Do You Understand Your Company’s Strategic Landscape?

For many of us, the strategic planning process is akin to a “black hole.” Meetings occur, and at the end magic happens and a three-ring binder is crafted or, worse yet, a plan is never formalized and stays in someone’s head. The most successful second-stage companies fully understand the value of strategic planning and appreciate that it is an iterative discovery process with inputs, outputs and deliverables.

The best-designed strategic planning processes start with a data-driven analysis of what’s happening outside of your organization. The data can then be used to begin to formulate your organization’s preliminary growth platforms. There are five critical areas of focus:

1. Market Dynamics: One can easily get lost in a “forest vs. the tree” scenario if not careful. The most critical areas to focus on are collecting data that can impact the performance of your organization, such as inflation rates, energy costs and unemployment rates. Understand the cause-and-effect variables that can help you determine market segmentation. For example, if inflation increases X percent, revenues decrease Y percent. You typically want to focus on the largest markets with the highest growth rates and largest profitability.

2. White Space or Blue Ocean: The best place to “play” is in uncontested market space where you are the first to identify an unmet need. Think of Cirque du Soleil, which combined traditional circus with Broadway theatrics to command a premium price point that appeals to a much a larger audience, from children to retirees. Cirque has flourished after finding “blue ocean” while most of the traditional circuses are now defunct.

3. Competitors: The more data you have on competitors, the better you can differentiate and dominate. Although it’s more difficult with privately held companies, data can be collected from sources ranging from third-party data aggregators and public domain to industry and trade groups. For every competitor, you should minimally understand the company’s business strategy, market segments, distribution/sales channels, pricing, product/service offerings, cost structure compared to yours and sources of competitive advantage.

4. Customers: How well do you understand your customers’ desired product/service attributes? Do you know which customers are most and least profitable? Most importantly, what are their unmet needs? Can you answer the following questions?

• Which customers are most strategic?

• Which customers do you work with that you know you will never satisfy?

• Do you understand why customers stop doing business with you?

5. Disruptive Technologies/Substitute Products: A disruptive technology is one that can make your product or service obsolete. Kodak didn’t understand that photo paper was about to become past tense, and Blockbuster Video didn’t grasp that streaming technology was the future. An example of a substitute product is using Splenda instead of sugar or using composites instead of steel. The net effect is that substitutes greatly diminish demand for your offering.

Key Success Factor

The first key outgrowth of an environmental scan is the identification of factors that detail the areas of performance your organization must excel at to dominate the markets you compete in. Illustrated on page 50 is one of the proprietary tools we use with clients to identify and rank factors and determine how a client compares to the industry leaders.

Opportunities/Threats

All of the data collected needs to be synthesized one last time to: 1) identify and prioritize trends and their implications on your organization, 2) prioritize opportunities and threats, and 3) begin to develop a preliminary list of growth platforms and business strategies.

Taking the time to collect the data and using that data to inform your decision-making is the secret sauce that separates “A companies” from the rest of the pack.

About the author

Ronald J. Recardo

Ronald J. Recardo

Ronald J. Recardo is the managing partner of The Catalyst Consulting Group LLC. He can be reached at rrecardo@catalystconsultinggroup.org.

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