“Victorious warriors win first and then go to war
while defeated warriors go to war first and then seek to win.“
– Sun Tzu
Nearly 2,500 years ago, the writings of the legendary Chinese general Sun Tzu defined the planning process that built a mighty empire and that has guided military conquests ever since. Not only do today’s generals read The Art of War, so do thoughtful business leaders worldwide. After all, without an effective strategy, few businesses will survive, much less grow and prosper.
Strategy formulation is a complex but elemental foundation of business life. Of the scores of modern business theorists who have written about effective strategy, one of the most widespread analytical planning tools is Michael E. Porter’s Five Forces model, helpful as a “high altitude” view of a business’s competitive opportunities and threats [See Figure 1].
Competitive strategy is a powerful enterprise. One of my clients, a leading European Credit Management Services company chose to strategically reposition itself in the marketplace. In its behaviors, systems and public presence, it moved from historically functioning as a debt collection agency to a catalyst for a sound economy and guarantor of fair trade.
In time, the results were remarkable and included a more distinct and robust brand identify, substantial revenue growth and a significantly broadened array of products and services. Such opportunities are open to all business that develop and implement a truly winning strategy.
Here are six observations that I find useful in working with clients to evaluate, devise, and refocus strategic thinking:
- Strategy is inherently customer-focused. Without an explicit and extensive awareness of customers’ preferences, desires, and needs, strategy will always fall short.
- Strategy must understand and seek to improve upon the competition. As Porter expressed it, “The essence of strategy is choosing to perform activities differently than rivals do.” For example, in retail activities there are many routes to a distinct position. A company may offer the lowest prices, the highest quality, the widest selection, in-store child care, products with unique qualities or capabilities, longer hours, better informed clerks, faster check-outs. The possibilities are nearly limitless, but their success ultimately rests on maintaining differential behaviors that attract and keep customers-to the disadvantage of the competition.
- A strategy that is well-crafted and well defined but rarely visited, tested, or reviewed will not provide continuing energy and guidance.
- A strategy whose vision is not broadly shared within the organization fails to maximize the understanding, commitment, and support of its greatest resource-its own people.
- Even a thousand tactics will never make a strategy, but even the best strategic thinking requires adroit tactical implementation. If a business were a body, tactics would be its muscles, feet and hands, but strategy would be its senses-and its soul.
- Strategy is not immutable. Competitive realities shift often and strategy must adapt and adjust. As Sun Tzu would say it, “Opportunities multiply as they are seized.”