If you would rather dominate your market then get a series of short-term advantages, you have to think like IKEA, Apple, WalMart, Netflix, and Aldi. Why are they so successful? They did their homework, discovered the critical factors that would give them an advantage and then created a strategy that focused on and dealt with those critical factors.
Having a Strategy is critical. Yet, most companies do not use strategy as a way to focus, leverage and dominate their markets. When asked, most startups, companies and even nonprofits will say they have a strategy, but only about 50% of companies and maybe 10% of nonprofits have a strategy.
In many cases, it’s because It’s because the word strategy has been so overused it has lost much of its meaning. Today, many companies put the word strategy in front of their list of goals. For example, “our strategy is to increase revenues and profits 20% per year over the next five years.” But, that’s not a strategy, by definition, that’s simply a goal.
We see far more “strategic goals” than we do strategies. Companies tell us about the technology they have created, the problem they have solved or the opportunity they think they have. What we want to hear about is the strategy, policies, and resources they are going to use to achieve market dominance.
This article will deal with what a strategy is and how it will give you a significant advantage over your competition. Creating this strategy can be difficult and time-consuming because it requires one to dig deep into the problem or opportunity, both in scope and depth. But, at the same time, is exhilarating because when you have created and verified your strategy, you and everyone who works at your company will be motivated to execute it.
Professor Richard Rumelt, in his book, Good Strategy I Bad Strategy reduces the concept of strategy to three key elements or ideas as follows.
- An in-depth diagnosis of the problem or opportunity and insights that could set the company apart from competitors, diagnosis, policy, plan,
- a policy that will guide the company in dealing with the obstacles and opportunities identified in the diagnosis, and
- a feasible, coherent plan identifying the resources and actions that will be taken to make that policy happen.
You have to remember that different people will define the problem or opportunity differently and that each diagnosis is a judgment, not a proven fact. Also, a diagnosis is more an explanation of the situation, it must also define a way to leverage action.
After you have identified the company strategy, then you could create a brand strategy, a marketing strategy, a sales strategy, and so on. But, each of those strategies must support and be in sync with the company strategy.
Also, a successful strategy always looks simple and obvious. For example, Apple’s strategy was to empower individuals (computers were oriented toward businesses then) with well designed, easy to use computers. Remember that woman in the red shorts who threw the hammer at the black & white movie screen to symbolize breaking with tradition.
Also, you should be able to condense that strategy into a tagline or slogan and even a metaphor. Apple had the graphic and two powerful words: Think Differently.
There is a lot more to know about strategy then what I have discussed here. In future articles, I will continue the discussion about strategy and how you can use it to create a significant, long-term advantage over your competitors (for-profit and non-profit organizations) including some leverages and business models you can use to gain an advantage.
Jim Zitek I Harbor Capital Group I We Turn Startups Into Businesses