In our previous blog, we discussed in depth the three types of market strategies from which to choose your overall go-to-market direction. As we discussed, the competitive strategy you select must fit with a company’s market, both in terms of geography, and with customer needs. It also must be completely in line with company strengths, abilities, and culture. Pick one of the three, and start positioning the organization as a market leader!
Regardless of which option is selected, do not forget the point of all this — to increase business value. The success of a strategy is ultimately measured through cash, not profit.
An organization should always strive to reduce costs, even if the strategy is not based on low selling prices. A company also should increase revenue, even if it does not follow a product leadership or customer focus strategy.
With this in mind, let us compare key features of the competitive strategies side by side:
A typical planning horizon for a mid-market company is three years. Well defined competitive strategies will be relevant for several years, but it is wise to check in annually to see if changes in the marketplace justify a course adjustment. This is a good discussion for the management team to have prior to kicking off annual business planning.
Remember: Competition is not the biggest threat to profitability — commoditization is. If once-unique product features or benefits ultimately become commonplace, this represents a systemic change that must be addressed.
Markets are, by definition, dynamic places. New technologies are introduced, processes are improved, and customer needs change. This dynamism can create opportunities for some organizations, but threats to others. One only needs to consider COVID-19, and how broadly it impacted many businesses.
Good companies always have their radar up, constantly monitoring trends and scanning for organic growth opportunities as well as acquisitions. Their CEOs are not afraid to pivot if needed, repurposing investments to the right growth initiatives.
Finally, there is a vital link between strategy and organization. The design of an organization must reflect its strategy, not the other way around. As with industrial design, form follows function. Too many times, organizational changes are carried out as savings exercises, with the unintended consequence of crippling a business’s ability to meeting strategic goals.
Hopefully, this approach of understanding customer needs, scanning for trends, studying industry, and finding KSFs, will make it easier to select a robust competitive strategy.
The decision to pick or modify a competitive strategy is not easy. If you would like to know more about how Chief Outsiders can help coach or facilitate the process, feel free to contact us.