In my first post I wrote that the US Ivy League university Dartmouth College conducted research that showed that, in order to succeed in business, you must excel at four primary management practices:
There are also four secondary management practices, of which you have to excel at two, but we’ll leave those till later. This month I’m moving on to the second primary practice – Execution.
Whereas strategy is about deciding what you’re going to do to achieve your goal, execution is about actually doing those things. It is where the rubber hits the road. Hopefully the rubber is on a Tesla in ludicrous mode, because the faster you execute, the sooner you will hit your BHAG.
The nemesis of strategic execution is Business as Usual (BAU) or the Whirlwind. You know, serving customers, ordering inventory and supplies, payroll and bookkeeping, updating the website, doing sales calls, etc. They are all extremely important tasks, in fact your business would cease to exist without most of them. You can’t fail to do them, or more accurately, you can’t fail to ensure they are done. The truth is, however, that BAU will always expand to fill 100% of the time available, if you let it.
You must carve out some time. Without fail. Every week, you must do the one thing that will take you closer to your BHAG. This is the mindset change – ruthless refusal to allow your strategic execution time to be stolen from you by anything.
Over the last few months we have covered most of the major items needed for creating your vision and strategy. This month we will pull all of this material together and develop some strategic objectives.
Just before we do that though, I’ll cover off one more important issue. It is not good practice to develop strategy without some understanding of trends in your industry, your market, and the overall context within which you are running your business. Useful analyses include the Porter’s 5 Forces Analysis, and PEST Analysis, both easily googled.
I recommend that you take the time to carefully consider the questions and answer them as comprehensively as you can. It would be very unusual for there to be no insights for you from these analyses, and you should be as thorough as you need to be to discover them.
Review all the possible moves you could make, based on your work on your target market and its greatest need, your value discipline and competitive advantage, and your environmental analyses. The idea is to select the three moves that together, will take you furthest along the journey toward your BHAG. Picture yourself three to five years out into the future, with your three strategic moves completed – have you made satisfactory progress toward your BHAG? If not, see if you can identify more challenging strategic moves.
To give you a better idea of what a strategic move looks like, I have included some of my clients’ below (suitably camouflaged).
OK, that’s enough strategy for now. Next month, we will start a new topic – Execution, or getting stuff done.
Happy New Year! I hope you had a wonderful Christmas, a restful break, and can still remember both of them.
In the December Beacon, I wrote about identifying your ideal Target Market Customer, and their greatest need. This month we’ll look at Competitive Advantage – a strategic position that is favourable compared to your competitors. Your competitive advantage answers the question, “Why should your target market buy from you instead of someone else?” If you want your business to grow, you need a competitive advantage.
I like to use a model called Value Disciplines described in the book The Discipline of Market Leaders by Treacy and Wiersema. I recommend you read this book. The basic idea is to build market leadership (competitive advantage) in one of the three value disciplines. They are:
Focus! Place the vast majority of your investment (time, money, energy, learning) into your chosen value discipline. If you are at the minimum level required for survival in your industry for the other two disciplines, leave them be!
This competitive advantage should drive all your marketing and branding messages – including your positioning statement and brand promise. Everything should be consistent so that your overall message to your target market is unmistakable.
Next month we will draw all of the vision and strategy stuff together into some strategic objectives.
My first two columns dealt with Vision. This month, I’ll cover Target Market, a key element of Strategy, which is the set of choices you make to try to achieve your Vision.
A golden rule of strategy:
Imagine trying to build a car that pleases everyone. Some will want it to be as environmentally friendly as possible. Some think internal comfort and luxury are the most important things. Lots of people choose price as their top priority. Others will choose speed and power. There’s no way you can give everyone exactly what they want, and the harder you try, the more everyone will go “Meh.”
Philip Kotler, professor of marketing at Northwestern University in the US, states, “There is only one winning strategy. It is to carefully define the target market and direct a superior offering to that target market.” This is not to say that you will only ever sell to your target market. Apple’s target market for the iPhone has been mid-30s males – will they stop females from buying an iPhone? Of course not. The idea is to ‘delight the few to attract the many’. When your product really delights your target market, other customers are attracted too. (pull-quote)
Get very specific about the narrow segment of people you are targeting. Find out which type of customer is your most profitable, the best opportunity for growth, and the most influential. Then make a call on which is the most attractive segment overall. Analyse this segment across the following criteria:
Once you have identified your target market segment, delve deep to find out what their greatest needs are. This can be a very tricky business, as often your customers don’t know what their root cause needs are. As Henry Ford is quoted as saying, “If I had asked people what they wanted, they would have said faster horses.” But it is your job to uncover their real greatest need. When you have done that, your next job is to figure out how to meet those needs more effectively than anyone else – that superior offering referred to above by Philip Kotler. We will cover this in the new year.
Last month, as well as a brief introduction to the management practices that really work, I covered Core Purpose, one of three elements of a good vision. This month, I’ll cover off another vision element, the Big, Hairy, Audacious Goal (or BHAG). The remaining vision element, Core Values, will be covered later on in a series on culture.
The BHAG, normally pronounced “Bee Hag”, is a huge, very challenging goal, designed to stimulate progress. If your Core Purpose is the “why,” your BHAG is the “what.” It should be:
Perhaps the most quoted BHAG is J F Kennedy’s challenge to NASA in 1961, “I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.” Brilliant. Clear and compelling. Certainly beyond their capabilities (especially the bit about returning him safely to earth, hence a distinct lack of volunteers). Nearly 10 years out, and it definitely stimulated progress at NASA, because they achieved it in 1969.
Other cool BHAGs:
“How do I find my BHAG?” you might ask. Jim Collins, the co-author of last month’s book Built to Last, followed up with a solo effort Good to Great. According to Collins, one of the characteristics of great companies is that they all boil everything down into one idea – land on the moon, predator-free, car safety.
When you deeply understand these circles and find your single organising concept at their intersection, your BHAG will be somewhere nearby.
In the next issue of the Beacon I’ll start looking at some key elements of strategy, which is the art of making a cohesive set of decisions that enable you to achieve your BHAG.
ave you ever asked yourself the question, “What do I have to do to succeed in my business?” If you have, you wouldn’t be alone. Fortunately, US Ivy League university Dartmouth College provides a great answer.
Their research showed that, to succeed in business, you must excel at four primary management practices:
In addition, you must also excel at any two of four secondary management practices:
You can forget the rest.
Hi, I’m Chris. This, my first column, is one of a series of three on strategy – one of those primary management practices. Strategy is about making a series of choices that enable you to beat the competition and achieve your business goals. This is a lot more difficult if you don’t actually know what your business goals are. As NY Yankees legend Yogi Berra said, “you’ve got to be very careful if you don’t know where you are going, because you might not get there.” So, I always start with vision.
The core purpose is the reason why your business exists. Note: as far as everyone except possibly you is concerned, your business does not exist to make you rich. That may well follow, but the sad news is your employees are not leaping out of bed in the morning thinking, “wow! I’m going to make the boss another million dollars today! Yee-hah!” An awful lot of them will, however, be energised by a core purpose that seeks to make a difference in people’s lives.
The way to find your core purpose is to ask “why?” at least five times:
Here are some examples of core purposes:
The third component of vision is the Big, Hairy, Audacious Goal (or BHAG). Join me next month, when we’ll take a look at that, and a key strategic decision.
Let's Talk Business
by Chris Bunce
Chris has 28 years’ experience as a management consultant and business coach. During this time he has worked with clients in many industries and of all shapes and sizes, including some in Australia, Asia and the US. Nowadays he is passionate about improving the lives of Aucklanders by helping business owners to master the very few management practices that actually make a difference to their success. Chris lives in Blockhouse Bay with his wife, Cathie, having lived in or around the area for most of his life.