7 tough questions regarding strategy to improve your growth
What’s up with the questions mentioned in the title? Why do they matter? What are they? The questions, which are listed towards the bottom of this article, are questions about company’s competitive strategy. They help you solidify how your company is different than the competition. By answering them, your company will be stronger and head in a firmer direction.
But first, let's learn a thing or two from companies like Walmart, Coca-Cola, and even Fenty Beauty, about sticking to their values, strategies and avoiding initiatives which deviate from them. Companies who focus on what they do best, on what makes them different and unique tend to be the superior ones in the market. It’s easy to observe what other companies have done in the past. Not so easy to replicate in the day-to-day. Let me share some examples with you and tie them into the question that I want you to be thinking about.
Do you run a coherent company?
Paul Leinwand and Cesare Mainardi call coherent companies the ones who “[align] its differentiating internal capabilities with the right external market position.” Most often, outside forces, like current marketing trends, influence a company's strategy. Although marketing is critical I — Leinwand and Mainardi too — would urge your organization to focus on itself first and it’s core values which then should affect how you go about doing business, including, among other things, marketing.
It doesn’t matter if you’re just starting a company or have been running it for years. It’s always a good time to sit down, reflect and adjust course as needed.
Leinwand and Mainardi define capability as something that you do exceptionally well which brings value to your customers. At the same time, it’s something your competitors can’t beat or recreate.
As both Leinwand and Mainardi suggest, start from the inside of your company and work towards external factors. Figure out what your business stands for, what makes it different and unique and only then work outwards on how you could leverage these differentiating factors into significantly more effective product building, marketing, and customer acquisition. This is the first step in understanding your capabilities.
What are Walmart’s and Coco-Cola’s capabilities?
Walmart acting on their core belief in bringing cheaper priced goods to its customers is one of the more significant reasons for their success. If you ever read about the company’s history you might know that they are responsible, for example, for influencing the deodorant industry. The company worked with its deodorant suppliers to remove cardboard box packaging back in the 90s. (Source: The Way-Mart Effect by Charles Fisherman)
Walmart is actually aiming to have package-free products in its store by 2025. Continuing with the deodorant example, removing the unnecessary packaging saved money to its supplying companies and in turn made the product cheaper for Walmart to sell. This only saves people a few cents per purchase. But, over even a few years, not to mention a lifetime, it adds up. It’s still an example of cutting prices as Walmart keeps promising.
Here is another example: Walmart sells a gallon jar of pickles for only $2.97. (That’s more than a year’s supply for some.) And one more: when Walmart entered the grocery market, they were able to cut grocery costs for consumers by 15%. This is especially significant for families with low income.
The company’s core is to bring low prices to its customers, and the internal company actions reflect precisely that. None of Walmart’s competitors invests so much time and effort into cutting costs. You don’t hear about Kmart, Target or Safeway doing this amount of active work into bringing lower prices.
Side note: there has been a lot of criticism about whether or not Walmart’s pressure on suppliers has been a good thing. You can read more about it on FastCompany (including more details about their gallon pickle jar deal too). An unfortunate aspect of Walmart’s power, but irrelevant to its low price strategy.
I’ve also mentioned Coca-Cola. The company focuses its capabilities on being the best in the beverage industry. The company doesn’t hold other subsidiaries such as snacks or even something compactly random such as apparel - it only owns and operates drinks. Why? Because their focus is beverages and they make sure they are the best in the market by conducting lots of user and market research. This allows Coca-Cola to cater to all sorts of tastes all over the world. It’s paying off for Coca-Cola, big time, as they are of the most influential and profitable companies, year in and year out.
What does Dollar Shave Club, What's App, and Fenty Beauty have in common?
Walmart and Coca-Cola are two large and ultra-successful companies; it can be hard to relate to them. While Dollar Shave Club, WhatsApp, and Fenty Beauty are relatively new (Fenty launched in 2017). What these companies have in common is a core strategy which helped them become successful companies. These three examples ought to be a lot more relevant to what’s possible for a small business.
Dollar Shave Club grew itself into a $1 billion acquisition. The company wanted to provide an affordable, convenient and fun shaving experience to its customers. Everything they did within the company fits these core values. Their prices were affordable starting at $1/month. They automatically shipped the products monthly to each customers making it a lot more convenient for them. Lastly, their branding was all about fun. Their initial launch video went viral because it was quirky, funny and different. Since then, their videos, website, and social media kept the fun branding alive.
Jan Koum and Brian Acton co-founded WhatsApp. Their mission was to create a messaging app that “[let’s] people communicate anywhere in the world without barriers.” The product isn't revolutionary, plenty of messaging apps exist already. Yet, the company thrived because of its focus. WhatsApp truly understood its audience and their needs. They made sure to keep improving and innovating the app to provide the best possible experience for their users. It paid off big time.
Earlier in 2017, Rhianna launched Fenty Beauty. It’s been dubbed the most successful social media launch to date. Fenty Beauty stands for many things, but most notably, it stands for inclusivity and diversity. (One key to Fenty Beauty's success is that Rhianna has always done things her way.) It launched its foundation with 40 different shades, which is unheard of. She included an open casting call to anyone who wants to be a Fenty Beauty makeup artist. Her open call received some backlash about trans-women which Rhianna handled beautifully by speaking out and standing up for diversity and privacy.
So, now, what about you?
Ah yes. But, what can you do? What can your small company learn from these big brands? What are these seven questions I mentioned in the title but have yet to speak off? These questions are for the company executive and boards to discuss and to answer firmly. If you’re a small or a young company, or if you’re running your business by yourself, these are still good things to ask yourself as you’re moving forward.
(For what it's worth, I've been trying my best to answer these too for my own design business. Not that easy, but I'm learning and gaining much needed insights.)
The tough questions
- Are you clear about how you choose to create value in your marketplace?
- Are you investing in the capabilities that genuinely matter and align with your values?
- Can you articulate three to six capabilities that differentiate you from everyone else?
- Do these capabilities align together in an overall system based on your values?
- Does your current strategy reflect this?
- Does the company reinforce these values internally?
- Do all of your different businesses or products and business practices feed off these values?
- Does your business structure reflect the strategies and capabilities which are essential to you?
- Have you specified how your products or services can reflect your values and capabilities?
- Do you understand how to leverage these capabilities in unique ways in the market?
- Does each one of your products and services fit into your capabilities and values?
- Do you evaluate new product ideas based on your values and cap abilities?
- Can the people who work in your company clearly see and understand your values and capabilities?
- Can your customers?
- Does yo ur company leadership reinforce the values and capabilities?
- Do decisions and action of your company bring you closer towards coherence or further away from it?
- What can you implement these question into your company culture and keep accountability for them?
How to engrain a new strategy-focused culture in your company?
The answer is simple: bring these points to your executives, your stakeholders, you board and your employees. These are important if not crucial things your company ought to be always thinking about and making sure it’s being practiced by everyone at the company.
Your company needs time to figure out what it wants to stand for and what it wants to look like in the long-term future. It starts the top with the key decision makers who are in charge of setting the company’s course. Like I said before, it starts on the inside first. It starts from the top and goes down to even the part-time, temporary or intern workers.
Involve your company’s employees in the discussion. Make sure everyone understands what’s doing on and why are you doing this strategy assessment. Your employees know your organization the best; use their knowledge to learn what can help position your business for success, what it’s doing well, what areas need improvement, what challenges your company is facing and what areas can be forgotten all together with the new strategy course.
The board is an essential element of each company that has one. The primary goal of a board is to map out the road for the company’s long-term future. If you have a board, get them in evolved right away. Don’t just review your old strategy with them; get them to help align the company’s actions, decisions, and executions to the newly refined strategy. Let the board keep your business in check. Let them help your company make better decisions which will ultimately help it grow by sticking to your newly defined capabilities.
you're going to be MAKING SMARTER DECISIONs
Once the assessment is over and your new strategy set in place, you and your employees need to start taking actions which only align with the new strategy and capabilities. Consider it a checkpoint. Does this new marketing initiative align with our capabilities? Yes or no. Can this new project or new acquisition help your capabilities? Yes or no. And so on.
Don't forget: "A real strategy involves a clear set of choices that define what the firm is going to do and what it’s not going to do." .
By no means am I saying this is going to be an easy or a quick process. I am, however, saying that it’s too important not to do if you want your company to grow to its full potential. After taking the time to think through and answering this questions, your company will be stronger and be heading in a more solidified direction that’s right for it.
I am still in the process of answering all of these questions fully. Once I am done, I will share a link to them.