Strategy made simple
What is strategy?
If you ask 5 people what strategy is, you’ll probably get 5 different answers.
Michael Porter, the father of competitive strategy, defines strategy as:
‘...deliberately choosing a different set of activities to deliver a unique mix of value.’
For me, strategy is about differentiating yourself from the competition in the eyes of your core customer.
But there are two aspects to differentiation:
What differentiators do you need to build?
Start by understanding your core customer. What are their biggest challenges? How can you solve that problem better than anyone else?
With my clients, we start by looking at a three year horizon and asking some key questions:
What are the attributes of the marketplace (i.e. price, level of service, scope of services, etc.)?
Where are you versus the competition right now? Where do you want to be three years from now?
What 3-5 attributes will you own in the marketplace?
What initiatives and activities are necessary to establish that ownership?
But here’s the rub.
It’s not just about building new differentiators, it’s about protecting those differentiators that already exist.
This is why I think it’s very important to incorporate this second part of your strategy:
2. How can you protect your current differentiators?
How do you create obstacles so other businesses can’t compete with you on the same differentiators?
Now that may sound a little bit aggressive. However, I’m not talking about monopolistic practices.
For example…
If you currently differentiate by having the widest product assortment, you might build a barrier by aggressively building new supplier relationships and investing heavily in product design.
If you currently differentiate on personalized service, you might double-down on training and innovating your customer experience.
Bottom line, your strategy needs to include an understanding of differentiators you want to build as well as barriers you want to protect.
Now you have a strategy.
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