by Larry Pendergrass, Principal
In my previous blog, Ten Tenets of Strategy –Tenet #3, I encouraged you, as a company leader, to make the hard choices and argued that deciding what you will not do is as important as deciding what you will do. The cost of not making these hard calls is often hidden: it is found in the cost of lost opportunities and in the lack of alignment in the organization. It can result in confused customers and in ways for the competition to gain a foothold in your most important areas.
Through this blog I offer Ten Tenets of Strategy, gained through years of personal experience and discussions with key thought leaders. These Ten Tenets are offered as guidance for the development of your strategy.
- Your core competency is not your strategy.
- Compete on core capabilities, your set of business processes integrated throughout your value chain.
- Make hard choices. Decide what you will not do.
- Focus on customer outcomes. Design your strategy through the customers’ eyes.
- Analyze and design for the industry forces.
- Understand and analyze the landscape of possible customer outcomes..
- Know your competitors and their strategies profoundly.
- Diversify around your core capabilities.
- Balance the stakeholders.
- Strategy is dynamic. Adjust as necessary, but with caution.
Here is more detail on the fourth of these Tenets:
Tenet #4: Focus on customer outcomes. Design your strategy through the customers’ eyes.
The only attributes that really produce long-term success for any business are those that result in visible and valuable differences to its customers. Your strategy is defined by the unique customer outcome you are trying to deliver through your set of business processes. This strategy should be defensible, it should set you apart from your competition, and most of all, it must be of value to your customers. From this strategy, the rest of your objectives, activities and value delivery plans should flow. Other methods for building a business exist and may work for a while. But to build a sustainable business, you must formulate your strategy through your customers’ perception of your value to them.
If you have not given executive thought to trends in media and entertainment, that oversight might be a mistake. Video and audio production and distribution are radically changing as devices and consumer tastes undergo both revolutionary and evolutionary change. Monitoring and controlling how these new forms of information flow affect your brand is essential.
We are talking about “New Media”, defined as informal content that is being increasingly produced and consumed by both external and internal audiences either on-duty or off-duty. The term characterizes access to the river of information that flows around us in both professional and entertainment streams outside of traditional media channels such as trade press, radio and television.
Created on anything from new low-cost professional gear to tablet or smartphone, New Media augments and in some cases replaces traditional communications content and channels. Generational lines and preferences blur the lines between personal vs. enterprise information and professional vs. entertainment streams, while the “Bring Your Own Device” terminal flexibly displays content interchangeably in both roles.
In my last blog, Ten Tenets of Strategy –Tenet #2, I argued that a company’s long-term defendable differentiation is its set of core capabilities, the set of business processes that are integrated throughout its value chain to deliver a unique customer outcome. This is not the same as a core competency. For example, designing low noise circuits is a competency. But the collection of tools, processes and policies that allow the company to deliver new products in half the time of its competition is a capability. Capabilities are focused on delivering a valued customer outcome, and are much harder to copy than a core competency.
Through this blog, I offer Ten Tenets of Strategy, gained through years of personal experience and discussions with key thought leaders. These Ten Tenets are offered as guidance for the development of your strategy.
As I stated in my previous blog Ten Tenets of Strategy – Introduction and Tenet #1, there is no absolute right strategy for your firm. But there may be one that is a best fit considering all other constraints. Determining the “best fit strategy” is a matter of understanding the industry forces, trends in the marketplace, your competitors’ strategies, your firm’s strengths and weaknesses and the passion that drives your value-creation engine. With these assets and constraints in mind, your firm can set a direction and build competencies for a business that can be defended and expanded upon over the long term.
Through years of personal experience and discussions with key thought leaders, I have crystalized the following Ten Tenets as guidance for the development of your strategy.
The right strategy, even in a mediocre industry can make you a winner. And the wrong one can make your life unbearable. Far more important than any specific service or product you offer is how you choose to compete. Strategy is the collection of decisions that you make that defines your firm’s unique value to the customer. It determines how you will return value to your stakeholders. And it is at least as much about what you will not do, as it is about what you will do.
Corporate strategy can include high level choices such as whether to compete on cost, performance or customer intimacy, which segments of the market to pursue, what parts of the value chain to emphasize and many other critical decisions. Product or service strategy is one step more detailed, encompassing choices on which products and services you offer and how to outmaneuver the competition with specifics about those offerings.
Many people are skilled at handling and filing paper. I have never been one of them. I tend to misfile important documents, lose them, stack them on an ever-expanding "inbox", spill coffee on them and - usually - not be able to find them when I need to. So, when it became possible to go paperless in the last decade or so - I jumped on it!
Now, when I receive anything written or typed on paper, I follow this simple process:
Is it something I need to save?
By Robert L. Carman, Principal
Outsourcing has become commonplace and in many cases required in order to keep the financial burden of staying near the cutting edge of so many associated technologies, both product and manufacturing process based. The problems with outsourcing are frequently tied to the management and implementation techniques and processes. We forget that in the old vertically integrated company, most of these capabilities were the source of our competitive advantage, and we don’t establish the proper relationships to allow the new multi-company enterprise to retain many of those competitive advantages. Dr. Scott Elliott wisely suggested that we treat key suppliers as family, but what does this entail?