Michael Porter has long been recognized a leader in Strategic Planning , particularly from the lens of the marketplace and marketplace competition. His work on The Five Competitive Forces that Shape Strategy is viewed as seminal. A recent book by Joan Magretta; Understanding Michael Porter, provides a useful interpretation of his work and the influence he has had on strategy development.
A foundational tenet that resonates for us in the development and implementation of Strategic Planning Models is role strategic competition plays. According to Porter, strategic competition means choosing a path different from others. Instead of competing to be the best companies can and should compete to be unique. It is about truly leveraging the value you create and how it differentiates you from the competition. The focus is on creating superior value for the customer rather than matching or imitating rivals. This means innovation. Competing to be unique can mean meeting different customer needs, or serving different customers.
What we find exciting is the idea that uniqueness and differentiated value can allow a company to be less-dependant upon competing on price, which erodes profitability.
5 Activities that define what makes you unique.
Here are five activities that strategic planning teams can engage in as part of the planning process that will assist in defining value and uniqueness.
Understand your Customer
Companies would not exist without a customer to serve. Key elements to be understood are; who are your customers and how would you define them in terms of need and what constitutes value to them. Often this can be quantified and described in economic terms. Non-economic factors should also be considered (e.g. the social and emotional factors such as the environment and technological advancements).
Understand your Industry
Understanding the focus and scope of your industry is important. Analysis here should focus around; what drives profitability, where the greatest need and opportunity are, and how the industry fits into the overall economic, political, social, and technological environment.
Know your Competition
This means being able to define your competition in terms of their relative position in the marketplace, their business model and how they would define their strategic competitive advantage. Being clear about their value proposition will support your company’s definition of differentiated value.
Define your Competitive Advantage
Competitive advantage is about superior performance. To have a real competitive advantage means that in the delivery of your products and services, when compared to your rivals, you operate at lower cost (use all your resources effectively), command a premium price (because of your unique value), or do both.
What is your competitive advantage? How would you define it?
Clearly Define What Makes You Unique
This is about being clear about what makes you extraordinary in the eyes of the customer that they would be prepared to pay a relatively higher price for. It needs to support the organizations profitability.
How would you define what truly makes you unique to your customers in ways where they would always choose you over the competition, and be prepared to pay more?
With answers to these questions it becomes easier to set the right strategic goals. Remember; flawed goals can lead to bad decisions. With the right goals in place and a clear understanding of how performance is measured against them, better results and higher profitability can be achieved.
What is your approach to defining what makes you unique?
What is your unique value?
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About Dave Hoy
Dave’s first career was as a highly successful national champion college basketball coach. He shifted careers to work in organizational development and over the past 20 years has brought his passion and experience in leadership and facilitation to dozens of organizations supporting; individuals, teams and entire organizations achieve high levels of performance and extraordinary results. Dave holds a M.A from the University of Alberta, an MBA in Human Resources from Royal Roads University and is an ICF Certified Executive Coach.