How to address the untapped potential in business strategies
What if internal concerns didn’t overtake customer and market focus?
Market-driven companies are 31 percent more profitable than those driven by other factors, according to George S. Day, professor at Wharton School of Business. Why? Market-driven companies know their market and customers, develop products and services that other companies and/or consumers want to buy and continuously improve the customer experience along all journeys. (Please note that we with market-driven include also market-driving.)
31 percent more profitable! And still a lot of companies are missing the customer and market content in their business strategies that needs to be there to be market-driven. Talk about untapped potential for a lot of companies when it comes to profitable growth, even if all companies with turn-over do something right as customers buy from them.
Market-driven means market potential and customer benefits are the first and most important consideration for your business. You listen to internal sources but foremost you listen to the market to identify spoken and unspoken unmet customer needs also when you define the business strategy. What does that mean?
On one hand, the business strategy reveals market spaces where you are dedicated to win. When defining these spaces, you look at categories (core and adjacent), geographies etc and you look at market size and CAGR (Compound Annual Growth Rate) to find where significant business value can be found. But you identify also spaces you should defend or redraw from.
On the other hand, your business strategy includes “strategic value propositions” (broader customer benefit areas) rooted in the key needs of your target customer/consumer and your current and emerging capabilities where you can deliver a competitive advantage. They are also inspired by trends and shifts in for instance technology and people behaviour.
It is with the “strategic value propositions” that you defend and/or win market spaces.
There are many reasons why business strategy implementations fail which are covered in endless of articles (popular subject!). From our own desktop research, we have found that the most common reasons that are highlighted are:
Too many goals and initiatives
Unrealistic objectives
Too much focus on organizational changes
Unclear accountability
Lack of alignment
Day-to-day business consume all time
Lack of clarity on actions required
Inconsistence in how to follow-up progress
We guess we can all agree on these reasons but what is striking is that lack of customer and market focus is not highlighted. We know, from first-hand experience, that when customers are in the centre of an organisation's way of working, internal silos are broken, and insight-based priorities, decisions and actions are made. From strategy to execution.
Finally, we recommend that you do a little test. Please review your company’s business strategy (why not the traditional one-pager) and see if you can answer following 4 questions:
Who is our target customer?
What benefits are they looking for?
What is our competitive advantage?
Which market spaces do we have to win?
If you can’t answer one or more of these questions, there is a job to be done.
/ Joachim Rask
