In our last article, we started the discussion about business strategy and action. We spoke about all the pieces of the puzzle that when being together correctly and quickly, would lead us to success; and how and why we could refer to this process as Digital Business Strategy in action.
Now, we will speak about the tools used to evaluate the competitive position of a business, and supply data sources to apply these tools to your digital business; then, we’ll use these tools to identify a product or service that will enable your digital business to deliver a quantum value leap to customers.
Part of the process is to explore and understand the framework for articulating your strategy.
Let’s start by answering two simple questions:
1. What is strategy?
2. How can you differentiate a good strategy from a bad one?
Strategy is a choice, more specifically, strategy is a bundle of internally consistent choices about where a company competes and how it will win in that arena. More specifically, a strategy contains a leader’s choices regarding specific questions such as:
· Which products should we sell, and what should our prices be?
· Which groups of customers should we seek to sell our products?
· In which geographic areas should we operate?
· How should we conduct key business activities such as distribution, product development, purchasing, manufacturing, human resource management, and sales and service?
· Why should customers buy our product over competitors’?
· How will we implement our strategy?
· How will we make money?
A good strategy yields rapid market share gains and enables a company to maintain its market share despite the onslaught of challengers. Almost inevitable, this measurable outcome of a good strategy brings the next question into our brains: Why do some strategies yield market share gains and most do not?
Here are some general principles of effective strategies:
1. The most effective strategies are customer-focused; that is, they seek to make life better for customers and they assume that regardless of how happy a customer may be with your product now, he or she will always be expecting something better. To gain market share, a company must offer customers a better bundle of benefits for the money (What is usually called value) than competitors do.
2. To deliver this better value, a superior execution is a must.
3. Such execution requires performing individual business activities well and coordinating those activities so that customers give your company a very high net promoter score (How likely is that your customers recommend you to others).
4. Finally, a good strategy keeps changing, so that a company is always ahead of evolving customer needs, new technologies, and an increasingly difficult competitive environment.
We already stated that to rapidly recovery revenue and to increase your odds of success, you should brainstorm many ideas. Then, create a list and rank them. Next step is to examine how viable they are.
To determine viability, describe your new proposed product or service in clear terms, look around you (In your market, within your current customers and prospects, within the customer segments you would like to attack) and try to answer the next questions:
· Do they already purchase this kind of product or have this kind of service?
· If so, which vendors did they consider?
· What factors (Such as price, quality, selection, etc.) did they consider when trying to pick the “winning” vendor?
· How did they rate the candidate vendors on the different factors?
· Why did the winner win?
· Do you have any unmet needs that vendors are not currently satisfying?
If you can, go beyond! and more than figuring out the answers by yourself, interview some customers. Validate whether the results of the interview match with your answers.
Then, determine whether there is an opportunity for your company to offer potential customers more value than competitors.
Analyze your company’s strengths and weaknesses to determine whether a real opportunity exists. If your analysis of potential customers reveals an opportunity for your company, you should next assess how well you perform critical activities compared to a leading competitor.
If you followed the whole process, then by now you should have a very good idea of what new products or services can be part of your winning digital business strategy that will help you to recover revenue rapidly.
RECOMMENDED TOOLS TO IDENTIFY WHAT PRODUCTS OR SERVICES SHOULD BE PART OF YOUR DIGITAL BUSINESS STRATEGY:
1. Market Opportunity Discovery.
2. Attractiveness matrix.
3. Agile Focus Roadmap.
4. SWOT Analysis.
5. Blue Ocean Shift Toolkit.
6. Strategy Development and Execution.
7. Strategy Execution Accelerators.
8. Does your strategy provide a Competitive Advantage?
9. Is your Strategic Management simple?
10. Business Model Building Blocks.
