no idea how they are going to achieve this. There’s no picture of the finished product for them to follow. Subject to a few parameters, they have free choice as to what they will cook. They find themselves with a basket of ingredients, some of which are unfamiliar to them. They know one thing: by the appointed hour, they must have produced something to “plate up”. As a team they combine their ideas and expertise. Usually they rise to the occasion, and by the end of the day (apart from the occasional culinary disaster), they have produced a delectable meal that they can all be proud of.
Similarly, when you are baking a strategy, you are dealing with inherent uncertainty. At the start of the process, no one knows what the end result will look like. And it’s actually best if no one thinks they know the answer. Everyone has a different perspective to offer. It’s an opportunity to consider many possible futures and directions, and to set the organization on a unique path where it can compete on its own terms. No one knows what the future will hold, but you can make some educated assumptions on which strategic decisions can be based.
The Strategy Pie challenge is to combine the available ingredients so as to make the most of the organization’s resources and “put value on the plate” for your customers.
Wednesday, July 20, 2011
A Strategy is not a Document
Everyone's looking for quicker, easier ways to do things in business.
People want to get things done quickly so they can move on with the next thing. This leads to a quest for the automation of tasks. Standard forms and templates are developed to make the work easier. Standard letters provide appropriate wording for various different purposes and commonly-encountered situations, so there is no need to "reinvent the wheel".
Sometimes strategy is treated as a task to be completed as quickly as possible, so that everyone can proceed to action.
I once purchased an electronic "Build A Business Strategy" program, which promised much but delivered very little. It offered a template containing fields to insert "Vision"; "Mission"; "Values"; "Present market share"; "Desired market share"; "Goals" etc. This "paint-by-numbers" offered nothing in terms of guidance as to how to think about these issues.
With strategy, there tends to be an emphasis on completing a strategy document, so we can say that the strategy is "done". People focus on developing words and phrases that look and sound good, but which are too general to have any real meaning and are really "empty rhetoric"*. It's as if the goal is to fill every field of a template with text, then the job is done.
The aim is not to produce a document, but to produce a strategy which can then be documented. These are two different things. It's not enough to fill in the "blanks". Each of the "blanks" requires comprehensive thinking, not jargon and ready-made phrases.
Just having words doesn't mean you have a strategy. Work on developing a strategy, not a document.
People want to get things done quickly so they can move on with the next thing. This leads to a quest for the automation of tasks. Standard forms and templates are developed to make the work easier. Standard letters provide appropriate wording for various different purposes and commonly-encountered situations, so there is no need to "reinvent the wheel".
Sometimes strategy is treated as a task to be completed as quickly as possible, so that everyone can proceed to action.
I once purchased an electronic "Build A Business Strategy" program, which promised much but delivered very little. It offered a template containing fields to insert "Vision"; "Mission"; "Values"; "Present market share"; "Desired market share"; "Goals" etc. This "paint-by-numbers" offered nothing in terms of guidance as to how to think about these issues.
With strategy, there tends to be an emphasis on completing a strategy document, so we can say that the strategy is "done". People focus on developing words and phrases that look and sound good, but which are too general to have any real meaning and are really "empty rhetoric"*. It's as if the goal is to fill every field of a template with text, then the job is done.
The aim is not to produce a document, but to produce a strategy which can then be documented. These are two different things. It's not enough to fill in the "blanks". Each of the "blanks" requires comprehensive thinking, not jargon and ready-made phrases.
Just having words doesn't mean you have a strategy. Work on developing a strategy, not a document.
Tuesday, June 21, 2011
A Strategy or a Plan?
A strategy isn’t a plan and a plan isn’t a strategy.
A strategy is a like a compass for your business. It points to the direction in which you will travel, and it also tells you where you are __not__ going. A plan, on the other hand, is like a map showing how you will get there.
A lot of people get impatient with the strategy and head straight for the plan. But without a clear strategy, the plan is destined to be generic and bland, and will not produce competitive advantage. You end up doing work that you don’t want to do, competing on price and losing market share to larger, more powerful competitors.
As Lewis Carroll wrote in Alice in Wonderland, “If you don't know where you are going, any road will take you there.” Your plan may be very creative, but if it is not pointed in the right direction, that’s all it is – creative.
To have a competitive strategy, you need to be able to state:
*Which target market(s) you choose,
*How you serve that market differently from your competitors, and
*What strategic assets you have that underpin these choices.
These questions can be really hard to answer, and even harder to answer innovatively. It’s no wonder a lot of people give up on strategy.
The strategy is often confused with the plan. The result is a catalogue of operational action items such as:
*”Hire marketing staff”
*”Develop branding”
*”Build relationships with customers”
*”Increase sales”
*”Upgrade the computer system”
*”Build a new web site”
*”Introduce KPI’s”
*”Improve internal and external communications”
*”Introduce customer satisfaction surveys”
*”Implement systems”
*”Advertise more widely”
*”Seek new customers”
*”Undertake market research”
*”Start viral marketing campaign”
These could all be valuable steps but none of it is strategy (even if you made them more specific). Without a strategy it’s just a grab-bag of scattergun actions.
Further, because each of these activities resides in some area of functional specialty, they tend to become the responsibility of the relevant “expert”. This tends to dampen any wide-ranging discussion of the possibilities. Either everyone looks to the expert for the answer, or the expert protects their “turf” by taking the lead and defending their position.
With strategy, you are all on neutral territory, because no one knows the answer. By definition, when you create strategy you are pioneering and forging a new path.
Strategy is not action. It is an exercise in conceptualization and articulation. It requires the expenditure of mental energy, and time for reflection and incubation. It can drive action-oriented people crazy. They will not find the answers because they are not even asking themselves the questions.
However, patient people who persevere will be rewarded with an original strategy which provides focus and enables the business to compete on its own terms.
Are you making a strategy or a plan?
A strategy is a like a compass for your business. It points to the direction in which you will travel, and it also tells you where you are __not__ going. A plan, on the other hand, is like a map showing how you will get there.
A lot of people get impatient with the strategy and head straight for the plan. But without a clear strategy, the plan is destined to be generic and bland, and will not produce competitive advantage. You end up doing work that you don’t want to do, competing on price and losing market share to larger, more powerful competitors.
As Lewis Carroll wrote in Alice in Wonderland, “If you don't know where you are going, any road will take you there.” Your plan may be very creative, but if it is not pointed in the right direction, that’s all it is – creative.
To have a competitive strategy, you need to be able to state:
*Which target market(s) you choose,
*How you serve that market differently from your competitors, and
*What strategic assets you have that underpin these choices.
These questions can be really hard to answer, and even harder to answer innovatively. It’s no wonder a lot of people give up on strategy.
The strategy is often confused with the plan. The result is a catalogue of operational action items such as:
*”Hire marketing staff”
*”Develop branding”
*”Build relationships with customers”
*”Increase sales”
*”Upgrade the computer system”
*”Build a new web site”
*”Introduce KPI’s”
*”Improve internal and external communications”
*”Introduce customer satisfaction surveys”
*”Implement systems”
*”Advertise more widely”
*”Seek new customers”
*”Undertake market research”
*”Start viral marketing campaign”
These could all be valuable steps but none of it is strategy (even if you made them more specific). Without a strategy it’s just a grab-bag of scattergun actions.
Further, because each of these activities resides in some area of functional specialty, they tend to become the responsibility of the relevant “expert”. This tends to dampen any wide-ranging discussion of the possibilities. Either everyone looks to the expert for the answer, or the expert protects their “turf” by taking the lead and defending their position.
With strategy, you are all on neutral territory, because no one knows the answer. By definition, when you create strategy you are pioneering and forging a new path.
Strategy is not action. It is an exercise in conceptualization and articulation. It requires the expenditure of mental energy, and time for reflection and incubation. It can drive action-oriented people crazy. They will not find the answers because they are not even asking themselves the questions.
However, patient people who persevere will be rewarded with an original strategy which provides focus and enables the business to compete on its own terms.
Are you making a strategy or a plan?
Tuesday, May 17, 2011
Got a strategy or a Strategy?
The term "strategy" has a variety of different meanings. "Strategic" can be used as a synonym for "important" or "sensible". You can have a "marketing strategy", a "recruitment strategy", a "succession strategy" a "success strategy"; a strategy for installing the new computer system or a strategy for getting the staff to reduce their number of sick days.
None of that is what I am talking about when I refer to Strategy (with a capital S). When I refer to Strategy I mean "Competitive Strategy", and it has a very specific meaning.
Competitive Strategy is "the choice of how and where to compete". It's like a recipe for how you plan to achieve competitive advantage.
The three components of a Competitive Strategy are:
1. The market in which you choose to compete
2. The way in which you intend to differentiate your offerings from those of your competitors, and
3. The identification of the strategic assets which you possess and which support the approach you have chosen.
How often does your organization analyse or review these matters? Does the discussion lead to a genuine exploration or is it a perfunctory "covering-off" of these points? The questions required to formulate an original strategy are the "dumb questions" that are often avoided, because the answers can appear obvious and no one wants to look stupid. They can't be answered comprehensively in one afternoon. Many people are impatient with such discussions and gloss over the issues, fast-forwarding to the action items.
Your Competitive Strategy is the compass which should guide all your other business decisions and activities.
Your "big S" Strategy is what makes your business unique. Can you afford not to have one?
None of that is what I am talking about when I refer to Strategy (with a capital S). When I refer to Strategy I mean "Competitive Strategy", and it has a very specific meaning.
Competitive Strategy is "the choice of how and where to compete". It's like a recipe for how you plan to achieve competitive advantage.
The three components of a Competitive Strategy are:
1. The market in which you choose to compete
2. The way in which you intend to differentiate your offerings from those of your competitors, and
3. The identification of the strategic assets which you possess and which support the approach you have chosen.
How often does your organization analyse or review these matters? Does the discussion lead to a genuine exploration or is it a perfunctory "covering-off" of these points? The questions required to formulate an original strategy are the "dumb questions" that are often avoided, because the answers can appear obvious and no one wants to look stupid. They can't be answered comprehensively in one afternoon. Many people are impatient with such discussions and gloss over the issues, fast-forwarding to the action items.
Your Competitive Strategy is the compass which should guide all your other business decisions and activities.
Your "big S" Strategy is what makes your business unique. Can you afford not to have one?
Wednesday, April 27, 2011
Utilize your unique ingredients
In the latest Fast Company magazine, there’s a story about the “The Top 50 Innovative Companies”. I bought it excitedly, but found it quite disappointing. The story focuses on the latest products or initiatives of these companies. It should be called “The Top 50 Innovations”. It tells us nothing about the companies and what has enabled them to produce these innovations.
You won’t get competitive advantage by copying what these companies have done. They probably have a completely different set of ingredients from the ones you have to work with.
When setting your strategy it’s important to understand your strengths. Today I'm going to talk about culture.
It’s been said that “Culture eats strategy for breakfast” – suggesting that it’s more important to work on your organizational culture than on your strategy.
Sure, if you have a toxic work culture, work to improve it as a priority, because if you don’t, you’ll lose your staff. But to suggest that you should choose between strategy and culture makes no sense. Culture is an ingredient of strategy.
Your organizational culture is one of those “strategic assets” I wrote about last time. It’s unique to your firm and difficult for your competitors to replicate. The question is: what does your culture enable your organization to do better than your competitors can?
It’s important to be honest about what kind of culture you have. If your culture is truly conducive to innovation, then base your strategy on being innovative, and invest in maintaining and heightening your capabilities in that area. If not, don’t pretend. Differentiate on some other basis. In time, you could perhaps create a culture of innovation, but it won’t happen overnight, or by proclaiming it on your web site. Perhaps there is something else about your culture, or some other strategic asset, that gives you an advantage over your competitors. Nurture and develop that instead.
Focusing on what competing companies have done is a way of getting stuck in precedent. Utilize your unique ingredients to create your own path.
You won’t get competitive advantage by copying what these companies have done. They probably have a completely different set of ingredients from the ones you have to work with.
When setting your strategy it’s important to understand your strengths. Today I'm going to talk about culture.
It’s been said that “Culture eats strategy for breakfast” – suggesting that it’s more important to work on your organizational culture than on your strategy.
Sure, if you have a toxic work culture, work to improve it as a priority, because if you don’t, you’ll lose your staff. But to suggest that you should choose between strategy and culture makes no sense. Culture is an ingredient of strategy.
Your organizational culture is one of those “strategic assets” I wrote about last time. It’s unique to your firm and difficult for your competitors to replicate. The question is: what does your culture enable your organization to do better than your competitors can?
It’s important to be honest about what kind of culture you have. If your culture is truly conducive to innovation, then base your strategy on being innovative, and invest in maintaining and heightening your capabilities in that area. If not, don’t pretend. Differentiate on some other basis. In time, you could perhaps create a culture of innovation, but it won’t happen overnight, or by proclaiming it on your web site. Perhaps there is something else about your culture, or some other strategic asset, that gives you an advantage over your competitors. Nurture and develop that instead.
Focusing on what competing companies have done is a way of getting stuck in precedent. Utilize your unique ingredients to create your own path.
Wednesday, March 23, 2011
Strategy Sets the Scene for Growth
As the world economy improves, businesses will again aspire to grow.
During the recession, businesses have been in survival mode, grabbing revenue from wherever they can, to make sure they can meet their overheads. Clearly, it's crucial to maintain cash flow and remain solvent, or there won't be a business to run when the recession is over.
But this approach is reactive, not strategic. Taking whatever business is available does nothing for your strategic positioning. The business loses focus. It becomes bland and loses its competitive edge because it is not clearly differentiated from other suppliers. As businesses become more alike, the need to compete on price becomes greater. And the result of this is a downward spiral.
Strategy is your choice of how and where to compete. It determines the identity of your business and the direction in which it is headed. Strategy enables your business to compete on its own terms instead of being dragged into a price war by its competitors. Your strategy defines what you won't do as well as what you will do.
A strategy should be original, not a replica of someone else's approach. Your business achieves competitive advantage through a combination of (1) its unique strengths and (2) how it decides to use them. To really differentiate, you need to think creatively about both parts of this equation.
Your strategy establishes criteria for all of the business decisions which are to follow. A new strategy forces a break from entrenched habits and old ways of thinking.
If you're ready for growth, don't get stuck in precedent; get a strategy.
During the recession, businesses have been in survival mode, grabbing revenue from wherever they can, to make sure they can meet their overheads. Clearly, it's crucial to maintain cash flow and remain solvent, or there won't be a business to run when the recession is over.
But this approach is reactive, not strategic. Taking whatever business is available does nothing for your strategic positioning. The business loses focus. It becomes bland and loses its competitive edge because it is not clearly differentiated from other suppliers. As businesses become more alike, the need to compete on price becomes greater. And the result of this is a downward spiral.
Strategy is your choice of how and where to compete. It determines the identity of your business and the direction in which it is headed. Strategy enables your business to compete on its own terms instead of being dragged into a price war by its competitors. Your strategy defines what you won't do as well as what you will do.
A strategy should be original, not a replica of someone else's approach. Your business achieves competitive advantage through a combination of (1) its unique strengths and (2) how it decides to use them. To really differentiate, you need to think creatively about both parts of this equation.
Your strategy establishes criteria for all of the business decisions which are to follow. A new strategy forces a break from entrenched habits and old ways of thinking.
If you're ready for growth, don't get stuck in precedent; get a strategy.
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