6 Vital Elements of Business Strategy
Last week at the 2018 Geneva motor show Audi, Airbus and Italdesign showcased their rather innovative mobility concept called the Pop.Up Next – an autonomous flying car consisting of a ground vehicle and a drone-like air module.
It’s fantastic to see companies using their current success to develop their future innovation and with it, their differentiation. Coming up with successful ideas is tricky and risky. For every good idea, there are many others that never see the light of day.
So why do only some ideas succeed while many others fail to ever “take off”?
Is it because their ideas or designs were not good enough or they didn’t have enough cash? This may account for some, but many potentially good businesses fail because they overlook vital elements of strategy in creating and maintaining a sustainable business model.
Many good businesses fail because they overlook vital elements of strategy
So, what are the vital elements that need to be addressed?
1) Market Perspective
Most businesses will look at the current market, assessing the product/service offerings, competitors, customers and routes to market. However, in a rapidly changing world, we must explore the future, particularly the potential disruption caused by political, environmental, social and technological changes. These can be either threats or opportunities, depending on how we decide to deal with them.
Understanding our strengths and weaknesses is always important. But getting a handle on our current and potential differentiating competences is critical, as these will enable us to compete on our own terms.
Understanding our elements of differentiation will equip us to apply the appropriate mix to attract and secure customers. It's a key foundation stone in the building of compelling value propositions. Furthermore, unless we define our elements of differentiation, we will not be able to communicate it coherently and consistently.
4) Customer/Market Selection
I believe all businesses are unique, as they are run by people with different aspirations, passions, skill sets, goals and values. Consequently, only those customers that value our unique set of advantages will be willing to pay us our true value. So, targeting customers or customer groups is essential if we wish to extract our real value from the marketplace.
5) Barriers to Entry
Just as important as differentiation is the ability to create barriers to entry. Some businesses will use legal barriers, such as patents, but, these are not always appropriate and are often difficult or costly to defend. However, there are many ways to put up barriers and all viable avenues should be considered in order to protect our investment.
6) Value Propositions
Each customer or customer group may need their own value proposition. The more sophisticated our differentiation is the more complex and individual the value propositions will need to be. It all starts with truly understanding why our customers are buying from us.
Does your business address these elements?
Companies that get this right will go on to grow their businesses sustainably, those that don’t could be marching headlong towards extinction.
About the Author: Tony Prouse
Tony Prouse is a well-respected strategic mentor. From his personal experience and through his work with the Institute for Manufacturing at Cambridge University, Tony has been instrumental in developing strategies for a wide range of businesses.
Get Strategic Tips
Receive tips to develop your business strategy skills and differentiation today!