• The Essence of Strategy (Part 1)

    by  • October 23, 2011 • Human Resources, Leadership, Marketing, Strategy

    I’ve always loved strategy. Maybe it’s because I grew up playing chess; maybe it’s because I can be stubborn. Luckily, good strategists are also stubborn. They have to be, because in today’s “light-speed” business world, most of their business colleagues are anything but strategic. They either believe that strategy is a deterrent to opportunity or they’ve never experienced the strategic disciplines of a prudent mentor. I suspect these folks have never enjoyed the sales and profit rewards that result from rejecting non-strategic opportunities in the name of maintaining the integrity of a guiding business strategy.

    The irony is this: the best strategies are actually those that require sacrifice. These strategies tell you what not to do. Once strategists carve out their course of action, the best ones stick to it like glue. They don’t want to hear about the innumerable opportunities on Mount Elsewhere. They want to know how to better trek Mount Here, the vista everyone on the team agreed to climb in the first place. Consider these basic strategic questions:

    1. What business are we in?
    2. What will we sell?
    3. To whom will we sell?

    I’ve posed these questions to hundreds of senior executives. You’d think I’d get similar answers from the executives who work in the same company. Think again. Answer the questions with a view to focus, clarity and differentiation and you will be on your way to a compelling business strategy. More on “the questions” in next week’s post.

    People worry that strategy slows a company down and limits growth opportunities. The opposite is true. Look at the success of Apple. Big. Fast. Focused. Innovative. Steve Jobs managed to harness the resources of 49,000 employees to introduce and successfully market a slew of breakthroughs. Both Jobs and Tim Cook were adamant in saying “no” to thousands of projects so that they could focus on the few that were truly meaningful to Apple.

    Take Starbucks. Howard Schultz grew the company at an outrageous pace. All it took was three decades for Starbucks to catapult from the Pacific Northwest to 17,000 stores in 55 countries, $10 billion in sales and $950 million in profit. Schultz’s vision for Starbucks was a social community with a defined culture that people would aspire to connect with, (over a cup of distinctive, dark-roasted coffee). Seemingly, the personality of the brand impacted every decision about the experience and the ambiance – the furniture, the artwork, the exotic names of the bean origins, even the music.

    With so much written about the success of so many great companies led by outstanding strategic visionaries, one has to wonder why there is less and less attention paid to the tenets of good strategy in today’s business.

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    Formerlife: Jacobs Suchard CEO (Kraft, Nabob), Strategy Consultant. Afterlife: Palgrave Macmillan Author, Historical Novelist, Business Journalist

    4 Responses to The Essence of Strategy (Part 1)

    1. October 24, 2011 at 12:57 am

      Hello John,

      I very much agree with your call for a focused strategy. It is probably one of the most difficult parts of business, because in most companies people tend to avoid the tension saying no causes.

      On your three basic questions. I prefer the following:
      1. Who is our Customer (segment) / What’s their need?
      2. What’s our value proposition?
      3. How do we deliver the value proposition?

      For the best way to create focus is to be very clear on who you are serving (not just selling to!) how, and subsequently who not.

      Wim Rampen

    2. John
      October 24, 2011 at 7:28 am

      Your questions work too, Wim. Interesting that I’d already written Part 2 on this subject for next week. In that I make the point that one is not finished after those basic 3 questions are answered. The next step is the Competitive Strategy and that is exactly what your questions address. Appreciate your input. JRB

    3. October 25, 2011 at 3:11 pm

      I’ll second the call for strategy, John, but I’d ask the questions that Tom Hall and I used in Ruthless Focus.

      What makes us distinctive?
      How will we make money from that?

      • John
        October 25, 2011 at 3:56 pm

        You are quite right about distinction, Wally. My 3 questions are a good start but not enough to differentiate. Your 2 questions from Ruthless Focus get to the all-important Competitive Strategy. That’s covered in next week’s blog post.