If your business isn’t achieving its goals, you probably have a strategy problem.
Strategy is about choices. It’s about saying “yes�? to some things and “no�? to others. Michael Porter, in What Is Strategy?, famously says “a strategy is the creation of a unique and valuable position... Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do. Without trade-offs, there would be no need for choice and thus no need for strategy.�?
This bears repeating: Developing and executing strategy is just as much about what NOT to do as it is about what to do.
It’s hard to let go of ideas we like or have committed to. Perhaps this is because many of us have been taught our entire lives not to be “quitters�? - that to give up is a sign of weakness. What makes this even harder is that our minds actually look for reasons not to accept that we have ownership of lackluster results and may need to change our strategy.
“Fundamental attribution error�? is a cognitive bias that happens when we try to explain our own and others’ behaviors. When we do well personally, we take the credit – we overemphasize our role in the outcome and de-emphasize situational factors. When we don’t do well, we tend to blame outside forces, which minimizes our motivation to do anything differently. However, when we try to explain other people’s behavior, it’s the opposite.
We do the same thing as organizations. When we do well, it’s all about how hard we worked and how smart we were. When the competition does well, they’re “lucky.�?
When strategies fail, we often look to outside forces for the reason – industry trends, economic challenges, or competition. This may even be partially true, but it’s not the entire truth. We made a wrong choice somewhere. The good news is that we can fix it.
A strong strategy is based upon an accurate understanding of how customers make purchasing decisions. Our financial success frankly comes down to one truth: Our customers either choose us or they don’t. Without using customer insights to guide us in our efforts to influence more customers to choose us, we run the risk of fanning the wrong fire. We develop strategies based on our experience, industry expertise, anecdotal evidence, or even “gut instinct�?.... And we just learned how our minds can work against us!
Take the Segway for example. It was supposed to revolutionize transportation by providing a viable alternative to automobiles... but it flopped. I’m sure there was a lot of excitement during product development brainstorming sessions at Kamen, but did they benchmark these ideas against what their target customers valued before executing? Did they adapt their strategy even when they started to see very real evidence that what they were doing wasn’t getting the results they wanted? Based on their market launch, it seems unlikely.
Finding the courage to walk away from what feels like a good idea when it’s not getting results can be tough. Having data to confirm that what you’re doing is not impacting customer buying decisions makes it easier to say goodbye.
How do we accomplish that? First, we need to identify what customers value and what they don’t. Imagine all the factors that play a role in your customers’ buying choices plotted on this Venn diagram. Could be aspects related to features, benefits, customer experience, etc. All of the factors that fall within the yellow customer circle are highly important to the customer’s buying decision. Everything you offer falls into the blue circle. (Ideally, what you offer falls into the overlapping area – these are the reasons your customers choose you!)
What falls into the area outside the customer circle represents opportunities to refocus our strategy. These are factors that you may need to either walk away from or breathe new life into. These are your low points of value that customers:
- don’t care about,
- actually don’t like, or
- just don’t know enough about.
So.... this begs the question: Why?
Why are you spending resources on factors that aren’t as important to your customers? Are there things you can stop completely (kapow!) or reduce your investment in, thereby freeing up resources to focus on aspects more influential to customer choices?
Or are there ways to breathe new life into a factor and change customer perceptions, building a burning competitive advantage from what is now just a little spark?
Photo courtesy of the film The November Man (2014).