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?
Tuesday, May 17, 2011
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, April 6, 2011
Strategy is Like Job-Seeking
Competitive advantage comes from a combination of:
1. what you have, plus
2. how you choose to use it,
to create value for your chosen market.
The phrase “what you have” is a reference to your “strategic assets”. These are not what we normally think of as assets – land, buildings, equipment or “Our people are our greatest asset”.
Strategic assets are unique to the organization and are usually intangible things. They include:
• Intellectual property
• Acquired consumer information
• Lines of capital
• Core competencies (those that are embedded in the organization, not individual staff skills)
• Operational, monitoring, planning, communication or decision systems
• Organizational culture
• Brand awareness
• Brand image and reputation
• Secured distribution
• Relationships with suppliers, customers and intermediaries
Strategic assets are:
• Costly or difficult for competitors to acquire or copy,
• Path dependent – they result from the experience of your business and
• Firm specific – they cannot readily leave with departing staff members or be sold
Whatever strategy you choose must be underpinned by strategic assets which equip you to out-perform your competitors.
Therefore, identifying your strategic assets is a crucial step in developing a strategy.
__Strategic assets often go unrecognized. Innovative strategy depends on your ability to conceptualize your strategic assets in a creative way.__
Here's why strategy is like job-seeking. Most people looking for a job don’t recognize their own strengths. In their resume they provide a list of generic skills and qualities. Mostly, these are bland and superficially-expressed. They do not differentiate the individual from other job-seekers. It is not until they analyse the unique path they have taken and what they have gained as a result, that they can truly describe what they uniquely have to offer an employer.
Don’t get stuck in old ways of conceptualizing “what you have”. Break free from that precedent.
1. what you have, plus
2. how you choose to use it,
to create value for your chosen market.
The phrase “what you have” is a reference to your “strategic assets”. These are not what we normally think of as assets – land, buildings, equipment or “Our people are our greatest asset”.
Strategic assets are unique to the organization and are usually intangible things. They include:
• Intellectual property
• Acquired consumer information
• Lines of capital
• Core competencies (those that are embedded in the organization, not individual staff skills)
• Operational, monitoring, planning, communication or decision systems
• Organizational culture
• Brand awareness
• Brand image and reputation
• Secured distribution
• Relationships with suppliers, customers and intermediaries
Strategic assets are:
• Costly or difficult for competitors to acquire or copy,
• Path dependent – they result from the experience of your business and
• Firm specific – they cannot readily leave with departing staff members or be sold
Whatever strategy you choose must be underpinned by strategic assets which equip you to out-perform your competitors.
Therefore, identifying your strategic assets is a crucial step in developing a strategy.
__Strategic assets often go unrecognized. Innovative strategy depends on your ability to conceptualize your strategic assets in a creative way.__
Here's why strategy is like job-seeking. Most people looking for a job don’t recognize their own strengths. In their resume they provide a list of generic skills and qualities. Mostly, these are bland and superficially-expressed. They do not differentiate the individual from other job-seekers. It is not until they analyse the unique path they have taken and what they have gained as a result, that they can truly describe what they uniquely have to offer an employer.
Don’t get stuck in old ways of conceptualizing “what you have”. Break free from that precedent.
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.
Thursday, March 10, 2011
Use Precedent Purposefully
When people are discussing future strategic directions, there is a tendency to default to what has been done in the past. The conversation goes something like this: "What should we do?" "Let's brainstorm some alternatives" "Well, what did we do last time?" "What are other people doing?" "What is best practice in this arena?"
Why does this happen? The people may want to think more innovatively, but something is preventing them. That thing is the human brain. Throughout your life, your brain takes in pieces of information and arranges them in patterns in your memory. As new information comes in, your brain does a search to see how it might fit with other information already stored in your memory. When you look for an idea, your brain goes straight to its store of similar ideas and retrieves those. The "shelves" of your brain are stocked with examples of things you've seen or done or heard of before.*
Your brain offers you a selection of "templates" (or "precedents" in lawyer-language).
This explains why many people find it difficult to think laterally, and why a brainstorm often produces little in the way of novel suggestions.
To make the most of the brain's liking for precedents, search for examples that are "broadly similar" rather than "narrowly similar". You can do this by stating the challenge from a variety of different perspectives, and by experimenting with different levels of abstraction (by expressing the question in a more general or a more specific way).
New ideas often come from unconsciously combining elements of existing ideas. To maximize the likelihood of such a brainwave, you need plenty of examples to work with. Don't just go with the first idea that seems to be workable - map out a whole range of options, and examine the best aspects of each.
Have patience with the process, because new ideas take time to develop.
When creating your business strategy, don't simply default to precedent. But if you are going to use precedent, use it purposefully.
Why does this happen? The people may want to think more innovatively, but something is preventing them. That thing is the human brain. Throughout your life, your brain takes in pieces of information and arranges them in patterns in your memory. As new information comes in, your brain does a search to see how it might fit with other information already stored in your memory. When you look for an idea, your brain goes straight to its store of similar ideas and retrieves those. The "shelves" of your brain are stocked with examples of things you've seen or done or heard of before.*
Your brain offers you a selection of "templates" (or "precedents" in lawyer-language).
This explains why many people find it difficult to think laterally, and why a brainstorm often produces little in the way of novel suggestions.
To make the most of the brain's liking for precedents, search for examples that are "broadly similar" rather than "narrowly similar". You can do this by stating the challenge from a variety of different perspectives, and by experimenting with different levels of abstraction (by expressing the question in a more general or a more specific way).
New ideas often come from unconsciously combining elements of existing ideas. To maximize the likelihood of such a brainwave, you need plenty of examples to work with. Don't just go with the first idea that seems to be workable - map out a whole range of options, and examine the best aspects of each.
Have patience with the process, because new ideas take time to develop.
When creating your business strategy, don't simply default to precedent. But if you are going to use precedent, use it purposefully.
Tuesday, February 22, 2011
Don't implement the wrong strategy
The first two ingredients in a business vision were “imagination” and “worldview”.
The third one is “possibility thinking”.
This is about your willingness to move beyond the first acceptable idea, to generate multiple ideas from which you can select and combine. Many people feel uncomfortable and impatient with this process. They latch on to the first viable suggestion, however superficial and unoriginal, so they can move straight to implementation, and feel as though they are doing something. However, implementing the wrong business strategy can be a disaster.
Creating a unique strategy, one that capitalizes on the organization’s strengths and caters to the needs of its customers, whilst also taking into account what is happening in the world around you, is not easy or quick. It requires the input of many and varied suggestions. Most will eventually be “redundant” and “surplus to requirements”, but they form an essential part of the process.
Much has been written about the importance of not shooting other people’s ideas down. Just as important is not shooting down your own ideas. Most ideas are never voiced at all. It takes time and confidence for a thought to develop to the point where it can be put forward as a suggestion. Mostly, we have “glimmers” which pass through our minds but never really form into an idea. Only if we let these glimmers grow can we exercise our originality and create a truly new strategy.
Recently I took part in a five-day Cabaret Summer School. During the week each of us was required to create an original solo mini-cabaret show of 10-15 minutes, consisting of three songs and some patter to connect them. At the end of the week all eleven of us performed our segments to a paying audience in a show held at a beautiful theatre, with professional sound, lighting and grand piano accompaniment. It was quite a challenge. At start of the week, most of us had no idea what our show would be about. The best piece of advice came on Day 1: “Most ideas get rejected before they have time to develop. Give your ideas time to grow”. This gave everyone permission to come up with novel ideas, and to experiment with all sorts of things without worrying too much about whether or not the material would eventually be used.
Obviously there are differences between the creative arts and the corporate world. But both require possibility thinking. You don’t get competitive advantage by copying what your competitors have done. To create a new strategy, we need to overcome the natural tendency to self-edit, and allow the glimmers to grow.
Possibility thinking stops you getting stuck in precedent.
The third one is “possibility thinking”.
This is about your willingness to move beyond the first acceptable idea, to generate multiple ideas from which you can select and combine. Many people feel uncomfortable and impatient with this process. They latch on to the first viable suggestion, however superficial and unoriginal, so they can move straight to implementation, and feel as though they are doing something. However, implementing the wrong business strategy can be a disaster.
Creating a unique strategy, one that capitalizes on the organization’s strengths and caters to the needs of its customers, whilst also taking into account what is happening in the world around you, is not easy or quick. It requires the input of many and varied suggestions. Most will eventually be “redundant” and “surplus to requirements”, but they form an essential part of the process.
Much has been written about the importance of not shooting other people’s ideas down. Just as important is not shooting down your own ideas. Most ideas are never voiced at all. It takes time and confidence for a thought to develop to the point where it can be put forward as a suggestion. Mostly, we have “glimmers” which pass through our minds but never really form into an idea. Only if we let these glimmers grow can we exercise our originality and create a truly new strategy.
Recently I took part in a five-day Cabaret Summer School. During the week each of us was required to create an original solo mini-cabaret show of 10-15 minutes, consisting of three songs and some patter to connect them. At the end of the week all eleven of us performed our segments to a paying audience in a show held at a beautiful theatre, with professional sound, lighting and grand piano accompaniment. It was quite a challenge. At start of the week, most of us had no idea what our show would be about. The best piece of advice came on Day 1: “Most ideas get rejected before they have time to develop. Give your ideas time to grow”. This gave everyone permission to come up with novel ideas, and to experiment with all sorts of things without worrying too much about whether or not the material would eventually be used.
Obviously there are differences between the creative arts and the corporate world. But both require possibility thinking. You don’t get competitive advantage by copying what your competitors have done. To create a new strategy, we need to overcome the natural tendency to self-edit, and allow the glimmers to grow.
Possibility thinking stops you getting stuck in precedent.
Wednesday, February 9, 2011
When Worlds Collide
The first ingredient in creating a business vision was “imagination”.
The second ingredient is “worldview”.
As the name implies, your worldview is the way you see the world. It refers to the framework or “filter” of ideas and beliefs through which you interpret the world and interact with it; the assumptions you make about people and things. Your worldview influences the way you think and behave. It’s your philosophy of life.
A worldview is an individual thing. Everyone’s worldview is different, because everyone is the product of a different culture, personality, upbringing, education, employment and other experiences.
A worldview is an unconscious thing – it’s so much a part of you, that you’re unaware of it.
Your belief regarding what is true or possible is largely determined by your worldview. You may think something is impossible, whereas someone else will see the same thing as easily achievable.
To challenge your own worldview, contrast it with the worldviews of other people. The more diverse the group, the more diverse the input to the business vision. The broader the questions and the discussion, the more your worldview will be challenged, and the more innovative the vision will become.
Conversely, the more you live within your own view of the world, the more limited the vision will be.
Involve more people, and more diverse people, in the process for developing a business vision. Allowing your worlds to collide helps you break with precedent, to build a vision for the future.
The second ingredient is “worldview”.
As the name implies, your worldview is the way you see the world. It refers to the framework or “filter” of ideas and beliefs through which you interpret the world and interact with it; the assumptions you make about people and things. Your worldview influences the way you think and behave. It’s your philosophy of life.
A worldview is an individual thing. Everyone’s worldview is different, because everyone is the product of a different culture, personality, upbringing, education, employment and other experiences.
A worldview is an unconscious thing – it’s so much a part of you, that you’re unaware of it.
Your belief regarding what is true or possible is largely determined by your worldview. You may think something is impossible, whereas someone else will see the same thing as easily achievable.
To challenge your own worldview, contrast it with the worldviews of other people. The more diverse the group, the more diverse the input to the business vision. The broader the questions and the discussion, the more your worldview will be challenged, and the more innovative the vision will become.
Conversely, the more you live within your own view of the world, the more limited the vision will be.
Involve more people, and more diverse people, in the process for developing a business vision. Allowing your worlds to collide helps you break with precedent, to build a vision for the future.
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