Ever since George Bush said "strategery" in 2001, and maybe since the dawn of snake oil, any reasonable person could be forgiven for being skeptical when it comes to strategy.
Despite its regrettable use as a self-important catchall euphemism for slacking, strategic planning is still vital. Believing your business can build success solely on its founding visions and dispense with the bother of a formal business strategy is a risk no business can afford to assume.
Who could blame savvy owners and managers for convincing themselves that detailed planning is just for corporate bigwigs with time to sit in ornate offices and think fancy thoughts? Small means nimble and agile, not slow and ponderous.
Who would criticize the scrappy street fighters for taking a more informal and improvisational approach to selling products or services? The passion, the shoulder-to-the-grindstone ethic, and people-to-people skills of their close-knit workforces give them the edge to win. Right?
Wrong. No business can survive, much less thrive, without building a plan that spells out revenue and earnings targets as well as the way to achieving them.
An effective strategic plan requires an expression of the challenges and opportunities that the business faces. It also requires clarity on the methods and means required to meet those challenges.
And there's something else that's mandatory. Without it, all the planning in the world is pointless.
Isn't That Special
In the film "City Slickers," Jack Palance asks Billy Crystal if he knows what the secret of life is. Crystal doesn't know. "Just one thing," Palance offers. Crystal asks what it is. Palance's reply? "That's what you've got to find out."
While taking the form of some old cowboy's silly, circular riddle, it remains the essence of your strategic marketing. It may also explain why people find marketing strategy so dubious. What senior management has to find out, and the entire organization embrace, is that one thing: that single most important reason why customers choose its offering.
That single reason is called the unique selling proposition (USP). And a frightening number of companies have no idea what their company's is.
The USP must be distinguished from any sort of demand stimulus (like pricing or special offers), set of product features or even their attendant benefits. "Service" doesn't count, either—unless you can demonstrate how your service is unique.
Despite so few companies' being able to articulate their USP, uncovering it is simple: find out what is the most important reason your customers choose you.
I said simple, not easy. Uncovering the USP is the grunt work that drives the pilings that support your business into solid ground. It's digging out the customer sensibilities and values that define what you're doing to earn their business and make their business better.
Unfortunately, you can't uncover your firm's USP by yourself. You need a dispassionate third party, one who can do the archaeology and then document the critical motivating points of your customer's pain—which your offering fixed in its own unique way. You uncover your unique value when you understand why your customers pick you as the best of all available choices.
This work tells you how you're filling customer needs, solving customer problems or building value that improves your customers' profitability.
A strategic focus on the company's USP gets management to look beyond what the company is making or doing. It focuses management on what is unique about the business that generates revenue. That's the secret of life, so to speak, for the business.
But it is a secret that can't stay concealed, because managers need to clearly communicate and sell the company's USP to all levels of the business. Clear understanding of the firm's USP is essential to achieving the goals and objectives of the business.
Conestoga famously failed for believing they were in the covered wagon business and not in the transportation business. Conversely, it's doubtful anyone believes Starbucks is actually in the coffee business. So, postpone the mission statement exercise until you are able to avoid falling into the strategic trap of letting your industry, your competitors or your business function define who you are and what you do.
Because performance expectations and results revolve around continual improvement in identifying and meeting customer needs, the value you provide to your customer should define your company and its vision.
What About the New Guy?
Existing companies have a customer base from which they can glean the critical information that yields a USP. But new businesses have to do something else, something more, to figure out what makes them special.
Often the startup has to wrest market share from somebody else, or find resources from prospects where none are appropriated. Thus, it's vital for startups to communicate their unique selling propositions with great specificity.
With little or no customer base, how is that done? The new venture's USP will have to be compelling enough to motivate customers to do what they are loath to—change their behavior. It's not enough to simply have a better mousetrap—it must be credibly demonstrated, in a number of contexts and in a specific way—why the new mousetrap is better.
This challenge makes startups different. They need to generate credibility but don't have the benefit of a track record. The best alternative to a history is an ironclad business case, one in which the venture demonstrates the superiority of its offering through a prototype or model that can, in turn, be documented, sampled or replicated.
This is not a new idea, obviously. It is just a loose application of the scientific method. The critical difference between a good strategy and a poor one is the recognition that any introductory program has value only when it yields real, credible documentation and endorsements that can be observed and verified.
Credibility development depends on validating experience, not manipulating fear or vanity to convince people they need something they might easily do without. Affirming real value requires cost-benefit analysis benchmarked against the expense of doing nothing. Customer-based affirmation of a very specific value is how the new business can penetrate its target market. The smaller and more focused the target market, the easier and less expensive it is to credibly demonstrate value.
Customers will switch when they feel the negative consequences of habit and inaction most keenly. Thermal-pane windows will be more attractive to people who feel the warm air leaking out of their jalousies and their power bill hemorrhaging as a result.
A business strategy isn't a guarantee of success, but the lack of it virtually guarantees failure. Remember, conducting due diligence is a testing process, and the conclusions drawn from it could be flawed. But from those productive failures comes the wisdom needed for fine-tuning or doing a wholesale revision of your strategy.
The more objective the analytical process and the more metrics applied to it, the greater the chance for success.