• The Essence of Strategy (Part 2)

    by  • October 30, 2011 • Human Resources, Leadership, Marketing, Strategy

    ThisWayLast week’s blog post bemoaned the lack of strategic discipline in today’s world of business. I posed three simple strategic questions that on the surface appear easy to answer.

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

    You’d think executives from the same organization would offer the same responses. More often than not, their answers can be as different as night and day. Why?

    Because people struggle with specificity; they hate strategic confinement. And yet, specificity and focus is the key to great strategy. Even though most senior executives know that being all things to all people is the roadmap to disaster, they can’t seem to help themselves. They cannot ignore the lure of opportunity – any opportunity. The ethic of more balls in the air, more chances of success lurks in their subconscious.

    Years ago I had the displeasure of consulting for a Canadian natural gas company. In a strategy seminar I asked the leadership team to tell me what business they were in. The answer should have been a no-brainer.

    The CEO said, “We’re in the peace-of-mind-business.”
    “So is Allstate,” I said to myself.
    One of the VPs then said, “We are in the customer service business.”
    To that, I wanted to say, “Who the hell isn’t?”

    The irony in the VP’s response is the fact that this company was poor at customer service. You can imagine my frustration. At the outset of this assignment I’d worried that this wouldn’t be a fulfilling gig. I should have listened to my instincts. Thankfully, Fortis Inc. acquired this misguided company. If the group I worked with is still there (which I highly doubt), they are now singing from the new parent’s strategic hymn sheet.

    Here’s how the Fortis B2B team define themselves: Natural gas is our business. At Fortis we help businesses use natural gas more efficiently, save energy and seek innovative energy solutions to save money. This statement brings clarity. They tell us what business they are in (gas), what they sell (efficiency), who they sell to (businesses) and how those customers will benefit (lower costs).

    So, is Fortis finished with strategic craftsmanship? Not quite. I’m going to assume they’ve identified their competitive advantage and the secrets of success in the business they’ve defined. Competitive advantage is strategy’s ultimate purpose. After that, you migrate to tactics – which battles to wage, when, how and with what resources. Defining strategy begins with a mind-set that is analytical, intuitive and creative. Executing the strategy requires the discipline to stay the course and not give in to non-strategic temptation.

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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 2)

    1. October 31, 2011 at 11:12 am

      Beautifully simple, like mathematics. I swear too many people over complicate strategy – and then have no idea how to translate into tactics. Thanks for the post.

    2. John
      October 31, 2011 at 11:52 am

      Appreciate you weighing in, Chris. Your point on complication – from my experience, the ones who do it are the most insecure about the direction. They hate to put themselves in a position where they’ll miss an opportunity that the competitor will seize. I say, “If the opportunity isn’t strategic, let the competitor have it!” For example . . . Q: Why don’t the specialty coffee makers promote instant coffee? A: Because compromising quality for convenience brutalizes their speciatly image. Over the long haul, the specialty/expert image is critical to high prices and high margins.

    3. October 31, 2011 at 12:33 pm

      Great post John!

      I think you hit the nail on the head with this statement: “Because people struggle with specificity; they hate strategic confinement. And yet, specificity and focus is the key to great strategy.”

      I agree completely and have seen this very reaction. I would add that they hate strategic confinement because it makes us accountable. Most of my work has been with non-profits, where the problem may be even worse because such organizations want to please everyone. Thank you for setting the record straight about what a Mission Statement is. Great strategies bring a razor sharpness to the company that energizes both employees and customers.

    4. John
      October 31, 2011 at 10:36 pm

      Thanks for the kind words, Greg. I’ve had some experience as a Board member with non-profits and agree with your general sentiment. My biggest challenge was educating a diverse group of Board members on the value of focused strategies. Anyway, I encourage you to stick with it. Non-profits and those they serve will benefit from your strategic tenacity.