Strategy – What is it?

Strategy is simply, the sum of an organization’s choices about where it will compete, how it will create superior value for its customers, and how it will generate superior returns to its investors.

In a world of limited resources, a company that tries to be all things to all people, with no specific focus or direction, will waste its resources and either fall behind its competitors or go out of business.

Choosing Where Your Organisation Should Compete

To make choices about where your organisation should compete you need to ask yourself the following questions:

• What is your winning aspiration? (the purpose and motivating aspiration/BHAG)
• Where will you play? (your sandbox – customers, channels, products, geographies)
• How will you win? (the way you will win on your chosen playing field)
• What capabilities must you have to be able to win? (the set and configuration of capabilities to win)
• What management systems do you need? (the structure, systems and measures that enable the capabilities, and support the choices)

You may be tempted to maintain the status quo and keep competing where you currently are. This can work during some stages of your business life cycle, but other times you may need to challenge this area of your strategy.

It is just as important to decide where you aren’t going to compete, as well as where you are. If you want to develop an effective strategy, you need to hone in on your audience. Putting your time and resources into trying to reach every market will ultimately lead to you not succeeding in any. 

“If you chase two rabbits, both will escape.” Chinese proverb

Creating Superior Value For Your Customers

Does your service or product not only meet the needs of your customers, but exceed their expectations? Do they prefer your service or product over that of your competitors? That is the definition of superior value. 

You need to have a solid understanding of your customers to be able to achieve this. What drives value for them? What is important to them? You can find out by conducting customer surveys to collect and analyse data. 

You also need to have a clear, strong value proposition so potential customers can quickly understand what your business has to offer and if it can meet their needs. It should provide your unique selling points, telling them why they should buy from you (and not the competition).

Generate Superior Returns To Your Investors

If you follow (and succeed) at the two points above, you will ultimately increase your sales and revenue to generate high returns. Having a robust strategy in place, combined with due diligence and a deep understanding of business processes, you will be more capable of generating superior returns to your investors.