Strategy could possibly be the most over-used word in business. We attend off-site meetings called strategic planning retreats moderated by $5000-day consultants. CEOs buy books on strategy in the thousands each year. Yet, do you have a definition of strategy in a business context?
The author of Islands of Profit in a Sea of Red Ink does not give a direct definition of strategy in Chapter 4, but he does address the three pillars of strategy:
- it’s all about customer value
- it’s defined by what you say ‘no’ to
- you have to be the best at something
Regarding customer value:
The starting point in strategy development must be the creation of value for customers by deeply understanding their real underlying business needs and developing innovative ways to meet them.Byrnes, Jonathan L. S.. Islands of Profit in a Sea of Red Ink: Why 40 Percent of Your Business Is Unprofitable and How to Fix It (p. 39). Penguin Group. Kindle Edition.
On saying no:
The reason strategy is so important is that it enables a company’s management team to do two things extremely well: (1) focus the company on a “sweet spot” in the market, and (2) align all the functional areas of the company to reach and own that part of the market.Byrnes, Jonathan L. S.. Islands of Profit in a Sea of Red Ink: Why 40 Percent of Your Business Is Unprofitable and How to Fix It (p. 40). Penguin Group. Kindle Edition.
Jonathan Byrnes goes on to say that it’s impossible for a business to achieve focus and alignment when a company tries to be everything to everyone. He’s so right.
On being the best at something:
Companies that fall into the trap of trying to be everything to everyone almost by definition cannot be best at something.Byrnes, Jonathan L. S.. Islands of Profit in a Sea of Red Ink: Why 40 Percent of Your Business Is Unprofitable and How to Fix It (p. 41). Penguin Group. Kindle Edition.
Last Thoughts on Strategy
Still stuck? Go back to the author’s first pillar. Focus on the customer. What do they want? What do they need? Is there a specific segment you want? How will you reach them? When you do, what will you say to them? If you capture them, how will you serve, keep, and grow them?
Start with the customer and the definition of strategy becomes easier.
Islands of Profit in a Sea of Red Ink
Publish Date: October 14, 2010
Goodreads Rating: 3.76 on 63 ratings