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The opposite of a niche marketing approach is to use the philosophy of “one size fits all“.

To understand how silly this is, we can go back to the Greek myth of Procrustes.

Procustes was the son of the sea god Poseidon, and he had a stronghold on the sacred way between Athens and Eleusis. He had a bed that would fit all sizes of people.

Unfortunately it wasn’t the bed that was special but would he did to his victims.

Those who were too short were put on the rack and stretched.

Those who were too tall, had their legs chopped off.

There are two options in business.

Adapting your product or service to your customers through bulls eye marketing. This is niche marketing.

The other option is to expect customers to fit themselves around your product.

And just like staying with Procustes for a night, it’s not an appealing offer when you understand the true facts.

The Greek myth makes it obvious that a one size fits all policy is wrong.

But it’s a mistake new businesses make time after time.

Why?

Greed.

The business owners don’t want to say “No” to anyone.

But it’s not attractive or magnetic.

Just like a personal dating ad saying “any woman will do” smacks of desperation and turns off would-be suitors, a business offering a “one size fits all” is turning away everyone who wants something special.

Strategy Quotes & Quotations

I have a weakness for quotes so I thought I’d start building up a list of my favourite strategy quotes and quotations.

I’ve split these into two categories – those strategy quotes that support strategic planning and those that take more of a negative view about strategy and planning.

Positive Strategy Quotes

I’ve grouped these strategy quotations into different sections, separating those with multiple quotes I like before a general “who said what” category.

Strategy Quotes – Jim Collins

Good is the enemy of great. Jim Collins

The best CEOs in our research display tremendous ambition for their company combined with the stoic will to do whatever it takes, no matter how brutal (within the bounds of the company’s core values), to make the company great. Jim Collins

The kind of commitment I find among the best performers across virtually every field is a single-minded passion for what they do, an unwavering desire for excellence in the way they think and the way they work. Jim Collins

A dream is a feeling that sticks – and propels. Jim Collins

A great company will have many once-in-a-liftetime opportunities. Jim Collins

Those who build great companies understand that the ultimate throttle on growth for any great company is not markets, or technology, or competition, or products. It is one thing above all others: the ability to get and keep enough of the right people. Jim Collins

Focusing solely on what you can potentially do better than any other organizaton is the only path to greatness. Jim Collins

You can’t manufacture passion or “motivate” people to feel passionate. You can only discover what ignites your passion and the passions of those around you. Jim Collins

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline. Jim Collins

Strategy Quotes – Gary Hamel and CK Prahalad (authors of Competing For The Future)

A company surrenders today’s businesses when it gets smaller faster than it gets better. A company surrenders tomorrow’s business when it gets better without getting different.  Gary Hamel and CK Prahalad

Laggards follow the path of greatest familiarity. Challengters on the other hand follow the path of greatest opportunitywhere it leads Gary Hamel and CK Prahalad

An industry full of clones is an opportunity for any company that isn’t locked into the dominant managerial frame Gary Hamel and CK Prahalad

If a top management team cannot clearly articulate the five or six fundamental industry trends that most threaten its firm’s continued success, it is not in control of the firm’s destiny Gary Hamel and CK Prahalad

Strategy Quotes – Michael Porter

Strategy must have continuity. It can’t be constantly reinvented Michael Porter

Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different Michael Porter

The company without a strategy is willing to try anything Michael Porter

The essence of strategy is choosing what not to do Michael Porter

If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful. Michael Porter

Strategy Quotes – Sun Tzu

If you know the enemy and know yourself, you need not fear the results of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle Sun Tsu

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved Sun Tzu

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat Sun Tzu

Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances Sun Tzu

The supreme art of war is to subdue the enemy without fighting. Sun Tzu

Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win Sun Tzu

Ultimate excellence lies not in winning every battle, but in defeating the enemy without ever fighting.  Sun Tzu

If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected. Sun Tzu

He will win who knows when to fight and when not to fight Sun Tzu

Invincibility lies in the defence; the possibility of victory in the attack. Sun Tzu

To know your Enemy, you must become your Enemy. Sun Tzu

Strategy Quotes – Other

Vision without action is a dream. Action without vision is simply passing the time. Action with Vision is making a positive difference Joel Barker

If you don’t know where you are going, you are certain to end up somewhere else Yogi Berra

If you can’t describe your strategy in twenty minutes, simply and in plain language, you haven’t got a plan. ‘But,’ people may say, ‘I’ve got a complex strategy. It can’t be reduced to a page.’ That’s nonsense. That’s not a complex strategy. It’s a complex thought about the strategy. Larry Bossidy

However beautiful the strategy, you should occasionally look at the results. Winston Churchill

Let our advance worrying become our advance thinking and planning Winston Churchill

It’s not the situation … It’s your reaction to the situation Robert Conklin

In order to plan your future wisely, it is necessary that you understand and appreciate your past Jo Coudert

Leadership is getting the right people to do the right thing for the right reason in the right way at the right time at the right use of resources Clark Crouch

Strategic Planning is a process by which we can envision the future and develop the necessary procedures and operations to influence and achieve that future Clark Crouch

In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment. Charles Darwin

You have to be fast on your feet and adaptive or else a strategy is useless. Charles de Gaulle

In preparing for battle I have always found that plans are useless, but planning is indispensable Dwight D. Eisenhower

Plans are nothing; planning is everything Dwight D. Eisenhower

A goal without a plan is just a wish Larry Elder

Whether you think you can or whether you think you can’t, you’re right! Henry Ford

By failing to prepare, you are preparing to fail Benjamin Franklin

It amazes me that most people spend more time planning next summer’s vacation than they do planning the rest of their lives Patricia Fripp

If you need to take a step back from day-to-day operations and plot out the long-term direction of your user experience strategy, consultants can give you a perspective you can’t get on your own Jesse James Garrett

Man cannot discover new oceans unless he has the courage to lose sight of the shore Andre Gide

Change is not a destination, just as hope is not a strategy Rudy Giuliani

What happens is not as important as how you react to what happens Thaddeus Golas

I always skate to where I think the puck is going to be Wayne Gretsky

Only the paranoid survive Andrew Grove

The essential element of successful strategy is that it derives its success from the differences between competitors with a consequent difference in their behavior Bruce Henderson

Success doesn’t necessarily come from breakthrough innovation but from flawless execution. A great strategy alone won’t win a game or a battle; the win comes from basic blocking and tackling Naveen Jain

High achievement always takes place in the framework of high expectation Jack Kinder

If we do what is necessary, all the odds are in our favor Henry Kissinger

Planning is bringing the future into the present so that you can do something about it now Alan Lakein

A satisfied customer is the best business strategy of all Michael LeBoeuf

If we could first know where we are and whither we are tending, we could better judge what to do and how to do it Abraham Lincoln

If you look at the various strategies available for dealing with a new technology, sticking your head in the sand is not the most plausible strategy Ralph Merkle

Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things Miyamoto Musashi

Strategic planning is worthless — unless there is first a strategic vision John Naisbitt

There is always a better strategy than the one you have; you just haven’t thought of it yet Sir Brian Pitman

The single biggest problem in business is staying with your previously successful business model… one year too long Lew Platt

Living in the past is a Jethro Tull album, not a smart poker strategy Richard Roeper

In marketing I’ve seen only one strategy that can’t miss – and that is to market to your best customers first, your best prospects second and the rest of the world last John Romero

It takes as much energy to wish as it does to plan Eleanor Roosevelt

What do you want to achieve or avoid? The answers to this question are objectives. How will you go about achieving your desire results? The answer to this you can call strategy. William Rothschild

It’s unwise to pay to much… But it’s worse to pay to little.When you pay to much, you lose a little money… that is all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do. The common law of business balance prohibits paying a little and getting a lot…. It can’t be done.If you deal with the lowest bidder, it is well to add something for the risk you run. And if you do that, you will have enough to pay for something better. John Rushkin

You may not be interested in strategy, but strategy is interested in you Leon Trotsky

Innovation is the ability to see change as an opportunity – not a threat. Unknown

The best way to predict the future is to create it Unknown

A good plan today is better than a perfect plan tomorrow Unknown

There will be hunters and hunted, winners and losers. What counts in global competition is the right strategy and success. Heinrich von Pierer

Four steps to achievement: Plan purposefully. Prepare prayerfully. Proceed positively. Pursue persistently William Arthur Ward

In real life, strategy is actually very straightforward. You pick a general direction and implement like hell Jack Welch

The cynic knows the price of everything and the value of nothing Oscar Wilde

You were born to win, but to be a winner, you must plan to win, prepare to win, and expect to win Zig Zigler

Negative Strategy Quotes

The reason that everybody likes planning is that nobody has to do anything Jerry Brown

It is a bad plan that admits of no modification Publilius Syrus

Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy Norman Schwarzkopf

A good deal of the corporate planning I have observed is like a ritual rain dance; it has no effect on the weather that follows, but those who engage in it think it does. Moreover, it seems to me that much of the advice and instruction related to corporate planning is directed at improving the dancing, not the weather. J. Brian Quinn

Have I Missed Your Favourite Strategy Quote?

If I’ve missed you’re favourite strategy quote, then I’d be delighted if you could add it as a comment.

As I find more that sum up the essence of strategy and strategic planning, I’ll be adding to this list of strategy quotations.

I adore classic rock music from the late sixties and the seventies and Ted Nugent is one of the stars that burst onto the scenes in the mid seventies when I started liking my music loud and heavy.

Differentiation By Who

Although I’m currently working with a young soul singer in the UK who has released one album so far to develop a more distinctive sound, image and general presence, you don’t have to want to be a rock or pop star to benefit from developing a strong personal brand.

It’s what I call differentiation by who.

I see it in the world of business advice and self help but it’s also there with celebrity cooks who can build chains of restaurants based on personal celebrity.

In fact, differentiation by who in terms of personal branding is open to any business which can build a strong element of “know, like and trust” with the business owner or key staff members.

Ted Nugent Is A Great Example Of A Personal Brand

According to his website www.tednugent.com

“In the past 50 years, Ted Nugent has done things that most musicians could only ever dream of, including setting attendance records at venues worldwide in 2005 and ’06, was the top grossing act in the world in 1977, ’78 & ’79, and has sold over 30 million records worldwide.”

The Void In the Hard Rock World

In the mid seventies the big British hard rock bands of the early seventies were in decline – Led Zeppelin, Deep Purple and Black Sabbath had all peaked and while punk rock was the “in thing” in 1977 – there was a gap for someone to fill.

That someone was Ted Nugent with his blockbusting first three albums – Ted Nugent, Free For All and Cat Scratch Fever along with other acts like Kiss who are also worth talking about in terms of differentiation.

Ted Nugent – The Wild Man Of Rock’n’Roll

I always saw Ted Nugent as the wild man of rock’n’roll but his main nicknames were:

  • The Detroit Madman
  • The Motor City Mad Man
  • The Nuge

I think it’s time for an example of why – this is Stranglehold from 1976.

If It’s Too Loud, You’re Too Old

That’s Ted Nugent’s music philosophy summed up in a few words and the phrase was used to promote on of his mid seventies tours.

I must admit that I turn the volume down a few notches now but his music still gives me an adrenalin rush. His typical sound was fast, heavy and raw.

He’s still a top performer now as this video of  Cat Scratch Fever shows from 2010.

Ted Nugent Had A Strong Visual Image

A key element of the Ted Nugent personal brand was how he looked.

Long hair was a hard rock requirement and facial hair was common but no one else wore animal skins and loin cloths.

Ted Nugent And His Controversial Views

Another part of his personal brand was the way he courted controversy with some views that people found offensive while others lined up in support.

  • A strong anti-drugs and anti-alcohol stance
    .
  • Pro-guns and the right to bear arms
    .
  • Pro-hunting – he even owns a hunting lodge according to Wikipedia. I can’t agree with him on this as I believe canned hunting is sick. I can admire the bravery of the old Maasai warrior tradition of killing a lion on his own before he can become man because I know how big lions are and I wouldn’t do it but shooting a defenceless animal that can’t escape is wrong.
    .
  • Right wing political views

In The World Of The Bland, Ted Nugent Stands Out

You don’t have to like Ted Nugent or his music but he does create a lasting impression and stands for something.

His enduring success show that what he does works.

Customer Value Performance Matrix

I learnt about the Customer Value Performance Matrix from reading Customer Power by David Swaddling and Charles Miller which they called the Customer Perceived Value Performance Matrix.

It is another 2 x 2 matrix – like the Innovator’s Portfolio Matrix – that I find myself wondering “why didn’t I think of this?”

The Customer Value Performance Matrix

The customer value performance matrix lets you look at your individual customer value attributes and convert them into a SWOT analysis by identifying the strengths, weaknesses, opportunities and threats.

The two axis are:

  • Relative performance which identifies good and bad attributes.
  • Relative importance from the customer’s perspective.

According to Swaddling and Miler you can calculate your relative performance of each attribute based on the customer’s next best alternative. This may be difficult to determine since it requires you to crunch through the customer value numbers to determine which is the best alternative (see Managing Customer Value).

Alternative ways would be to

  • Average the attributes across your main competitors and compare your performance against the average. This risks over-assessing your strengths and opportunities if there is one outstanding competitor who has a clear advantage, but if that’s the case, you can use that competitor as your benchmark in the customer value performance matrix.
    .
  • Picking the best customer value attribute performance from all the competitors which would be a tough test.

On the other axis, Relative Importance, Swaddling & Miller draw the cut-off line at 12.5%. I believe this depends on how many attributes you track in your customer value formula. If you’ve got five attributes then the dividing line would be 20% with a possible sample of importance ratings of 35%, 25%, 15%, 15% and 10%. If you’ve got eight in your customer value formula, then the 12.5% is appropriate.

SWOT From The Customer Value Performance Matrix

Strengths – high relative performance (i.e. you’re better than your competitors) but low relative importance. The customer value strategy would be to maintain performance.

Weaknesses – low relative performance and importance are low priority improvement targets unless they are order qualifiers and performance is below the threshold or risks falling below it.

Opportunities – high relative performance and importance – these are the competitive advantages of the business, the key factors of difference.

Threats – low relative performance but high relative importance – these attributes are priorities to the customer but the company does not perform as well as competitors. These are priorities to improve the underlying capabilities.

Putting Customer Value Into Perspective

Customer value can seem a complex, intangible concept when you start working with it but techniques like the Customer Value Performance Matrix help to make it much more relevant to sceptical management since it guides priorities and decisions.

The Innovator’s Portfolio Matrix

When I was reading Business Innovation For Dummies by Alexander Hiam, I came across the Innovator’s Portfolio Matrix.

I think it’s a powerful way to think about differentiation in your product mix.

What Is The Innovator’s Portfolio Matrix?

It is a 2 x 2 matrix (much loved by strategy consultants of course) with uniqueness on one axis and profitability on the other.

Profitability is measured through the margins you achieve but it’s up to you to decide what’s a high and what’s a low margin in your business or industry. There can be a long debate on the right margin information to use but I favour contribution margin (after variable production and sales costs) and all other directly attributable costs which would disappear if the product was taken away. This would therefore include advertising costs for the product and any special promotional deals with customers.

Uniqueness is an assessment of how your product compares to its close competitors. If it’s a commodity with all competitors selling the same basic item, then unique is very low. If it is totally only supplied by you, then your uniqueness is high. The best assessment of uniqueness is from your customers and non-customers in the market but that means a market survey. You can make your own assessment provided you try to look through your customer’s eyes.

The Four Cells

The four cells in the product portfolio matrix are:

  • Develop – high uniqueness, low profitability
    .
  • Maximise – high uniqueness, high profitability
    .
  • Update – low uniqueness, high profitability
    .
  • Eliminate – low uniqueness, low profitability

When a new product concept is brought to market it is unique but no one knows about it or understands its advantages. While selling prices are high, production costs may also be high because there’s been little benefit from accumulated learning and there’s a big marketing job to be done to educate the market.

If things go well, the product moves out of the Develop stage to the Maximise stage where profits are high and uniqueness is maintained.

Unfortunately success attracts imitators who will also have high costs at this stage and will want to shelter under your price umbrella. Profitability can stay high in the short term but to maintain it, the uniqueness needs to be renewed through additional product innovation.

If it isn’t normal competitive forces will mean that the product is commoditised and prices and margins are competed away in the scramble to win volume from customers who know they only need to focus on price comparisons rather than a more complicated value assessment.

How Do Your Products Fit In The Innovator’s Product Portfolio Matrix?

The logic of the Matrix is clear but it’s power to help you to think through your strategic issues only really becomes apparent if you plot your products into the matrix.

It can help you to add in elements into your SWOT Analysis:

  • Products in the Maximise cell represent both a strength and a current opportunity.
    .
  • New products in the Develop cell represent an opportunity that is worth pursuing.
    .
  • Older products in the Develop cell could be an opportunity or a weakness – while the product is uniqueness, that uniqueness doesn’t appear to support a price premium. This may be because the uniqueness isn’t appreciated by the market (the weakness) or it might be because you are under-pricing.
    .
  • Products in the Update cell are a threat – while profitability is currently good, unless you do something to restore the differentiation, you can expect prices and margins to fall sharply as customers exert their buying power in negotiations.

What Do You Think Of The Innovator’s Portfolio Matrix

I’m kicking myself that I hadn’t thought of this 2×2 matrix because it is such a neat way to summarise the differentiation issues within a business.

I like it but I’d like to know what you think of this Matrix so please leave me a comment.

The Consumer Value Chain

In the classic book, Competitive Advantage, strategy guru Michael Porter introduced the value chain in a stylised diagram based on a manufacturing business but many people overlook the idea of a consumer value chain.

The Consumer Value Chain

A business performs many activities to create its own products or services which it intends to sell to make a profit. The traditional value chain is a way for the strategist to look at the business to see how activities can be improved to:

  • Reduce the costs of the necessary activities; or
  • Improve the performance of the activities in ways that create extra value for the customer, differentiate the business and encourage the customer to pay a higher price for the products and services on offer.

The key to improving performance in ways that customers value can be found by examining the customer’s own value chain to find ways that it can:

  • Reduce costs for the buyer
  • Improve the buyer’s own activities and products in ways that it can increase prices and/or sell more.

The traditional value chain provides a guide to this process when the business is selling business-to-business but it doesn’t provide much guidance when the business sells to consumers.

What Michael Porter Has To Say About The Consumer Value Chain

In his book Competitive Advantage, Michael Porter says the following about the consumer value chain:

“A consumer’s value chain represents the sequence of activities performed by a household and its various members in which the product or service fits. To understand how a product fits into a household value chain it is usually necessary to identify those activities in which a product is directly or indirectly involved, typically not all the activities a household performs…. a household’s value chain reflects its members’ habits and needs.” (pages 130 & 131)

Identifying The “Consumer”

If we are to think through what a consumer wants, we need to identify who is the consumer and how that may differ between the user of the product or service and the person who makes the buying decision and who makes the economic sacrifice of paying for the item. There is also the knock-on impact onto other members of the family or household.

A child plays with a toy but it may have been chosen and paid for by the child, a brother or sister, a parent, grandparent or someone else. The child gets the pleasure while the buyer gets pleasure from having a happy child or fills a social obligation.

If the present is a set of drums (or anything else that is irritating), then the child’s pleasure comes at a cost to other members of the household.

Sometimes one person will benefit from a purchase, other times everyone in the household will get benefits (e.g. a television).

The consumer for consideration in the consumer value chain is therefore a complicated concept which will depend on the product or service that is being sold but it will be a composite of:

  • The user who gets benefit from the product
  • The product selector – the person who makes the choice
  • The person who incurs the cost of the product
  • Others affected by the product in use.

The Goal Of The Consumer

It’s easy to assume that the goal of a business is to increase profit which can be achieved by selling more products at higher prices and with lower costs.

But what is the big goal of consumers and what are the main drivers to the achievement of that goal?

That’s a big question for philosophers but I’m going to try to keep it simple here.

I believe the main goal is “happiness”. I want to be happy and I want my family to be happy.

Money helps but it’s not the big goal. It’s more of an enabler which makes life easier and more comfortable.

We do certain things to acquire money to allow us to buy or do certain things.

It’s an input and an output of the process of living as a consumer.

The three big inputs are:

  • Time
  • Energy
  • Money

The consumer value chain needs to take into account all three.

Time is fixed. One hour spent on one activity means an hour sacrificed elsewhere. Anything that saves time therefore creates value because it means we have more time to spend on other activities.

Energy is variable but comes at a cost. Expending a lot of energy on one activity means that less is available elsewhere although the relationship isn’t as clear and absolute as time. As people get used to exercise and spending energy, their bodies normally get fitter and they are able to do more. Sometimes expending more energy saves time, sometimes it doesn’t. Reducing effort and the energy required for an activity usually creates value for consumers – we want things to be easier.

One of the ways that consumers reduce the energy and effort is to satisfice. Instead of continuing to search for the best solution, they can take action when something satisfactory is presented. This also creates customer inertia where customers are not satisfied but continue to consume because of the perceived difficulty of changing.

Money is variable and as consumers we can earn more by either working more hours, finding ways to earn more per worked hour or leveraging our time to earn more. Saving money adds value because it means that more can be spent on other activities and products.

The Consumer Value Ownership Lifecycle

The consumer is involved with the product in different ways at different times in the ownership lifecycle:

  • Selection and purchase
  • Delivery, installation and making the product ready for use
  • Use
  • Disposal

Each stage offers opportunities to save time, energy and money which can be included in the consumer value chain.

How Do You Use The Consumer Value Chain?

How do you make decisions in your family about expenditure? Do you have some kind of trade off where everyone in your family has the chance for some treats or does one person dominate the spending of any spare cash?

How Can Strategy Be Defined?

What is the definition of strategy and how do various strategy definition compare?

There is a lot of talk about strategy and the need to be more strategic in your thinking if you want business to succeed but I don’t think there is any agreed definition of strategy.

In fact, looking through various strategy books, many authors have shied away from defining strategy.

Online dictionary definitions of strategy tended to emphasise military strategy and didn’t provide the clarity I was looking for.

The link to the military isn’t surprising as the original Greek word, stratos means army.

The Definition Of Strategy – Strategy Definition From Various Sources

My Strategy Definition

Since this is my blog, I thought I’d start with my definition of strategy which I wrote about in the article What is Strategy:

“Strategy is how you achieve your own objectives by winning the hearts, minds and business of customers by out-thinking and outmanoeuvring competitors.”

Before I delve into other definitions of strategy, I like my version because:

  • It is customer focused – the customer is the ultimate judge of whether a strategy is successful based on whether he or she is willing to buy at the price offered. It also recognises that customers must be influenced rationally and emotionally.
  • It’s also focused on achieving the objectives of the person or business developing the strategy.
  • It emphasises both thought and action
  • It brings in competitors who by following their own strategies will be trying to stop you from succeeding.

Let’s see if other definitions of strategy are better or more comprehensive.

Wikipedia Strategy Definition

The first definition of strategy from Wikipedia emphasises strategy’s routes in military campaigns and warfare.

“Strategy, a word of military origin, refers to a plan of action designed to achieve a particular goal. In military usage strategy is distinct from tactics, which are concerned with the conduct of an engagement, while strategy is concerned with how different engagements are linked. How a battle is fought is a matter of tactics: the terms and conditions that it is fought on and whether it should be fought at all is a matter of strategy, which is part of the four levels of warfare: political goals or grand strategy, strategy, operations, and tactics. Building on the work of many thinkers on the subject, one can define strategy as “a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills – there have to be at least two sides to a conflict.”

To pick up the issue of business strategy I looked at the definition of strategic management in Wikipedia:

“Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of ?rms in their external environments.[1] It entails specifying the organization’s mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.  ”

Johnson and Scholes Definition Of Strategy

In their book, Exploring Corporate Strategy, Johnson and Scholes define strategy

“Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations”.

Kenneth Andrews Strategy Definition

In his book, The Concept of Corporate Strategy, Kenneth Andrews says

“Corporate strategy is the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organization it is or intends to be, and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities.” (pp.18-19)

More Definitions Of Strategy Are Needed

I’ll add to this blog as I find more definitions of strategy but you can help me too by leaving a comment.

How do you define strategy?

Or do you know of a definition of strategy which you find powerful and convincing?

While I believe strategy is important, the more I think about it, the more it seems strange that there aren’t popular definitions for strategy.

I’ve been writing a series of articles about strategy questions so when I learnt that Harvard Business School professor Robert Simons has written a book called Seven Strategy Questions: A Simple Approach for Better Execution, it seems appropriate to include details of the questions.

The Seven Strategy Questions

1. Who Is Your Primary Customer?

2. How Do Your Core Values Prioritize Shareholders, Employees, and Customers?

3. What Critical Performance Variables Are You Tracking?

4. What Strategic Boundaries Have You Set?

5. How Are You Generating Creative Tension?

6. How Committed Are Your Employees to Helping Each Other?

7. What Strategic Uncertainties Keep You Awake at Night?

I haven’t read the book yet but I do think they are an interesting set of strategy questions.

You can learn more at the Harvard Business School blog.

The Five Questions To Build A Strategy

On the Harvard Business Review website, Roger Martin, the Dean of the Rotman School of Management at the University of Toronto in Canada wrote about the five questions to build a strategy.

1. What are our broad aspirations for our organization & the concrete goals against which we can measure our progress

2. Across the potential field available to us, where will we choose to play and not play?

3. In our chosen place to play, how will we choose to win against the competitors there?

4. What capabilities are necessary to build and maintain to win in our chosen manner?

5. What management systems are necessary to operate to build and maintain the key capabilities?

What Do You Think The Important Strategic Questions Are?

Do you have a set of strategy questions you think a business owner or management team should answer to help develop an effective strategy?

If so, please share them in the comment section below.

I want to tell you about an idea I learnt from one of my mentors, Rich Schefren.

It’s called your Core Concept and it has the power to differentiate you in the minds of your potential customers and clients.

The Core Concept is the big idea which is used throughout your marketing and goes deep into your products and services. It’s an idea that gets your prospects excited because you’ve helped them understand their problems in a new way.

Instead of tackling the symptoms and effects of the problem or problems, you’ve helped them to see the cause of their difficulties in a way that makes sense to their minds and emotions.

My Core Concept is about how differentiating your business is the solution to many of the problems which business owners suffer from – low sales and profits, difficulty explaining what you do and a lack of purpose and vision. Quite simply it’s tough running a me-too business but it’s fun owning a business designed to provide great value to  a special group of customers.

I want to talk more about Rich Schefren‘s Core Concept and especially the one that made his name in his first classic report, the Internet Business Manifesto.

The big idea or Core Concept is…

“Opportunity Seekers struggle and fail while Strategic Entrepreneurs succeed massively”

Simple isn’t it?

But it’s also very profound.

There’s a huge problem in Internet marketing where punters buy “magic buttons” for get-rich-quick schemes from greedy gurus.

To be fair, that may not be what they are selling – there are some excellent training programs out there packed with great information if people do the work – but people want the silver bullet.

When they realise that the first opportunity is going to involve that terrible four-letter word… WORK… they decide it’s not for them. By then there’s another magic solution being promoted, and they jump on that.

And keep repeating the cycle because they want big money with little time and effort.

If only life was that simple.

Sure you can learn from the experts but you still have to make stuff happen yourself.

Anyway the Internet Business Manifesto was a big wake-up call to Internet marketers in this opportunity seeking mindset.

It highlights the craziness of what they are up to and it promotes the Business Growth System from Rich Schefren.

Rich Schefren goes into the Core Concept in one of his reports from the Founders Club – “The Single Element Critical To Your Marketing Success: How To Leverage A Core Concept To Go From Mediocrity To Millions.”

In this special report, he goes into detail of how the Core Concept works focusing on the Internet Business Manifesto.

The Core Concept doesn’t just apply to reports.

You can see the same ideas incorporated in the webinar used to promote the Business Growth System. Learning the idea is useful but the big bucks come from taking the idea and applying it in your business.

Do it right and you’ll blaze away from your competitors. No longer are you a provider of general services with many alternatives. Instead, you are positioned as the person who has redefined their issues uniquely and as such, you have the only solution.

I’m still working on my Core Concept and how I can frame it in a way that shows many of the fundamental business issues come back to the issue of business design and creating a unique, differentiated solution.

You can see the tie up and why I am so excited by the Core Concept idea.

If you are going to write an information report and you want it to create demand for your product or service – or if you’re going to create a video presentation – the time you spend understanding the Core Concept and developing your own will make a big difference to your success.

Many people have information reports – but it’s rare that any focus on such strong ideas that they create million-dollar selling products. That’s what Rich Schefren has done time after time.

You don’t have to be an Internet marketer to benefit. It will work just as well for professional services where you still need to demonstrate that you have a unique perspective.

It’s what will differentiate your business and attract clients.

Exit barriers intensify competitive rivalry by stopping businesses that are losing money from leaving the industry when there is little or no hope of future profitability.

The Five Forces model  from Michael Porter is an important way to understand the competitive pressures within an industry and at the centre is competitive rivalry.

What Are The Major Exit Barriers?

I’ve split the discussion of exit barriers into two sections for rational barriers backed up with economic logic and emotional barriers which create commitment beyond the level where it makes sense financially.

Rational Exit Barriers

  • Specialised assets – some industries require specialised assets and capabilities which cannot create value in other markets. Assets that can be re-used elsewhere or those that are easily adapted make it easier for a business to move from one market where it is struggling to another where prospects look brighter.
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  • Contractual arrangements – the business may have entered into contracts with customers and suppliers where breach of contract creates punitive damages which the business cannot afford. Even if there is nothing in writing, a business may be unwilling to break its commitments because of relationship and reputation damage that could affect other parts of the business or group.
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  • Vertical integration with other business units – a group may have a number of subsidiaries connected in the industry value chain. While one may be losing money (although transfer pricing makes it difficult to get a realistic arms-length assessment), damage may be done to the other businesses.

Emotional Exit Barriers

  • The business may come under political or social pressure to keep an important factory unit open because it is a key part of the local economy. Sometimes financial help may be available but more often the business fears damage through bad publicity.
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  • The owner or senior managers may have an emotional commitment to the business which makes it unwilling to concede defeat even when the economic justification for exit is compelling. Perhaps the business was where it all began and therefore there are heritage reasons to keep the business going which link into the core story. Perhaps there is loyalty to employees or fear for what it means for their own personal positions.

The Impact Of Barriers To Exit

Whatever the cause of the barriers to exit, the end result is that firms stay in the market when it is better for them and their competitors that they leave in an orderly manner.

It therefore makes sense for the market leader or someone determined to win the “last man standing” strategy in a declining market to help struggling firms to leave and take out the excess capacity.

The worst that can happen is for the business to go bankrupt and to be bought for a song by an ambitious management team with an idea to shake-up the industry with a strategic innovation and the financial backing to make it happen.

More often, the existing management and shareholders find the finance to buy the business back in a pre-pack administration deal, free of the high levels of debt and contingent liabilities that stopped an effective turnaround taking place.  It may lead to a viable business or the industry economics may cause future problems.