Strategies for Growth

To get market traction – we need to choose ONE strategy and do it well…

Growth in a business comes from either selling more to our existing customers or getting more customers. Either way we need to gain a position of strength and differentiation to grow our business.

In the jungle economy, if we are not growing and taking some one else’s customers, they will take ours. Equally so we have finite resources, so must choose a small list of things to do and do them well.

How do you get to “own your customers” i.e be the supplier of choice?

Too many businesses attempt plans that are incompatible with their balance sheet, their personal circumstance or even reality or worst still a potpourri of every possible strategy. My recommendation is choose one.

 Strategy Primer Questions

Strategic planning is about exploring and debating options in an iterative loop.  Before working out how to win customer mindshare you need to define what is your target market. A key step in this iterative cycle is to decide where long-term opportunities exist.

• What is your long-term market opportunity?  Have you explored what’s going on in your industry ecosystem? What facts do you have that support your market will exist in 2 or 5 years time?
• What is you competitive advantage or point of difference?  Is it a truly sustainable competitive advantage?  Do you have the skills to deliver this?
• What is your strategy to maximise your competitive advantage?

Next you need to work out how you will get to “own your customers mind”, i.e begin your growth – to create a change in the market place.

 Unfortunately in the real world, we do not have unlimited resources – so despite ambitious intentions, we do need to make some choices of what do we do first and what takes priority. Most SME’s can only afford to invest (people & money) in one strategy at a time.

Strategic Priorities & Restraints:

• What is your key strength?   Product, operational excellence (process) or customer intimacy
• What is your no.1 priority? –  Market Share or Profit or Revenue (Prioritise these options)
• What market segments are you going to take on and in what order? (geography, demographic, etc)
• Have you got the make / buy split correct? Where do you add most value to your clients & yourself (who will you partner with).  Are some of your business activities a major distraction and not make you any money?

WIN THE RACE to OWN YOUR CUSTOMER’S MIND: – Choose one  

Strategy guru Michael Porter was of the belief that you only have two options to gain strength in a market Cost leadership or Differentiation.   

Winning market reach & share quick

• Freemium (give your product or a cut down product away for free)– do a land grab then start charging or kick in alternative revenue streams later eg trademe
• Partner with large organization – preferably corporate challengers rather than the giant that already has the customer, as they can up sell something “additional” to them (your product or service). Note Giants are typically too arrogant and do not need you
• Merge – with other small players to increase efficiency and customer reach

Win the technology/product innovation race

• Create products that others do not have and your customers will lust after – that have amazing customer pull eg killer apps
• You may need to use a strong IP strategy that can not be worked around (trade secret) and patents or simply just obsolete your own products with new ones so people can not copy  (eg Apple, Microsoft)
• In the services space this race is often influenced  with “thought leadership”

Create / Find a new market

• Legislation change
• Disruptive technology – new product paradigm eg MP3 players – ipod
• Use existing technologies in a new way

Win the cost race

• Make your product cheaper than all others. Organisational and cost efficiencies.
• Warning – making products cheaper does not mean start a price war. Price wars in most cases become a race on who can hold their breath the longest.

Win the heart – BRAND

• Build a brand experience people fall in love with – this may include service paradigm

What is your strategy to capture the mind of your customers?  – Is it one of the ones listed above or do you have another? Please share.

If you want a hand generating your strategy, how about coming along to a Business Dominoes workshop? We have just started running 3 day workshops that take in a weekend day, so you can have some tools to take on summer holiday.

A Strategy or a Goal? (Good Strategy / Bad Strategy)

A strategy is not a financial goal or a motivational slogan, it is a plan that has been developed to surmount a challenge, based on a considered choice, created from a thorough understanding of the environment you exist in.

What is the “rationale that says your business will be successful in the long term”  and “how will you exploit your competitive advantage”? 

 Your understanding of the environment that you exist in, to the point where you can attempt to predict the future, so you can see long term positions of strength will enable you to create effective strategy. Without undertaking this exercise you are operating without a key piece of “intel” you will stumble from one short term opportunity to another, missing out on long term profitable markets.

Wikipedia defines Strategy as:

A strategy is a plan of action designed to achieve a specific goal. Strategy is all about gaining (or being prepared to gain) a position of advantage over adversaries or best exploiting emerging possibilities. As there is always an element of uncertainty about the future, strategy is more about a set of options (“strategic choices”) than a fixed plan.

The problem with most entrepreneurs is their unwillingness to stop and analyse the market or the eco-system they exist in long enough to create multiple options to create an informed strategy.   A crucial step in creating good strategy is that you present multiple options and that you are forced to debate and create stronger arguments to support them.  To often we either go with the first option or just operate in committee mode and merge the options together. Powerful strategy often involves hurt – some one not getting their way and stopping pet projects.

Our impatience and desire to “just do it” – makes us jump directly to creating a plan, missing out on the great power of “true strategy”

There are two orders of power when looking at strategic planning.

1.  Business Planning:- Operational Excellence: Gaining clarity in what you do and are good , deciding what to do and not.  BHAG (Big hairy audacious  goals), purpose, defining immediate goals and tactics to achieve those goals., basic competitor analysis.This business planning by itself does produce improved performance, but will not de risk the business in the long term.
2. Strategic Market Analysis:  This higher order activity involves deeper understanding of what is going on in the market, where long term opportunities lie, maximising gains over industry trends and predicting trends.   Although this activity requires in depth market research and evaluation of multiple paths it will result in a simple statement.

In Richard Rumflet’s book  “Good Strategy Bad Strategy – the difference and why it matters” he makes a strong case for taking the time to do what I refer to as Strategic Market Analysis before business planning. He make brutal comments about what he calls bad strategy. He has brought a new clarity to me around business strategy or more importantly non strategy that will help me in my work. Below are few excerpts – learning’s from his book (available on kindle) …

• Good strategy almost always looks this simple and obvious and does not take a thick deck of PowerPoint slides to explain. It does not pop out of some “strategic management” tool, matrix, chart, triangle, or fill-in-the-blanks scheme.
• Unlike a stand-alone decision or a goal, a strategy is a coherent set of analyses, concepts, policies, arguments, and actions that respond to a high-stakes challenge.
• The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors
• If you fail to identify and analyze the obstacles and opportunities, you don’t have a strategy. Instead, you have a stretched goal, a budget, or a list of things you wish would happen.
• The kernel of a strategy contains three elements: a diagnosis, a guiding policy, and coherent action that respond to a high-stake challenge.

1. Diagnosing the specific structure of the challenge or change rather than simply naming performance goals.
2. Choosing an overall guiding policy for dealing with the situation that builds on or creates some type of leverage or advantage.
3. The design of a configuration of actions and resource allocations that implement the chosen guiding policy.

• Good strategy is not just “what” you are trying to do. It is also “why” and “how” you are doing it. Combining all three elements mentioned above.

Even after working out what needs to be done “Good Strategy” is explicit in how you will do it.  Steve Jobs’s guiding policy  is legendary: (1) imagine a product that is “insanely great,” (2) assemble a small team of the very best engineers and designers in the world, (3) make the product visually stunning and easy to use, pouring innovation into the user interface, (4) tell the world how cool and trendy the product is with innovative advertising.

My observation is that we are all jumping over step one in Richard’s process or simply restricting it to a basic SWOT and competitor analysis.  Explore more on this topic in another post called  finding new strategic opportunities or come along to one of our business dominoes strategy workshops

Take the time and watch Richard’s three minute video.

At very least challenge your strategy : is it a slogan or a goal or does it have some decent market intelligence behind it?
And more importantly have you had it challenged?

Rapid Analysis of ‘What If’ Strategic Options

Too often we are stuck trying to evaluate a multitude of ‘what if’ options when it comes to strategic planning; trying to tabulate a massive matrix of all the variables.

Scenario Evaluation

A tool we use at Business Dominoes is to map out the different scenarios on a simple cost vs benefit matrix (click image below).   Simply referencing the centre point being business as usual (BAU) i.e what we are doing now. Then referencing the alternatives based on the relative cost and benefit.

Our brain has an amazing “gut calculator” that enables it to subjectively accumulate of all of the data to evaluate what does total cost and benefit accumulating a multitude of variables.

(click image for larger version)

This analysis will quickly highlight both quick wins and potential long term strategies, bearing in mind often you will need to adopt a couple of interim strategies to achieve your end goal.

Competitor Profiling

You can also use the same tool to compare your competitors. Remember it’s from your customers perception, not yours. The diagram below is an easy way to illustrate your market positioning.

(click image for larger version)

Business Dominoes – Strategic Development Programme

If you are after some fresh thinking around how to handle some major strategic decisions for your business and avoid being blind-sided by some giant guerrillas in the market I would suggest attending the Business Dominoes Programme. It’s a 4 day intensive boot camp, where you will be armed with and use a variety of tools to aid you strategic thought processes, make decisions and chart a lower risk path to success.

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Free Entry to MyBizExpo:

The My Biz Expo is running from 14-16 October, ASB show grounds, Auckland.  Business Dominoes will be on stand 2023.  Register online now at www.mybizexpo.co.nz and save yourself the $20 entry fee.

 Free 1 hr Seminars at Biz Expo –
Monday 15th Oct 2pm
Creating Powerful Elevator Pitches

Tuesday 16^th  Oct – 1pm
Funding Business Growth  – Tools and strategies to build a scalable business
Presenter  Mark Robotham

Finding New Strategic Opportunities

 Take yourself out of your business and explore the industry view

 We all suffer tunnel vision when it comes to running our businesses. Even worse, when it comes to finding time to do some true “blue oceans” strategic thinking.

Too often our thinking is constrained by looking at our world from our own perspective rather than that of the customers and the industry eco-system we exist in.

We all got a great reminder of this when Kodak got into major financial trouble in Jan 2012. How could such a giant with 1000+ patents in digital photography screw it up so bad.  My take, they failed to adapt the culture (attitude) of the business to the new value chain and eco-system that emerged into the new digital age.

Real Strategy

Strategy is most probably the most miss used word in business. Strategy is about understanding the lie of the land, understanding the geography you are about to do battle in, assessing the enemies strengths and weaknesses looking for gaps and opportunities to capture a market.  Its not about what to do every day operating your business – alah business planning and execution.

Mine your external value chain for opportunities

If you are looking for investment, market or channel partners the best place to start is looking at your customers and end users. Then map all of their suppliers, customers and their influencers out on a huge mind mapped value chain. Documenting suppliers, to suppliers, to customers and so on. By reviewing all the players on this map e.g. who holds the power of influence, who owns critical scarce resources and who is making the profit etc you will uncover a raft of possibilities.

Include in your thinking competitors as well, most NZ business shy away from conversations with their competitors let alone doing deals with them to collaborate in the global marketplace.

Look for market trends that will uncover future change in your industry

Take the time to look for current trends across your complete value chain so you can spot hot spots or market opportunities to take advantage of.

 Business Dominoes – Strategic Development Programme

If you are after some fresh thinking around how to handle some major strategic decisions for your business and avoid being blind-sided by some giant guerrillas in the market I would suggest attending the Business Dominoes Programme. It’s a 4 day intensive boot camp, where you will be armed with and use a variety of tools to aid you strategic thought processes, make decisions and chart a lower risk path to success.

_________________________________________________

Free Entry to MyBizExpo:

The My Biz Expo is running from 14-16 October, ASB show grounds, Auckland.  Business Dominoes will be on stand 2023.  Register online now at www.mybizexpo.co.nz and save yourself the $20 entry fee.

 Free 1 hr Seminar at Biz Expo – Tuesday 16^th  Oct – 1pm
Funding Business Growth  – Tools and strategies to build a scalable business
Presenter Business Dominoes – Mark Robotham