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Strategy blog - Steps 2 and 3 (of 6)

mtfitzgerald

strategic framework

In my last strategy blog here I wrote about how to do a good situation analysis. Once you have taken the time to do so and gained insights in each area, it is time to decide your strategic priorities and choose your growth initiatives. 

Choose your target customers and industries – explicitly remove resources from others

As mentioned in my last post, nobody has unlimited resources, and strategy is about how you allocate your resources to outperform your competition. The first decision you need to take is which customers to focus on, and by implication which customers to drop, or at least remove focus. It is simply not possible to “focus” on all customers and all industries. The situation analysis should have told you which customers are the most attractive based on what you and your competitors are offering and how well you serve current and future markets.

There will be few objections to starting the new work, but...

Of course it is easy to say “We will now focus on small financial services businesses in the greater New York area, targeting companies with less than 250 employees and who are growing.” It is harder to say “Even though we currently make lots of money with them, to be able to afford the new resources needed for the small financial services companies, we will disengage from our business with large cement companies in Mexico.” Nobody feels threatened by the first statement, so there will be few objections. Loads of people will feel threatened by the second one and there will be many reasons not to do it, or not to do it now. Without unlimited resources, you can’t do both well.

What is your “winning proposition”?

So, the first step is to decide what customers to target, and with what products and services. To ensure you are on the right track, you should be able to clearly state what Willie Pietersen calls the “winning proposition”, the “thing” you will do that is different or better than the competition, provides greater value to customers, and superior profits. The situation analysis should also have let you understand which engagement models work best, how they will vary by country for multinationals and what the business (financial) models look like for each offering.

Please ban the term "value proposition" from your vocabulary. All of your competitors have a value proposition. Only one of you is going to win. You need to be explicit about how you are going to do it.

Count the growth strategies on your fingers – with one hand in your pocket

As CEO of various companies, Willie Pietersen learned that having a maximum of five points in your company strategy is critical. If you have more, you have not put enough thought into it, and are spreading your resources too thinly. Less than five is even better. As he put it, you need to be able to count your initiatives on your fingers, with one hand in your pocket. Of course this makes it all easier to communicate too.

My own addition to the method, especially for larger companies

The best-known budget trap is where your budget proposal sets a revenue target and also specifies the resources needed to attain that target. Your revenue target gets approved quickly. The necessary resources may not get approved at all. You are trapped! The most effective way to deal this is to break your strategy submission into three categories:

  • Work that needs to be done by new “incubator teams” and the associated revenue.
  • New work for existing teams, including explicit statements about work that will be stopped (and the associated revenue) so the new work can be done.
  • Work that can be done by a mix of centralized (“HQ”) resource and decentralized resources so that each can plug the other’s resource gaps.

Doing it this way is not perfect, but it is the best I have been able to find.

Next step

In my next post, I will cover the main categories of investments that are likely. More soon.

Maurice FitzGerald - Customer Experience and Strategy consultant
maurice.fitzgerald@hnetplus.ch
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About the Author

mtfitzgerald

Maurice FitzGerald ecently retired from his position as VP of Customer Experience for HPE Software after a career in hardware, software and services at DEC, Compaq and HP.

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