The World Has Been Changing. Have You Adapted Your Business Strategy? – Part 1 –

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The world has been changing dramatically since the Pandemic began two years ago. A key question facing business people is this: Have you adapted your business strategy?

Whether you have a business strategy or not, this is a compelling time to re-visit this tool — the only single tool that can open a clear line-of-sight to success, guiding you in re-focusing on what’s important in today’s world.

This article is the first in a mini-series clarifying 7 key ways your business strategy can help you build business performance and growth into the future.

What is a Business Strategy?

Recognizing that there are a number of types, definitions and perspectives, this article considers the following critical elements of a business strategy:

  • Business Purpose
  • Competitive Differentiation
  • Disciplined Execution
  • Ability to Adapt to Change

Your Strategy is a Living Keystone of Your Business

What is a keystone? If you look it up you’ll see it’s the central principle of an entity (or of a structure, or a system) on which all else depends. In a business, the strategy is its living keystone.

As a living keystone of a business, a business strategy needs to be reviewed, assessed and adapted, at least annually. Otherwise, there is risk it will become outdated, irrelevant to current times, or even obsolete. Failure to adapt can lead to failure of a business.

Today, as organizations respond to each phase of the pandemic, there is both a need and an opportunity for leaders to re-visit the company purpose and the strategy, taking into account the learnings inherent in the experience of navigating this enormous global crisis.

We believe that effectively creating, adapting or assessing your business strategy begins with considering questions such as these, from the perspectives of your leadership team, your employees and your customers:

  • What is your company’s business strategy?
  • How have the business environment and customer needs changed since you established your business strategy?
  • Why does your company exist?
  • Why do customers buy from your company rather than from your competitors?
  • Who are your company’s key competitors and how do you differ?
  • How do customers use your products and/or services?
  • How does your job relate to the company strategy?

There is widespread agreement that Strategy is a detailed plan for achieving success. It incudes a competitive course of action, leading and lagging metrics, goals and more.

In business, Purpose and Strategy function jointly to establish parameters that people use day in and day out to drive short and long term execution, by guiding shaping priorities, decisions and organization effort. According to Deloitte, purpose-driven organizations achieve 30% higher levels of innovation and 40% higher levels of workforce retention than their competitors. They gain higher market share and grow 3 times faster than other companies not driven by purpose.

7 Levers to Strategic Success

  1. Market Discipline or Focus
  2. Strategic Understanding & Buy-in
  3. Balanced Metrics/Performance Indicators
  4. Scorecard & Business Performance Reviews
  5. People
  6. Activities and Structure
  7. Leadership

Next Steps

To build a powerful business strategy that will lead to business success requires giving priority to the 7 levers above, and company-wide communication about each one. These levers are not in an order of importance; all seven have powerful impact on strategic success.

The lack of a strong, organization-wide understanding and buy-in of the the business purpose and strategy has been recognized as a critical issue throughout the past ten-plus years. John Kotter’s July 19, 2013 article in Forbes, “When CEOs Talk Strategy, 70% Of The Company Doesn’t Get It” and Harvard Business Review’s June, 2013 article, “When CEOs Talk Strategy, Is Anyone Listening?” demonstrate two early indicators of an obstacle to performance that still exists in businesses today.

Series Step 1: We encourage readers to focus on taking the following two actions between now and next week’s post

Market Discipline or Focus, the first lever, requires business leaders to make choices about what the company will and will not do. The two Actions below can help you to conduct the reflection, homework and discussions essential revealing and clarifying this key component of your strategy.

Successful organizations do not try to be and do everything, to serve every potential target customer in the marketplace. They make difficult choices and trade-offs to identify their purpose, what they do best, and which customer bases are the optimum fit for their products and services. That way they avoid operational problems caused by conflicting customer needs and other such variations that can dilute effectiveness and efficiency and undermine effort.

Action 1: Move forward to create, adapt or assess your business strategy. Reflect and obtain input from key stakeholders (such as your leadership team, your employees and your customers) to consider the questions listed earlier, which we are re-listing below for your convenience.
  • What is your company’s business strategy?
  • Why does your company exist?
  • Why do customers buy from your company rather than from your competitors?
  • Who are your company’s key competitors and how do you differ?
  • How do customers use your products and/or services?
  • How does your job relate to the company strategy?
Action 2: Choose your specialty from one of the following three value disciplines:
  • Operational Excellence
  • Product Leadership
  • Customer Intimacy

Operational Excellence is rooted in an organizations demonstration of strength in performing operational and execution functions, resulting in reasonable quality at a very low price to the customer. Low profit margins are typical. This fits a business where people are task-oriented and products and quality requirements are standardized; efficiency, streamlining processes, and supply chain management are the rule. Without offering add-on choices for customers, the organization is well positioned for mass or cookie cut delivery.

Product Leadership requires continually updating products and services to keep them on the cutting edge. The organization is capable of innovation and brand marketing. Focus is on development, time to market, and high profit margins. Experimentation, research, and hiring specially talented people are norms. This type of organization continuously offers or creates leading edge solutions.

Customer Intimacy is characterized by close working relationships with customers, and customization of products and services to meet each customer’s needs. This results in a wide range of products and services, with employees who know the customers are empowered to make decisions. These businesses often have contractor relationships or third-party collaboration and partnership agreements that ensure special needs can be met quickly as needed.

Why Choose Just One of the Three Values?

Mixing the strategies is an expensive proposition made complex by the conflicting resource and process requirements that would be involved. For example, the Operational Excellence model offers reasonable quality, no-frill, low cost and low margin products and services. Delivering on either the Product Leadership or Customer Intimacy values is high quality, higher cost and higher profit. There are innumerable conflicting needs between these that make it ineffective to choose more than one specialty. This specialty will be your value proposition to customers, and the crux of your competitive differentiation. You won’t ignore the other two values/disciplines, as you need to do an adequate job performing them. Your specialty is what makes your product or service a compelling factor causing customers to choose you.

Summary

Once you’ve completed the initial actions, you’ll be ready to focus on the additional levers that will be the subject of our next post in this mini-series.

What has your company been doing to build and evolve its strategy? Have you already made a decision on the trade-off between the three value disciplines? Please share your questions, results and comments with us! You’re welcome to contact us at your convenience.

Other segments in this mini-series

The introduction segment: “Sometimes, in business and in life, we find wisdom not in what people think, but in how they think” LINK: https://rosannamnadeau.com/2022/01/21/sometimes-in-business-in-life-we-find-wisdom-not-in-what-people-think-but-in-how-they-think/

“The World Has Been Changing. Have You Adapted Your Business Strategy? – Part 2” – Strategic Understanding & Buy-in – LINK: https://rosannamnadeau.com/2022/01/19/the-world-has-been-changing-have-you-adapted-your-business-strategy/

“The World Has Been Changing. Have You Adapted Your Business Strategy? – Part 3” – Balanced Metrics – https://rosannamnadeau.com/2022/01/26/the-world-has-been-changing-have-you-adapted-your-business-strategy-part-3/

Part 4 – “The World Has Been Changing. Have You Adapted Your Business Strategy?” – LINK: https://rosannamnadeau.com/2022/01/30/the-world-has-been-changing-have-you-adapted-your-business-strategy-part-4/

Part 5 – “The World Has Been Changing. Have You Adapted Your Business Strategy?” – LINK: https://rosannamnadeau.com/2022/01/31/the-world-has-been-changing-have-you-adapted-your-business-strategy-part-5-2/

Additional Resources

LINK: https://www2.deloitte.com/us/en/pages/consulting/articles/driving-business-value-with-corporate-purpose.html

LINK: https://fortune.com/2022/01/21/ceos-reinvention-supply-chains-climate-change-war-for-talent-ceo-daily/?tpcc=nlceodaily

“The Strategy-Focused Organization,” by Robert S. Kaplan and David P. Norton, published by Harvard Business Review Press

“Creating Competitive Advantage,” by Jaynie L. Smith with William G. Flanagan, published by Doubleday

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