It should go without saying (but it will be said anyway) that the first order of business for building a strategy for moving toward most often preferred supplier status is knowing just what makes a business ‘most preferred’ in the eyes of the targeted customers.
Identifying which elements of a company’s offer could be the source of unique, compelling value requires real insight into the attributes customers use to choose one supplier over another. Many things can be important to a buyer, but there are only a few which significantly impact supplier and offer ranking on any given purchase occasion. The potential differentiators can reside not only in what a company sells, but also in how it does business—characteristics which can be subtle and difficult to uncover through traditional management and sales interactions. It is absolutely critical to get this insight right because it underlies all future assumptions and decisions. Don’t try this at home—hire a professional.
It is next to impossible to produce a focused, fully integrated and highly effective business strategy in one big, bold first try. Those companies with the most effective strategies built them over a number of years and multiple business cycles of sequential learning and adjusting to get it right. Fortunately, it is not necessary to achieve a high level of coordination and consistency before a business can realize real benefits from the process of developing a true strategy. Any incremental progress in that direction can bring about a material contribution to improving a company’s effectiveness.
Creating a real business strategy is the ultimate expression of working on a business vs. in a business. It is the one and only tool for focusing all investments and activities on those things which make a company’s offerings more and more preferred by its customers, and eliminates spending on activities that don’t contribute to attaining that market position. The outcomes of operating with a real strategy are improved business growth through a higher percentage of ‘wins’, higher revenue, higher profits and lower costs—all the things that contribute to a healthy bottom line and long-term business success.
Yes, creating a real business strategy is not easy, but neither is running a real business. So for a tool to effectively contribute to succeeding in a real-world, competitive environment, it has to reflect reality. Real strategy, you see, is not a one-liner.
Businesses put themselves at a great disadvantage if they dismiss creating a real business strategy as too academic or time consuming to be of practical use. It does takes significant effort to do so, but so does dealing with the costly, chronic problems which result from not having one (to which many business people can attest). In fact, many strategy experts believe that having a real strategy is one of the best forms of advantage a company can have.
What’s important is to begin the process.
For Part II of this series, What a REAL Business Strategy IS please click here.
Horwath, Richard. Deep Dive: The Proven Method for Building Strategy, Focusing Your Resources and Taking Smart Action. Greenleaf Book Group Press, 2009
Kiechel III, Walter. The Lords of Strategy: The Secret Intellectual History of the New Corporate World. Harvard Business Press, 2010.
Lafley, A.G.; Martin, Roger L. Playing to Win: How Strategy Really Works. Harvard Business Review Press, 2013.
Leinwand, Paul; Mainardi, Cesare R. The Essential Advantage: How to Win with a Capabilities-Driven Strategy. Perseus Books Group, 2010.
Magretta, Joan. Understanding Michael Porter: The Essential Guide to Competition and Strategy. Harvard Business Review Press, 2012.
McGrath, Rita Gunther. The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business. Harvard Business Review Press, 2013.
Rumelt, Richard P. Good Strategy, Bad Strategy: The Difference and Why it Matters. Crown Business, 2011.