Three questions can lead you to great business strategy ? rapidly.
Strategy. A concept everybody wants, but frighteningly few companies are prepared to put in the time and investment to create workable strategy. Most companies are looking for an easy way to have a strategy that works ? here is a framework that enables that to happen rapidly.
Background
Say ?Strategy? and people visualise a time consuming and therefore expensive process to come up with a business approach. ?Strategic Planning? sounds like something only big companies do, an activity documented voluminously by teams researching in great detail.
It doesn?t have to be that way. For any business ? big or small, new or established ? a clear view of where the company is headed is essential. The challenge is to come up with something meaningful and actionable that a business can get behind and will lead to success.
A Simple Approach
For pure pragmatism and speed, I really like the approach to strategy creation originally developed by Derek F Abell in ?Defining the Business: The Starting Point of Strategic Planning? and later developed further by Constantinos C Markides in ?All the Right Moves: A Guide to Creating Breakthrough Strategy?.
The principle is astounding simple. Just answer these three questions and you have the headlines of your business strategy:
- What products or services will the business offer?
- Who will the business target as customers?
- How will the business achieve this in an efficient manner?
Working up answers to those questions enables any business to have a clear view of what it should do to take it closer to success. It also enables any business to differentiate itself from its competitors by evaluating how they would answer the three questions, and then choosing a different approach.
An Example ? Dell vs. IBM and Compaq
When Michael Dell founded the Dell we know today, he was looking at a PC market dominated by IBM and Compaq. He could have pursued the same strategy as they were, but by choosing something different, he made Dell stand out and occupy a unique competitive position and so went on to prosper.
At the time, IBM and Compaq marketed their PCs through chains of resellers ? independent businesses that sold PCs to customers. Their What/Who/How strategies were probably something like: ?We sell personal computers to businesses through a chain of accredited resellers?.
Dell could have done the same. But they didn?t. Their strategy probably looked something like: ?Dell sells personal computers to knowledgeable users who want to buy direct from the manufacturer?.
Dell struck two important differences.
- The first was the distinct targeting of knowledgeable users ? the ?Who?. A cute move ? it doubtless reduced their support costs dramatically and so enabled them to price aggressively.
- The second was the ?How?. They chose to sell direct, ignoring the resellers completely. That too was cute ? it enabled them to take stock out of the chain between manufacture and buyer. That in turn meant they were always ready to offer the latest technology at the lowest pricing without having to protect stock ?In the Channel?.
How can you create a business strategy for your business?
A great start point is to answer the three questions: ?What? Who? How??
The first stage is to get totally clear on your answers to those three questions. At the outset, this doesn?t need to be deep or time-consuming.
Interestingly, it doesn?t really matter which of the three questions you address first. If your passion is for a specific type of customer, so be it. Start by answering ?Who?? And it may well also be iterative in that you need to double back around a few times until you get to a series of answers that make sense.
What?
What products or services will the business offer? ?On the face of it, easy enough. ?The challenge at this point is to think about the problems your products or services help your customers solve, and express your business in that way.
So for example, if you are selling wood burning stoves, you are actually selling your customers the ability to be warm in the winter.
Who?
Who will the business target as customers? ?This often needs a little more thought to get down to who, specifically, are your intended customers.
The other dimension is to be clear about roles within a longer chain to the customer. ?So for example, if you are selling dog food to petshops, who is your customer? ?The petshop or the dog owner? ?Theoretically either can be the right answer, but each would require a very different ?How?? to achieve success.
A popular concept to help illustrate ?Who?? is the persona. ?You describe everything you can about your ideal customer, as if they were a real person. ?To help visualise the person and their needs, some people go as far as giving them names and coming up with pictures of their fictitious but lifelike character.
How?
How will the business achieve this in an efficient manner? ?How are you going to take the story to market? ?How will you deal with the logistics of order fulfillment? ?What are your programmes and policies towards your customer?
The ?How?? question is the one most open to creative ? and therefore powerful ? interpretation. ?Take your time and don?t accept the immediately obvious answer.
Is your strategy differentiated?
An essential for business success is to have a clear strategy that is recognisably different to your competitors. Dell could have chosen to enter the PC market with the same strategy as IBM and Compaq. I?d suggest if they had done that, they wouldn?t be the company we recognise today.
So before you get too attached to your business strategy, figure out who your competitors are or might be, and what their ?What, Who, How? answers might be. Then look again at your own strategy. What can you do to make sure at least one of your ?What, Who How? are different to your competitors?
Then ask yourself, is that difference sustainable? If for example your ?How? is to be 10% cheaper than anybody else in the market, that just isn?t sustainable over any period of time. Somebody, somewhere will come up with more efficient processes than you and your differentiation will evaporate.
Nothing is ever a 100% sustainable differentiator, as whatever you do can be copied. The challenge is to find something that will take enough time to copy so as to enable you to occupy and own your chosen strategy.
A great start
This is a subject I?m passionate about. So many of the businesses I work with frankly haven?t given enough time to thinking about their strategy. That?s because they see it as a time consuming process when it doesn?t have to be.
The result is they are struggling to grow, and struggling to make money as competitors slug out price wars that become a race to the bottom.
Recently I ran a workshop with a business where over a weekend we started with little and ended with a really solid, differentiated strategy the business is now rolling out. It?s early days, but all the indications are it?s going to be a success.
Kickstart
The above process to define a creative business strategy is outlined in more detail in my workbook ?Kick-Start Sales and Marketing Planning?. ?Download your free copy now.
Here?s what to do next
If you?re interested in how this could help you, or feel I may be able to help you with some of the challenges you?re facing, please get in touch for an informal discussion.
There?s no commitment, we?ll just discuss your situation to see if working together might be a good fit. ?Contact me?now.
Best regards
Source: http://www.salessuccessandmore.com/how-to-create-great-business-strategy-in-three-easy-moves
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