Can you say what your strategy is?
David J. Collis and Michael G. Rukstad | Apr – 2008
Summary : Can you summarize company’s strategy in 35 words or less
Very few executives and they are most successful
Ex: Grow from x to y by 20XX by offering this and that service [through a national/international network of offices]/[online]
Companies that don’t have a simple and clear statement of strategy
Complains like “No one told me before I started” or “We lost time chasing xyz which are not in our strategy”
A well-understood statement of strategy aligns behavior within the business. It allows everyone in the organization to make individual choices that reinforce one another
What is strategy?
Michael Porter lays out characteristics of strategy in a conceptual fashion, conveying the essence of strategic choices and distinguishing them from the relentless but competitive fruitless search for operational efficiency
Its not practical and most executives don’t actually know what all the elements of a strategic statement are, which makes it impossible for them to develop one
With clear definition, two things happen
Formulation becomes infinitely easier
Implementation becomes much simpler (easy to communicate to employees and easily internalized by everyone in the organization)
Elements of a Strategy Statement
3 critical components
Should include not only endpoint but also a time frame for reaching it
Define the part of landscape in which firm will operate
“What will your business do differently from or better than others”. Two components.
External: Why targeted customer should buy your product above all the alternatives
Internal: How internal activities must be aligned so that only your firm can deliver that value proposition
Defining the Objective
Companies often confuse their statement of values or missing with objective
It’s not, for example
Maximizing shareholder wealth by exceeding customer expectations for XYZ product and providing opportunities for our employees to lead fulfilling lives
Firms in the same business often have the same mission, values and vision, however strategic objective would be different
Strategic objective should be specific, measurable and time bound
It should also be a single goal
Defining the Scope
Customer or offering
does not define archetypical customer by net worth or income
Rather by Psychographic: customers are long term investors, who have a conservative investment philosophy and uncomfortable making serious financial decisions without support of trusted advisor
Targets “delegator”, not the “validator” or “do-it-yourselfer”
Scope should specify where the firm or business will not go
Scope of product line
Defining the Advantage
Clarity about what makes the firm distinctive is what most helps employees understand how they can contribute to successful execution of its strategy
Defining sustainable competitive advantage consists of 2 parts
Statement of the customer value proposition: A simple graphic that maps your value proposition against those of rivals can be extremely easy and useful way of identifying what makes yours distinctive
Unique Activities (or complex combinations) allowing that firm alone to deliver the customer value proposition. (Activity-system map described as What is Strategy?)
Developing a Strategy Statement
First step requires careful evaluation of industry landscape
Understanding customer needs
Identifying unique ways of creating value for the ones the firm choose to serve
Creative part of developing strategy is finding the sweet spot (see above)
Process of developing the strategy and then crafting the statement that captures its essence is a readily communicable manner should involve employees in all parts of the company and at all levels of the hierarchy
Wording of the strategy statement should be worked through painstaking detail (most important part of Strategy development process)
(Leaving No Room for Misinterpretation)
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