Brands would do well to take a leaf out of the Apple playbook and aim for a much simpler strategy, says Tim Williams, and offers a step-by-step guide on how to do just that.
Upon his return to the company he founded, Steve Jobs' first executive action was to announce that Apple would scrub almost all of the 300+ projects currently under development and instead focus on no more than four. In an intense work session with his core team, he stood at the whiteboard and drew a simple matrix consisting of four squares – two representing the home computer market and two for the business market. Apple would immediately discontinue its misguided and unprofitable foray into diversification and instead do just a few things well – really well.
The results of this simplification of strategy speak for themselves. By narrowing instead of expanding, Apple started down the path of becoming the most valuable company on the planet. Even today, Apple – with a market value of over $760 billion – has under 200 SKUs.
The counterintuitive truth about business strategy is that it's mostly about deciding what not to do. Contrast that with the experience most of us have had at the ceremonial 'offsite strategic planning session' which usually results in an exhaustive list of things the firm should start doing: new services we should offer, competitive competencies we need to match, new disciplines we should add, and the myriad ways we should continue to expand the company.
There is certainly value in blue-sky ideation and prototyping new ideas for the future direction of the firm. But as marketing professionals, we must keep in mind the maxim first posited by David Ogilvy: "The essence of strategy is sacrifice." Another way to frame this idea is through the lens of trade-offs. If a retailer decides they want to be known for superior sales help in well-furnished stores, they're trading off the ability to also be the low-cost leader. Writing in the Harvard Business Review, authors David Collis and Michael Rukstad state simply, "The trade-offs companies make are what distinguish them strategically from other firms." In effect, your trade-offs are your strategy.
Just because you have a 'strategic plan' doesn't mean you have a strategy. Creating a 30-page deck is relatively easy when compared with the critical thinking required to craft a bona fide strategy for your firm. While most plans are likely to be long and wordy, a good strategy is short and concise. The sum and substance of your strategy should fit on one sheet of paper, organised as follows.
First, the Setting: what are the main dynamics of the current environment in which our firm competes (considering both direct and indirect forms of competition)? Then, the Constraints: In creating a unique story about our firm, what are the primary challenges or obstacles we must overcome? Next, the Desired Outcomes: what outcomes or results are we trying to produce with our strategy? Next, the Strategic Framework: what is the specific position we're attempting to occupy in the marketplace? Describe this positioning strategy in a single sentence comprising these elements: 'for (who), we (what) by (way) because (why)'. Who = the specific type of client we are targeting (inspired by categories, audiences, types of brands, etc.). What = the unique solutions or benefits we provide to these types of clients. Way = the distinctive way in which we deliver the above (inspired by philosophies, methods, etc.). Why = the underlying motivation for what we do; our purpose as a business.
Finally, the Supporting Ideas for each of the major dimensions of our strategy, what can we offer as proof points, examples, or supporting ideas?
Once you and your team have made these strategic decisions and committed to the accompanying trade-offs, evaluate the efficacy of your strategy by asking these three questions. First, does it help us say no to the wrong prospects? Does our strategy provide us with a litmus test for selecting clients that want us for what we do best? A focused strategy makes the firm intensely appealing to a select group of clients. Second, does it create strong barriers to entry? Does this strategy create boundaries that make it difficult for competitors to enter our space and duplicate what we do? A unique strategy is, by definition, difficult to copy. And third, does it result in fewer competitors? By focusing our business in this way, do we have fewer direct competitors – other firms who say they do the same thing or serve the same market? A distinctive strategy leads to the waters of the 'blue ocean' where, if pushed far enough, you have the potential to create a completely new kind of firm that never existed before.
The ultimate in strategy-making is to be in a category of one.