I recently shared the outline of my 6-Day Strategy and have already set out my approach for Day 1’s session on assessing your current position and Day 2’s focus on future possibilities. The focus of Day 3 is to take the outputs of the first two days’ work and create a clear and compelling future direction for your business.

First, it’s important to realise that a strategy is not a plan – many organisations have plans even when they don’t have a clear business strategy. Instead, a strategy is a framework for how your business can deliver superior performance. As shown in the chart, below, there are four elements to any business strategy: a clear, overarching #1 goal; an articulation of where you play; a focus on how you will win as a business; and a small set of priorities that form the basis of your agenda for action.

On Day 3 we will focus on the first three of these strategic elements and will return to the agenda for action on Day 5 of the process.

Your #1 Goal

A strategy is all about making choices. You need to realise that you can’t be all things to all people. Clarifying your #1 goal is a great way for you to face into those choices. As Ian Filby, the former CEO of DFS once told me, “A strategy has to meet a clear goal. Without agreement about the goal, you’ll never settle on the strategy.

Your goal, however, must respond to the challenges your organisation faces. The first two days’ work generated a long list of issues, opportunities and challenges that you then distilled into a short list of 3-6 critical challenges. It’s now time to decide on your company’s single biggest challenge.

Distilling your list of issues into a single, over-arching challenge is not an easy task, but it helps you to clarify the nature of your situation and the strategic choices you face. Several years ago I started working with Topps Tiles, the UK’s leading tile retailer. At our first executive meeting we ploughed through the company’s long list of issues and opportunities, but when we asked ourselves which issues would really impact most on the company’s long-term performance, we realised that improving the company’s strategic position in the tile market was the first among equals. Other issues, such as controlling margins, attracting certain customer segments and improving the service proposition were all important, but secondary. The executive team agreed that nothing would have a bigger impact on Topps Tiles’ overall growth, profitability and shareholder value than improving its competitive position in the UK tile market.

The next step was to translate that challenge into a goal. The team considered a straightforward sales goal but, instead, settled on a goal that focused on market share. It would have been difficult to deliver major sales gains as the market was in decline at that time, but, even in tough market conditions, they believed they could still step-change their share and competitive position. And, as long as they did so sensibly and profitably, this focus would drive their long-term financial growth. As a result, the agreed goal was to grow the company’s share of tiles sold in the UK retail market from 25% to 33% in five years.

In the end, Topps Tiles reached its goal a year ahead of schedule, but that was because their goal gave the entire organisation the focus it needed to succeed.

What is the key challenge facing your business and what is the #1 goal that results from this analysis?

Where You Will Play

This strategic element sets out the scope of your business – your target customers, the products and services you offer them, the channels you reach them by and your geographical reach. At Topps Tiles, once the executive team had agreed the goal, the next stage was to follow through on what that meant for the company’s playing field.

The team quickly realised three things. First, that they hadn’t, as a business, been sufficiently focused on tiles. In previous years, they had added wooden flooring and decorating materials to their range in the hope of kick-starting growth. These categories had added some sales, but had taken the organisation’s focus away from their core tiles ranges. Second, the leadership team realised that there was an opportunity to do more for their biggest customers – the tradespeople who installed tiles. Third, the executives understood that tiles were increasingly being sold through on-line channels.

As a result, the team decided to remove flooring and decorating materials from their offer. They resolved to become a true tile retailer. They created a guiding philosophy of “Out-Specialising the Specialists” to remind everyone that they wanted to be better than even the best independent tile specialist. The team also decided to improve Topps’ focus on trade customers, offering deals, discounts and rewards to earn more of their business. Finally, they committed to building a multi-channel business, offering on-line sales as well as through their national network of stores.

The team at Topps dramatically improved the performance of the business by taking these decisions, which were, in turn, directly linked to their new #1 goal and the key challenges facing the business. Other companies have also transformed their fortunes by re-setting their scope and playing field. Twenty years ago, for instance, Whitbread decided to sell its brewing business – as management realised that it could no longer compete with the giants in the market – and focused, instead, on hospitality, allowing it to develop the market-leading brands of Costa Coffee and Premier Inn. Similarly, Intel turned around its fortunes when Andrew Grove and his management team decided to exit its troublesome memory chip business and make the most of its secondary business, microprocessors.

What are the changes in where you play that are needed to allow you to better focus on your #1 goal?

How We Win

The third step in Day 3 is to articulate how and where you will be advantaged against your competitors. Focusing on what makes you unique and valued by customers enables you to deliver superior performance and provides a focus for ongoing investment and development.

The choice of how you will win depends on three things: what your target customers value most, your organisational capabilities, and how your competitors stack up. The leadership of Topps Tiles decided that, given their focus to “Out-Specialise the Specialists”, they would win by leading on product range and offering superior customer service to their rivals.

So, how can you identify how you should win? The chart, above, sets out five generic competitive strategies and you can use these as a guide as to where you should focus. The five strategies are:

  1. Product Leader. These companies want to have the latest and best products for their target customers. New product development is critical to their success, and customers are willing to pay a bit (or a lot!) more to get the high-quality product, service or brand experience they’re after. Examples include Apple, Sony, Singapore Airlines and Ferrari.
  2. Cost Leader. These companies offer amazing prices to their customers who, in turn, believe that the product quality is good enough given the amazingly low prices. Examples include Tata Cars, Aldi and Primark.
  3. Convenience Leader. These companies offer products and services that are highly dependable, convenient and hassle-free. Their strong operational focus and highly efficient systems often mean that they are also low-cost organisations. Examples include McDonalds, Toyota, Dell and Amazon.
  4. Service Leader. These organisations gain and keep clients as a result of the expert advice and support they offer, both before and after purchase. Examples include John Lewis, Nordstroms, Home Depot and Lexus.
  5. Solutions Leader. These businesses tailor their offer to individual customers, creating bespoke solutions. Close and deep relationships with their customers are critical to their success. Examples include McKinsey, IBM and many bespoke engineering firms.

The world’s top organisations make clear choices about where and how they wish to differentiate themselves. They know that they can only focus on one, possibly two, of these dimensions. Apple, for instance, is not trying to offer low prices and McDonalds is not offering individual, bespoke solutions. If they did, it would most likely weaken their existing ways of winning.

You can determine how your organization will win in the future by taking these steps with your team:

  • Using the chart above map out the existing strategic profile of your key competitors on each of the five dimensions. Using your own experience, customer feedback and other insights identify whether they are Uncompetitive, Competitive, Advantaged on Breakthrough.
  • Now it’s your turn. Place a “C” for Current in the relevant box for each of the five types of Strategic Focus for your business as it stands today. Are you behind the pack, in the pack, ahead of the pack, or so good you’ve created your own pack?
  • Next, for each strategic dimension place an “F” for Future in the box that you aspire to be over the next 3-5 years. Would you like to improve, and if so how radically, or do you think you should stay the same or perhaps decline in your relative performance on each dimension?
  • Finally, review the profile that you’ve developed. The gap between your current position and your future ambition indicates the level of work you will need to undertake to achieve your goals.

Which dimension is the one you wish to really focus on most going forward? What, as a business, are you going to be famous for, and how will you win in your chosen markets?

Day 3 is critical to the overall success of The 6-Day Strategy, but by following these three steps you can create clarity and a sense of purpose about how your business can win in the future. As you do so, it’s likely that you’ll start to consider what this will mean for the wider organisation, and that will be our focus on Day 4.

© Stuart Cross 2020. All rights reserved.