Try this sniff test to see if your business strategy is DIFFERENT enough to win
There are really only two business strategies where you can expect success.
You are either cheaper than the competition or you are distinct.
When drawing up a business strategy a lot of folks will give some thought to how their business is distinct to their competitors.
But how do you know if your strategy really is different?
Roger L Martin has developed this clever sniff test.
He says if the opposite of your core strategy looks stupid, then every competitor is going to have more or less the exact same strategy as you. You will not be differentiated in the market and your chances of success will be approaching zero.
Imagine a wealth management company who decided their target market would be wealthly people who were willing to pay for comprehensive wealth management services. They claim they would win by providing excellent customer service across all their services.
What’s the opposite position? Target poor individuals who don’t want and aren’t willing to pay for comprehensive wealth management services. Then provide them with crappy customer service.
No one in their right mind would offer that, would they? Exactly.
Two of the most popular strategies are service excellence and operational effectiveness.
The problem is that no company will offer the opposite – that would be bonkers – so it stands to reason by offering it you are not widening customer choice. And so you are not differentiated.
The best strategies, says Martin, are where your competitors are doing things opposed to what you do — and they make money doing them.
That means that you have made a distinctive choice.
American investment management company Vanguard made a real choice when it said it would not sell managed funds. We know it was a real choice because competitor Fidelity focuses on selling managed funds, and makes enormous sums of money doing that.
Of course, choosing to define service in a way that is different than others define it is also a legitimate strategy.
Four Seasons defines luxury as service that makes up for what you left at home or the office. Its luxury competitors define it as grand architecture and décor and obsequious service. That is a real difference.
When next you mull strategy, ask yourself, Is the opposite stupid ? Have most of my competitors made the same choice as me?
If the answers are “yes,” back to drawing board.
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About the author
My name is Andy Pemberton. I am an expert in data visualization. I guide global clients such as Lombard Odier, the European Commission and Cisco on the best way to use data visualization and then produce it for them: reports, infographics and motion graphics. If you need your data visualized contact me at andy@furthr.co.uk or call 07963 020 103
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