The First Question to Ask of Any Strategy

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. 

The Art of Crafting a 15-Word Strategy Statement

Focus: What you want to offer to the target customer and what you don’t; Difference: Why your value proposition is divergent from competitive alternatives.

I don't know about 15 words, but succinct and to the point is the best way to articulate a strategy.  So much time is built constructing long strategy documents that sit on a shelf and are never read again.  A mantra or a short strategic statement become rallying cries of the organization.

I had the pleasure of watching a keynote by Guy Kawasaki where he stated that every organization needed a mantra.  It is something that has changed my way of thinking since hearing the logic behind his statements.  It takes so much inertia to move an organization that having a simple mantra can rally the entire organization around a single statement.  

The focus and difference in the strategy statement proposed by Alessandro Di Fiore are wonderful points.  So many times the target customer is forgotten in an organization.  In an age of growing earnings every quarter and constant pressure on short-term financial results, the target customer gets lost in the shuffle, replaced by revenue opportunities that alienate the target.  The difference piece is key for the organization to understand what they need to deliver to that target customer.  Once the organization understands why it's different, it becomes easier for everyone to deliver on the promise.