More than a few times I have been at a business conference led by one big strategy guru or another, listening to the presentation in disbelief.
It’s not that I don’t understand their theories about competitive advantage, core competencies, virtual commerce, supply chain economics, disruptive innovation and so on. But the way these experts tend to talk about strategy—as if it should be determined by some sort of scientific methodology—feels really off to me.
Strategy is simply about finding the big “aha!”, then setting a broad direction, putting the right people behind it and executing with an unyielding emphasis on continual improvement. In essence, strategy is nothing but resource allocation. It means making clear-cut choices about how to compete. You cannot be everything to everybody, no matter what the size of your business or how deep its pockets.
The first step of planning a new strategy is figuring out what you can do to gain sustainable competitive advantage—in other words, uncovering a significant, meaningful insight about how to win. To do that, you need to debate, grapple with and answer five sets of questions.
What the playing field looks like now:
• Who are the competitors in this business, large and small, new and old?
• Who has what share, globally and in each market? Where do we fit in?
• What are the characteristics of this business? Where is it on the growth curve? What are the drivers of profitability?
• What are each competitor’s strengths and weaknesses?
• Who are this business’ main customers, and how do they buy?
Over the years, I have been amazed at how much debate can result from this simple grounding exercise. In fact, it’s not unusual for people who share the same office space to have very different views of the same competitive environment.
A rich, wide-ranging conversation will foster consensus on the business environment— just what you need to ultimately uncover new insights.
What the competition has been up to:
• What has each competitor done in the past year to change the playing field?
• Has anyone introduced game-changing new products, technologies, or distribution channels?
• Are there any new entrants, and what have they done in the past year?
This set of questions brings the players on the field to life. Competitor A has been stealing your key salespeople. Competitor B has introduced two new products. Competitors C and D have merged and are having all kinds of integration difficulties.
What you’ve been up to:
• Over the past year, what have you done to change the competitive playing field?
• Have you lost any competitive advantages that you once had—a great salesperson, a special product, a proprietary technology?
The best thing about these questions is that they quickly show whether you’re being outflanked. Very simply, the comparison of question sets two and three tells you whether you are leading the market or chasing it. This should make strategy formulation an active process and also prepare you for the questions that come next.
What’s around the corner?
• What scares you most about the year ahead—what one or two things could a competitor do that would hurt your business?
• What new products or technologies could your competitors launch that might change the game?
• What mergers or acquisitions would damage your business?
Most people answering this set of questions underestimate their competitors’ power and capabilities. They often assume that their competitors will never change.
Finding the right strategy means that you have to assume your competitors are very good, or at the very least as good as you are, and that they are moving just as fast or faster. When it comes to peering into the future, you can’t be paranoid enough.
What’s your winning move?
• What can you do to change the playing field—is it an acquisition, a new product, globalization?
• What can you do to make customers more loyal than ever before and more loyal to you than to anyone else?
This is the moment to leap from analysis to action. You might decide to launch a new product, make a new acquisition, double the sales force or invest in a major new capacity.
By the time you’ve finished this exercise, the effectiveness of your strategy should be pretty clear. If you’re not winning, you need to change your strategy. If you didn’t have a strategy, this process should help you get one. Either way, you’ve only just begun.
Adapted from Winning (HarperBusiness Publishers, 2005), by Jack Welch and Suzy Welch.
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Jack and Suzy are eager to hear about your career dilemmas and challenges at work, and look forward to answering some of your questions in future columns. Jack and Suzy Welch are the authors of the international best-seller, Winning. Their latest book is Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today. Mint readers can email them questions at email@example.com. Please include your name, occupation and city. Only select questions will be answered.