“Fitting in is a short-term strategy, standing out pays off in the long run.” Seth Godin
Last post, I shared insights about what was not good strategy (tactical ideas, ‘table stakes’ offerings…). Today, I want to share what a top notch business strategy looks like.
In many ways, it’s simple (do the opposite of the bad strategy ideas) but in many ways, it is more complex and nuanced than that. The goal of strategy is to create differentiation. The elements of a great strategy that accomplish this feat include;
- A multifaceted collection of unique activities
Having a unique strategic offering has many benefits including brand positioning and pricing power. Check out the book Blue Ocean Strategy to help you understand the value of, and process for, finding you niche.
The other critical piece is that your strategy is multifaceted. This will take time to develop but once you have this in place, your current (and future) competition will find it very difficult to copy. A great example of this is Southwest airlines. After their initial success, many others (do you remember Continental Lite?) attempted to challenge Southwest in the low fare space. However, without the full interlocking strategic system that Southwest had created, each of the competitors failed…and most no longer exist.
- The requirement of making trade offs
The best strategies result in the business will say ‘No’ to far more opportunities than ‘Yes’. A sharp strategy provides focus and reduces the time spent chasing shiny objects.
Does Nordstrom try to compete on price or seek revenue via opening stores everywhere? The question seems silly but it is important to consider. Have you ever shopped at IKEA? The stores are labyrinths, there is minimal sales support on the floor, and you have to assemble most of what you buy. They are clearly saying “No” to many normal retail activities and to many potential customers. Yet their sales were $44 Billion (USD) last year (up 27% over 3 years)
- Fitting to company culture and strengths
The key to making your competitive advantage sustainable is fit. Your strategy must be aligned with the core values and core competencies of your business and it must provide value to your target customer. The question to ask yourself here is what resources do you have (talent, training, processes, supply chain, customer relationships, brand,…etc) that can be crafted into a winning strategy? There may be a few elements that are missing and/or need to be developed but you should have most of it now. If not, your strategy becomes aspirational and your customers are likely to become frustrated with the mismatch between what you sell and what you deliver.
Strategy is a challenging but fun topic that I love to study and discuss. Want to join the conversation? Send me an email (firstname.lastname@example.org) and I’d be happy to talk with you about how you can build a winning strategy.