The old song may say that ‘it ain’t what you do, it’s the way that you do it’, but, when it comes to your strategy for growth, nothing could be further from the truth.
There are two sets of decisions in any strategy development process. The first set is to decide where you wish to play, which is called participation strategy. This focuses on the customers you wish to serve, the product and service markets you wish to serve them with, the channels you will sell through and the geographical markets where you will operate.
The second set is all about how you intend to win, or your competitive strategy. These decisions are all about what you wish to be famous for – the best products/services, the cheapest offer, the most convenient service, the best advice or the ability to deliver bespoke solutions.
Success, of course, happens when you are able to bring these two elements of strategy together in a way that (1) your customers value, and (2) your competitors struggle to emulate.
I have found, however, that many executives and managers are resolutely focused on competitive strategy, often at the expense of participation strategy.
Take Apple, for example. Its success over the past ten years has been regularly hailed as a tribute to the company’s ability to innovate and build the best products. That’s true, but Apple has always had those skills and that competitive edge.
The real breakthrough for Apple came when Steve Jobs moved the company out of the relatively narrow market of personal computers and into a much bigger playing field of personal electronic devices. That’s the decision that allowed iTunes, the iPod and the iPhone to be developed in the first place.
Over the past twelve months I have helped several clients drive major new growth initiatives and, in all cases, the real breakthrough came when we focused on their participation strategy.
For example, I helped one retailer, looking to accelerate its growth, identify and enter an attractive and adjacent new market for it to add to its existing ranges. The management team were aware of this market, but because their focus had been on competitive elements of their strategy (such as the level of in-store service they should offer), they hadn’t given this opportunity the attention it deserved.
The other valuable aspect of critically reviewing your participation strategy is that you can drive growth by deciding not to do something. I recently helped a consumer goods business to exit a declining and unprofitable channel, and re-invest the cost savings in higher growth channels, resulting in valuable new growth without adding a penny to the company’s overall operating costs.
It is necessary to make sure that you remain competitive and are advantaged against your competitors. But you should not neglect the huge opportunity for growth by critically reviewing your participation strategy.
© Stuart Cross 2010. All rights reserved.