Whenever starting a strategy definition process for a Company, it is always important to bring about healthy debate to the table, to try to shake a little bit what is taken for granted (paradigms) and to avoid staying still in the status quo. For this, I always use with my clients a couple of Powerful Questions:
| 1) In what business are we? |
| 2) What is our value proposition, what do we offer to our customers? |
In what business are we?
Even before trying to define a Vision or Mission for your business, it is important to look at it from 10,000 feet.
Avoid looking at the obvious: of course you sell auto parts, or food, or clothing. But, is that all to it? Does the market niche where you are situated at require anything else, or is it even the adequate niche? What are your customers requesting you every day? Are there opportunities that you have not pursued yet?
If during their early years of operation, you’d have asked Jeff Bezos in what business Amazon was? I am sure that the answer that they were in the “selling books” business, only lasted for a very little time. Soon, they’d had realized that there were many more opportunities than that. Their business evolved to selling everything from A to Z. Moreover, nowadays, they have diversified so much that the answer to the question “in what business are we?” must have shifted to something completely different.
The more you understand your market and your customers, the better you can answer this powerful question. The better you answer it and you use it to implement a clear strategy, the stronger your business will grow. And then, most probably, your leadership in that market will make you answer the same question in a very different way. The answer to this question for sure will change over time.
Is your business to sell bicycles or it is to satisfy many other requirements of the cycling community: bicycles, equipment, training, events, insurance? What about electric bicycles or even motorcycles? What about organizing cycling events? How these other options would leverage your market position? Please, take a time with your executives and directors to answer these questions.
What is our value proposition?
In every business, it is very complicated to compete in the market trying to be the best at everything. Usually, it is too complex and too expensive to do it. Not impossible, but often very difficult.
This is why, at least at the beginning, you need to decide how are you going to beat your competitors and increase you market share. This is often achieved by reviewing your market, and then deciding where you add most value to your customers:
By having the best products: the more innovative, with the better quality, the biggest variety, highly customized, most environmentally friendly, or very exclusive and luxurious? etc.
By having the best service: delivering faster than your competitors, no-question asked returns, no shipping costs, having the best pre and post-sales support, having the best buying experience? etc.
By having the lowest prices: every day promotions, lowest price guarantee, etc. It will also require for you to have the lowest costs.
Each value proposition will entail your company to implement a very different strategy, to have very different strengths, to improve different processes, etc. So, again, it will guide your company regarding your strategic planning.
It is important that you understand your market and your competitors to be able to answer this question correctly. And remember, choose one of the options, implement a strategy to allow you to be the best at it, but at the same time, you need to be very good (not necessarily the best) at the other two. If not, you won’t get far with your strategy.
In Conclusion
Your yearly strategic exercise (or more frequent if your market is changing fast) needs to start by answering powerful questions that will allow you to better define and focus your strategy.
These questions need to be answered by your top executives and directors. Their answer will guide the direction of your business the years to come. By answering these powerful questions, you will get the required elements to define a sound and clear strategy.
Then you can go to define / review your business’ Vision, Mission, Values and from there, move forward defining your strategic objectives, drawing your strategic map and finally, defining process objectives and their related corporate and departmental projects.
Do not allow that the strategic planning processes in your company die off in a dull exercise that does not generate value for your company or your customers. Find a way to generate discussion and shake the status quo.
Juan Pablo Franco
General Manager
