Are You Sure Your Company Is Strategic?

When all the local initiatives are dubbed "strategy", what is the value of the strategy to the company?

For many executives, the concept of a complete strategy has not yet formed. It should include five elements: fields, modes, differentiation, development order and economic logic. Only by integrating strategic factors with the five elements can we get a truly effective strategy.

The popularity of these claims just reflects people's misunderstandings - describing strategies as being all embracing.

In fact, these (pricing, capacity decisions, decision R & D budgets, etc.) are only elements of strategy, and can not be isolated decision-making and thinking.

This is the reason why the great painting must be a perfect combination of choice colors, outline lines and images, skills and ending process.

For example, five force model, core competitiveness, super competition, resource theory, value chain and so on.

However, what is the result of using these tools - what should be included in the strategy - is missing.

In fact, the use of specific analytical tools to describe strategies often leads strategic planners to be restricted by tools, thus forming a narrow and fragmented strategic concept.

For example, strategist based on Potter's five force model tends to regard strategy as industry selection and market segmentation.

Executives who use competitive theory or other game theory systems for strategic analysis consider strategies as a series of decisions to deal with enemy friends.

CEO are also talking about "service strategy", "joint venture strategy" and "brand strategy".

But when a company pursues "acquisition strategy" or "becoming an industry leader" strategy, does it help managers in their daily work or help them distinguish priorities from priorities?

What is the value of new initiatives when they are called "strategies" and are often announced?

This will not only confuse people with strategy, but also indicate that executives have not really formed a complete strategic concept.

So what does the general's job have in common with the position of a position commander?

The general is responsible for many troops, many battles and multiple fronts, and the challenge lies in overall control.

Great generals have strategies, and have detailed entries or elements to form an organic whole.

The generals in the market must also have a strategy - a focused, integrated and externally oriented concept that enables business development to achieve a predetermined goal.

Without strategy, time and resources can be easily wasted on trivial and irrelevant matters.

Finally, there is a big mess of a strategic move that is disconnected and with little success.

Similarly, Xerox, who has been invincible, has tried to turn the tide after the crisis, but its executives criticized the company for its lack of strategy.

An executive said, "I heard that I had sold assets and heard the financial restructuring, but I did not hear anyone say" this is your future ".

As depicted in Figure 1, the vision and objectives of a company are independent of strategy and guiding strategy.

Therefore, we can not regard the New York Times's commitment to become the best newspaper in the United States as part of its strategy. GE's goal of "achieving the best number of industries in the industry" is not a strategy.

Any goal to achieve a particular income or profit is not part of the strategy.

In addition, the strategy shows how business fits into the external environment. Therefore, decisions about internal organizational arrangements are not part of a strategy, such as salary policy, information system, training projects, etc. they are important decisions that are used to support and promote strategy, but not strategy itself.

If anything important is thrown into the basket of strategy, the crucial concept of strategy will become worthless.

The most important thing in strategic thinking is to achieve the integration and strengthening of organic elements among all the elements contained in the strategy.

As shown in Figure 2, a complete strategy should contain five elements:

The most basic decision of strategists is: what business should be done?

This is similar to what Peter Deruk put forward decades ago, "what kind of business should we enter?"

But the answer should not be general. For example, "we want to be an industry leader in the field of information consultation" is only a vision or a goal, not a strategy.

Enterprises should have a clear domain definition, and the most important thing is to describe the product categories, market segments, geographical areas, core technologies and value-added links of value chain, such as product design, manufacturing, sales, service, distribution, and so on.

After careful consideration, a biotechnology company combed and refined its field: the company developed T cell receptor technology for the diagnosis and treatment of a specific type of cancer product; controlled all R & D and industrialization links, but outsourced manufacturing and major clinical testing processes; and targeted the United States and major European markets as target markets.

The field chosen by the company is highly specific, and products and markets are even refined to specific names.

There are also enterprises in industries with a wide range of product lines, market segments and geographical regions. The strategy should focus on the level and keywords of selected fields, such as "high-end fashion goods for women" and "GDP per capita of more than 5000 dollars".

For example, some market segments are very important and others can be ranked second.

A strategy should focus on one product type reasonably, and the importance of other products, such as products offered for market defensive purposes, is obvious.

Only through careful selection can the company get a place in a specific product category, market segment, geographical area or value added link.

If you decide to expand the product line, then do you rely on internal research and development, or joint ventures or mergers and acquisitions?

If the plan is to expand in the international market, will it take new investment, local acquisition, concession or joint venture?

Biotech companies in the foregoing rely on joint ventures to enter the European market, and add some products to supplement their existing diagnostic product lines through a series of tactical acquisitions.

The way to help an enterprise enter the target field is very important. It should be the result of pre deliberation, rather than being summed up afterwards, or merely treated as operational details.

In a competitive environment, success results from differentiation.

For example, Gillette uses its proprietary products and processing technology to expand high-end razor business, and highlights its differentiation through distinctive and constantly enhanced brand image publicity.

Sometimes an organic combination of a series of differentiated elements helps companies form a huge competitive advantage, which is the "Honda philosophy" in the automotive industry.

Many cars are better than Honda, and some cars are cheaper than Honda. But many buyers think Honda has the highest cost performance, which is Honda's continuous efforts to establish and strengthen strategic positioning.

In addition to those deliberately differentiated elements, such as image, customization, price, product style, after-sales service and so on, for strategist, the most important thing is to identify forward-looking, thoughtful and differentiated elements.

And ensure that these key elements help to improve the value of the company in the target area.

Although there are no universally applicable rules in business strategy, strategists must make a judgement about them.

For example, a printing equipment company decided to expand its product line and expand its business in the international market. The high level decided to add new products in the first stage, because the core distributors of the company to expand the international market could not be in the existing narrow ones.