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Strategic Planning

by John D. Callos

Strategy is about choosing different ways of competing that are not necessarily good for everybody, but that are uniquely good for you, in your company, given the particular market outcome that you aspire to achieve.

The essence of strategy is tradeoffs - making choices about what you won't do, in order to do other things uniquely well. The weakness of many companies is that they lack the discipline to limit themselves to competing in some business segments while avoiding others. They react to pressure to quickly grow revenue without first considering the strategic impact. Many businesses inadvertently destroy their competitive advantage by attempting to be everything to everybody.

Everyday, you and your employees are making choices - about how to spend your time, about what to say to individual customers, about whom to call on - and those choices are either going to be consistent or inconsistent with your strategy. To ensure sustainable results, you must be diligent in communicating and enforcing the strategic limits of your company.

Sustainable competitive advantage comes from being different. What one must ask is:

"How can we, by limiting what we do, by not seeking to serve all customers, by not seeking to offer every product in every geography, how can we, by limiting ourselves, be unique?"

That's the essential strategic question you must answer.

The strategic mindset understands tradeoff. The strategic mindset is willing to sacrifice customers and is willing to forgo making customers happy if they're not profitable customers. (Many of our Internet clients will argue that all their customers are unprofitable by design in order to gain market share. But that's consistent with their strategy!) The strategic mindset is willing to turn down current opportunities for growth if those opportunities are not wholly consistent with the long-term strategy.

This means that as the Leader, you have to learn to say "NO" - a lot! In any business, there are countless opportunities to invest money, to incorporate new technologies, to add new features, to chase a new market segment, to respond to a competitor. There's constant pressure from all directions to blur, homogenize, and imitate in the name of "opportunity." So, while you are developing and reinforcing your strategy - communicating how you are different and what you are willing to give up in the name of strategy- you must also have the self-discipline and courage to be the enforcer of those limits. Only by setting limits can you truly be unique. And without being unique, you will have no competitive advantage.

The hallmark of strategic thinking is making those crucial tradeoffs. You must have the willpower to turn away some customers, pass on some opportunities and abandon some markets in order to focus on what you do best. Most business owners don't want to hear this, because in the short term, sticking to a core strategy may constrict growth. But those who have the guts and determination to focus on the areas where they have a unique competitive advantage will build a much stronger, and ultimately, more successful company.

Copyright 2000, Ideabridge Consulting Group


Tags: Wisdom and Life Skills


