Business strategy is about growth not buzzwords

“A company without a strategy is willing to try anything.”

- Michael Porter

Strategy – what it is and what it isn’t

For a while I worked at a large, multi-state corporation that used the word “strategy” more often than I have pairs of socks. There were committees with “strategy” in their name. There were reorganization efforts named “strategic” something or other. Leadership would often ask their teams and individuals what their “strategy” for a project was.

But that corporation had no discernable business strategy creating differentiation from competitors to win new business. Maybe that was why they were struggling to succeed financially.

Business strategy is not a plan, a workflow, a process, or a reorganization effort. As Amy Edmondson clearly articulates, a strategy is a hypothesis. This is scary for many business leaders because by definition it means the outcome is uncertain. It requires tracking early metrics and adjusting course as feedback is collected, fine tuning the original hypothesis. It also requires leaders to be in close dialog with staff in positions to gather direct feedback from the market – both positive and negative – and then take action as needed.

Internally clear-eyed and externally aware

Much has been written by very smart people on the topic of business strategy. For most businesses looking to succeed there are basically four potential paths to follow. Selecting the correct path requires a deep understanding of competitors and buyers in the market, as well as honest introspection and clarity about the internal resources the company can bring to bear. Trying to follow more than one strategic path runs the risk of creating confusion internally for operations and externally in the market place.

Offering something new

Inventing a new product, technology or intellectual property (IP) empowers a company to stake out new market sectors and peel customers away from incumbents. This is a powerful strategy for those that own unique IP, technology or knowledge no other competitor has. This is not offering a strong brand, or greater convenience or lower costs. Those are all merely improvements to the user experience.

Example: the introduction of the Apple iPod in 2001 offering substantially more storage capacity and smaller size than any other product

Shifting the existing business model

Shifting how consumers pay for products or services can create differentiation and become a strong business strategy. This shift often eliminates or minimizes inconvenient and inefficient tasks required of buyers to complete a purchase. It may also be a payment model that incentivizes consumer loyalty and repeat purchases.

Example: the launch of Costco (then Price Club) in 1976 offering discount prices to members in exchange for collecting a membership fee

Reacting to new and emerging opportunities

It is easy to jump to new technologies when thinking about this type of strategy, but equally important are shifts in market expectations and availability of new consumer cohorts in existing markets. Companies that track market demographic trends and shifting consumer behaviors can leverage insights gleaned to launch new products and services to leverage those shifts.

Example: the $15B invested in digital health companies by venture capital in 2022 post-pandemic enabled by new consumer openness to digital healthcare delivery

Building on what you already do

Many established companies have developed operational expertise within their organization, often considered “just something we do every day” that is actually fairly unique and valuable. The opportunity is in asking how to monetize and productize that expertise. Offering that expertise to another businesses can be low hanging fruit, helping to diversify the revenue stream.

Example: Providence Health and Services launched Ayin Health Solutions, selling their existing care management, pharmacy benefit management, and data analytics services to smaller health insurance companies and provider groups who lacked the internal resources to deliver those functions with equal sophistication.

What does this all mean?

Crafting, test driving and refining a business strategy hypothesis is the key to sustainable growth. But it is critical to adopt the type of strategy that fits your core business competencies and resources. It the company doesn’t own intellectual property, trying the “offer something new” path will fail. Conversely, a new start-up is not likely to succeed adopting the “building on what you already do” strategy.

Pick the appropriate path, iterate continuously based on market feedback, and don’t land in the trap of just “trying anything.”

Copywrite 2itive

20242itive is a Portland based consultancy founded by Erik Goodfriend, offering a unique combination of market intelligence, knowledge of healthcare payment systems and creative business strategy insights. Feel free to contact us at info@2itive.com