We often hear the term strategy but everyone has a different definition of what it is. Any good strategy is there to guide decision makers within an organization to make choices about what to do (e.g. should we invest in a new market?) and about what NOT to do. For example, if an investment company chooses to strictly focus on investors that are not self-investors, logically, top marketers should not be offering self-investing tools on its websites. Once a company has chosen a strategy, it should qualify good ideas by answering the question, Does this fit with our strategy? Without a strategy, any idea is a good one.
Strategies force organizations to position their business by occupying, in a sustainable way, a unique spot in a given market. I used the term “position” intentionally although I suspect some of you may read “differentiate” instead. They are similar terms with different meanings. Differentiation alone is not a strategy. A new product mix (4Ps: Promotion, place, price, and product) is also not a strategy.
There are several strategy models and a popular one is Michael Porter’s model. It includes three (3) main strategies: cost, differentiation, and niche. According to him, for a strategy to be a “strategy”, the value chain of an organization (some parts or all of it) must be impacted. For example, an airline that chooses to reduce expenses by no longer offering free meals is an example of a cost reduction strategy since it will affect its supply chain (Airplanes will no longer need to be filled up with meals). Repainting walls or introducing a new color scheme to offer a relaxing ambiance on a website is not a new strategy.
A strategy involves multiple activities and people. It is based on products, consumers, and accessibility. It could involve new or existing products, new or existing consumers, and accessibility of a service or product. Last but not least, to maintain a competitive advantage, a strategy must be hard to copy. The openness of the Web and the speed at which it evolves has made this criterion even more difficult to meet.
What makes up a strategy? Find out in my next article.
Post by Yves Rannou, Jun 2nd
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
Hi Allen. Thanks for the nice comment and hope to hear from you again soon. This is only the beginning of a long discussion on this topic. Yves Rannou