Every year there are thousands of articles and blog posts published about strategy. Amazon lists more than a hundred thousand books on the subject. Maybe we’re overdoing it.
Strategy is really pretty simple Start with the answers to two basic questions.
Here’s the first question. “What will set us apart?” Another way to ask this one is: “What will we be known for?”
Wal-Mart is known for low everyday prices. Amazon is known for a huge selection and good prices. Atkins and Pearce is known as a great American manufacturer of specialty textiles.
Now, here’s the second question: “How will we make money?” Without answering this question you may have a wonderful idea, but you aren’t likely to have a successful business.
Wal-Mart makes money by offering those everyday low prices. They make a profit through savvy purchasing and a religious devotion to eliminating costs.
Amazon offers selection and good prices by using technology to streamline operations and improve the shopping experience. And Amazon also leverages its technology by selling technology and logistics services.
Atkins and Pearce invests in research and development so they can continue to meet the needs of their customers. And they cultivate a stable and productive workforce, so they can deliver on what R & D promises.
You’re not done when you answer those two key questions. You need to simplify your explanation so anyone can understand it.
That takes work. You have to keep trying it in new ways until it’s crystal clear.
A clear and simple strategy is easy to implement. It helps you make choices about what to do. It tells the people who work for you what’s important. It helps concentrate effort, expense, and innovation on the right things.
Then you put it in practice. And you stick with it, unless you need to change.
Sticking with a strategy that’s working is a key to long term competitive advantage and profitability. You get good at what you do. Your customers learn what to expect. And the people who work for you hone their skills and share their ideas.
That’s what we learned writing Ruthless Focus. You need a simple strategy that defines your business clearly. And you need to stick with that strategy until it quits working.
This isn’t rocket science. It isn’t even sophisticated theory. But it is what companies who have been profitable for a long time do to stay that way.
Ruthless Focus: how to use key core strategies to grow your business has many examples of how companies have used simple core strategies to create long term success.
