A great article by Roger L. Martin regarding Strategy.
Sadly, like the majority of strategies that I read, this firm’s strategy failed my sniff test and for that reason I would bet overwhelmingly that it will fail in the market as well. The test I apply is quite simple. I look at the core strategy choices and ask myself if I could make the opposite choice without looking stupid. For my wealth managers, the opposite of their “where” choice was to target poor individuals who don’t want and aren’t willing to pay for comprehensive wealth management services. The opposite of their “how” is to provide crappy customer service.
The point is this: If the opposite of your core strategy choices looks stupid, then every competitor is going to have more or less the exact same strategy as you. That means that you are likely to be indistinguishable from your competitors and the only way you will make a decent return is if the industry currently happens to be highly attractive structurally. The wealth management company was targeting the exact same clients as every single global competitor and, like every other global competitor, they planned on giving them “great service.”
I recently wrote about the differences between strategies and tactics, this gets to the heart of defining a good strategy. It is a really interesting take on the definition of the strategy itself. I am a big fan of differentiation of the a strategy. Unless your business is the market leader, following the same strategy as your competition is a recipe for disaster. You will never overtake the leader. This is an entirely different take on competing with a strategy that is opposite of a winning strategy.
Most market leaders and successful companies have good strategies. They make a lot of money and have a lot of customers. Sometimes as a business you have to take a strategy that is opposite of what those competitors are doing. For instance, Apple looked at the smartphone landscape and determined their competitors were tailoring their products to business minded individuals, but Apple decided their strategy was not to go after that market, they decided to make a phone for consumers. Yes this was in their wheelhouse, but it is an example of not following the competition. Only later in the iPhone's life did it add features to compete in business, but that was secondary.