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All the Right Keys


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How to go to Market Ahead of your Competitors
with Superior Business Strategies

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All the Right Keys

  1. 1. 01280 844966 Page 2The New Strategic ManagementAll The Right KeysHow to go to Market Ahead of your Competitorswith Superior Business StrategiesbyAndrew Pearson MBACoaching
  2. 2. 01280 844966 Page 3CONTENTSThe Purpose of this Book 5Positioning is neither vague nor academic, it’s about delivering what the 7customer values, to get the results you wantMake productivity part of your business strategy 13How to withstand external disorder and maintain momentum! 18Bringing it all together 25Further Support and about the author 26The New Strategic ManagementAll The Right KeysA Guide to Going to Market BetterEquipped Than Your Competitors
  3. 3. 01280 844966 Page 4All The Right Keys© Copyright 2009 Andrew M. PearsonALL RIGHTS RESERVED. No part of this report may be reproduced or transmitted inany form whatsoever, electronic, or mechanical, including photocopying, recording, or byany informational storage or retrieval system without express written, dated and signedpermission from the author.DISCLAIMER AND/OR LEGAL NOTICES: The information presented hereinrepresents the view of the author as of the date of publication. Because of the rate with whichconditions change, the author reserves the right to alter and update his opinion based on thenew conditions. The report is for informational purposes only. Whilst every attempt has beenmade to verify the information provided in this report, neither the author nor hisaffiliates/partners assume any responsibility for errors, inaccuracies or omissions.
  4. 4. 01280 844966 Page 5THE PURPOSE OF THIS BOOKThe right actions to release cash into the business - How to immunise your companyagainst future such crisis – How to build a stronger businessMany of my friends from industry have asked for my opinion on the economic crisis and itsimpact on business. My answer to them is that the real problem is that companies simply donot internalise the proper actions to take in order to respond to such a situation.Managers over the years have invested so much time and money to improve their operationsto create a solid platform for business. Now, in the midst of a dramatic change in marketconditions we see that many have become afraid of the future.This means that these same managers, with all their investments and all their efforts to buildup the strengths of their businesses, have not really succeeded in improving their companiessuch that any external change will not have a devastating effect on them.And yes, I see actions all around me like cutting expenses, freezing investments, releasingpeople and so forth because they are afraid that sales will fall.My opinion is that if a company wants to, it can move through this time, without sufferingawful consequences, simply by turning the opportunity of having to something into prudentaction. If they take the right steps then I think companies can come out of the crisis muchstronger than when they entered it.The impression that cost cutting in an organisation is the single means of releasing cash forcontinued operations negates more creative alternatives and only imposes pressure, createstension, and jeopardizes human relationships in organisations.Moreover, we have deluded ourselves about the process of improvement and the time it takesbefore we see real results. If you take the right actions the time it takes to release a lot of cashis not years, nor months. This is simply not the case. In most situations its weeks and, what’smore, these actions will not compromise the future of the business. They will build thefuture.But even if you adopt these measures, it has to be understood that the real message of thiscrisis is how it has impacted companies that seemingly appeared impregnable.What I want to show you is that if you take the right actions you will immunise yourcompany against future such crisis and build a stronger business.Moving from Survival to Greater StrengthAt a time of extreme and exaggerated gloom about the British and global economy, whencurrent news flows overlook strenuous and aggressive efforts on a global scale are being
  5. 5. 01280 844966 Page 6taken to counter the severity of recession this book shows how, even in the mostunpromising circumstances, good management can turn a struggling business into aMARKET LEADERAbove all the message in this book is an OPTIMISTIC one. The survival and prosperity ofcompanies is in the hands of their managers. Instead of urging the government to ‘dosomething’, managers would do well to act on the strategies contained in this book.It is designed to be an easy read and a concise overview of a subject of considerableimportance to managers responsible for the survival and development of their businesses inTODAY’S tough times and TOMORROW’S NEW DOMAINES.The responses and insights revealed in each of the FOUR PRINCIPLE ELEMENTS of thisbook contain the ACTION POINTS to enable you to take the right steps to come out of thiscurrent crisis much stronger than when your company went into it.The comments and questions that appear at the end of the book provide the basis forassessing your responses to each action point and means to act on them.The basic premise is that superior business is about exploiting four mutually reinforcingstrategies very effectively. They are:1. Maintain a window on the future2. Position to offer customers superior value3. Make productivity part of your business strategy4. Preserve business momentumWhat I want to show you is how, when taken together, these four strategies, whenimplemented effectively, will immunise your business against external pressures and enableit to take advantage of an improving financial climate and evolving opportunities.
  6. 6. 01280 844966 Page 7POSITIONING IS NEITHER VAGUE NOR ACADEMIC, IT’SABOUT DELIVERING WHAT THE CUSTOMER VALUES,TO GET THE RESULTS YOU WANTThe wise old words of an advertising manThe word positioning always prompts me to think of David Ogilvy, one of the greatadvertising men of all time. He said that positioning is about “what you do for whom youwant to do it!” Get this right and you have the basis of a proposition - the driver of a mutuallybeneficial relationship with your customers.A proposition is simply the sum of a company’s answers to three questions: WHO should Itarget as customers? WHAT products or services should I offer them to meet theirrequirements? And HOW should I do this? This is as equally as important as the first twoquestions because it is this that’ll gives your proposition sustainability. But more on this laterSuffice to say at this point that positioning is all about making tough choices in these threedimensions, and a business will be successful if it chooses a sustainable and distinctiveposition – that is, a position which combines superior value for customers and is differentfrom each of its competitorsLet’s concentrate on the first two elements of positioning; the proposition.Managing customer spendIf a proposition has a good blend of quality, value and service, then this will benefitconsumers emotionally through the delight they experience from their purchase, and in turnyour business will benefit financially from greater customer loyalty.Finding the right blend of quality, value and service is key to attracting customer spend. Incurrent times many businesses are introducing rapid promotional price-cutting as a meansof encouraging greater consumer spend, but ultimately if all businesses start to follow thispath then their propositions will become too similar and differentiation will be lost.Moreover, it seems pretty clear that the more discounts customers are exposed to, the moretheir spending behaviours follow this path and the less likely they become to purchasingproducts at full price.It’s also worth pointing out that a business will struggle to change its proposition to combattough times. For example it will be mighty difficult for an electrical retailer to diversify intogrocery overnight purely to combat tough times. While Tesco’s diversification into clothing,
  7. 7. 01280 844966 Page 8home entertainment and insurance proves that it can be done, this sort of decision requiresplanning and careful implementation.Yes business leaders should always be looking to increase market penetration and identifyand meet new needs (or indeed create new ones), but the core proposition will nearly alwaysremain the same. And I’ll put it to you that changes in WHO and WHAT are much inevidence.NETTO and Lidl’s attempt to capture price sensitive consumers with a basic product offeringis a case in point. Tesco’s ‘Britain’s Biggest Discounter’ strategy was a magnificent attempt tocounter the discounters’ inroads into their turnover.As the maker of Harpic, Dettol and Finnish dishwasher products Reckitt and Benckiser has areputation for cleaning up in the household goods market. In the year to February 2009 itachieved a revenue increase of 22% to £6.5 billion against a 26% fall in the FTSE!Holding the No 1 and No 2 positions in most of its product categories, Benckiser hascontinued to attract shoppers that prefer the reliability of premium branded goods duringhard times rather than cheaper private labels to its premium brands despite a worseningeconomy.Positioning is about choosing between cost or value - not bothNotice the difference between the two propositions? The one concentrates on cost and theother on value - or differentiation.You can choose one or the other, but not both, to operate with depending on the breadth ofcompetition. Let’s look at this a little further.There are three sources of positioning:1. Product positioning is based on what is economically right to produce in a given set ofcircumstances. For example, Xojet specialises in short-haul, ‘high value’, premium pricedservice for corporate business travellers, in the USA. Thus customers go to Xojet forprivate jet travel, customised on board services, on-time departure, and multiple aircraftfor clients on a single day.2. Needs positioning is based on all or most of the needs of a group of customers. IKEAmanufactures to fulfil all the home-furnishing needs of its customers, not just a singleniche3. Access-based positioning is based on proximity to customers. Tesco now operatessmall town stores as well as large stores. Thus, both rural and urban customers can be
  8. 8. 01280 844966 Page 9served by smaller, standardised formats, rather than large stores, but still benefit fromTesco’s purchasing power, lower rental costs and pay.Consequently, positioning is not purely about creating superior value; it’s also aboutoperating in either a single segment or a number of segments with least cost ordifferentiation strategies.As we have seen, Xojet serves a single highly priced segment and by contrast easyJet foundopportunities to serve underpriced segments that are broadly served by larger competitors.Waitrose as well as Marks and Spencer exploit high priced food segments and conversely, alarger, more broadly focused competitor, such as Tesco, serves a larger array of customergroups with a wider range of products.Sustainable - and competitive - positioningWhichever, positioning strategy you choose, you’ll need to find a way of achieving asustainable proposition of value!And this takes us to the issue of HOW! Remember I said that a proposition - positioning isconcerned with WHO and WHAT. It is also concerned with HOW for it is this that givesyour proposition longevity and - or sustainable differentiation or least cost. Superficialdifferentiation of products or services that are effectively identical is not sustainable.Consider Direct Line and pioneers like them, and you’ll see what I mean.Direct Line achieved incredible success when it led the way in telephone-based insuranceselling. It transformed the way insurance was sold, drastically reducing policy prices. For amoment, competitors were stunned and lost market share, but they soon recovered as they,too, introduced telephone selling systems.But notice how Direct Line skilfully position their policies consumer needs; cars, trucks,household and health insurance.The issue, then, is not only to seek positions in which superior value can be offered tocustomers but also to find defensible and, therefore, sustainable means to remain ahead ofcompetitors. This can be achieved by performing activities differently or byperforming different activities to those of our competitors.So what can be done to exploit positions in which to offer superior value to customers andobtain real and sustainable differences which matter to customers? The answer lies in acompany’s operations. In other words if business strategy is about being different, then the
  9. 9. 01280 844966 Page 10essence of positioning is to select and perform activities differently, or to performdifferent activities to those of competitors.Approaching sustainable competitive differentiation in this way is also dependent on twofurther conditions. First, competitors cannot imitate or equal a company’s positioning withtheir current operations. Second, the activities needed to support the position shouldactually fit to each other and to the company’s capabilitiesThis means that for a strategy to be superior, it needs to reflect what the business does best –not what its competitors can do just as well.This means that, in attempting to imitate a company’s strategic position, any rival will beforced to replicate not only the company’s key activities, but also the way it carries them out.In other words, the activity system itself!This is not easy because it is much harder for a rival to replicate an array of interlocking andreinforcing systems than it is to copy a product and match a process technology. Forexample, easyJet’s strategic positioning, as a short-haul, ‘no-frills’, low-cost service forbusiness travellers, tourists and students in Europe, rests on an interlocking system of theactivities it performs to support its low-cost convenience positioning. These include fast gateturnarounds, frequent departures with few aircraft, automated ticketing, self seat selection,meals at cost price, and low maintenance and fuel costs.In contrast, a full-service airline, such as BA or Quantas, performs activities to support ahigh-cost, full-service programme. It will provide customers with services to reach anynumber of destinations with a larger range of aircraft, as well as providing comfort, offeringin-flight meals, arranging connecting flights, and checking and transferring baggage.Both types of airline operate viable and valuable strategic positions that are built on entirelydifferent systems of interlocking activities.A differentiating STRENGTH or distinctive competenceA great or unique strategic position is also grounded in a sizeable and significant strength, infact what your company is really good at doing. This forte is referred to as a company’smain strength or – strategic asset.A strategic asset may be described as a process or capability that will allow a business tocreate and exploit a breakthrough strategy, because it is rare, difficult for competitors toemulate, provides outstanding benefits to customers and can be leveraged into other markets– faster than its rivals.
  10. 10. 01280 844966 Page 11What are these companies good at doing?Ask yourself who is it that is really good at making long life batteries (Duracell), assemblingcomputers (Dell), marketing sports shoes (Nike) small electric motors (Black and Decker),fast affordable fashion (Zara), an exclusive and popular drink (Coca Cola) and innovation(Apple). At the end of the day it’s these core skills or processes – or strategic assets - that giverise to the reasons why people buy from their chosen suppliers.Don’t get me wrong you could achieve success in the absence of a core skill or process but itwill be a lot harder to attain. At best you would be profitable but you wouldn’t be taking fulladvantage of something others are unable to emulate.The importance of the question: ‘what are we good at doing?’ can’t be overestimated. Forwhat your business does well is what creates the value your customers really appreciate anddifferentiates your business.With this in mind it follows that if you concentrate on activities and capabilities that leverageyour strategic asset – or key strength - you will acquire serious advantages particularly if youcontinually develop and build on your distinctive competence.Do we have a value proposition?If you have a good idea about your companies competitive positioning the question remains:“Do we have something that articulates the value we can offer our customers?” In otherwords do you have a proposition for your customers?You might answer the question with an emphatic “YES!”, and if this is so, try jotting it down.If you don’t know what makes your offer more attractive to your selected customer groupsthan other offers, then you don’t have a unique strategic position.For example, the written value propositions of the following three businesses describe thepositions they aim to take in their customers’ minds.• ‘The Internet in your back pocket’ – Apple iPhone• ‘Still red hot’ – after 25 years in business, Virgin Atlantic Airways• ‘Fast and affordable fashion – Zara• ‘Every little helps’ - Tesco.The issue is to take such propositions to targeted customers and find out whether or notthose customers believe them and whether they stand out from those of the competition.
  11. 11. 01280 844966 Page 12Some last thoughts on the subjectAt the end of the day a good product is one that a customer really wants and that yourcompany has an advantage in offering. Actually it’s the combination of these two factors thatallows you to earn an attractive profitDifferent companies have different competencies. Your task is to identify products that willallow you to maximise the impact or your unique capabilities and competencies relative toyour competitors.
  12. 12. 01280 844966 Page 13MAKE PRODUCTIVITY PART OF YOUR BUSINESSSTRATEGYThe pivotal role of productivity in strategyProductivity is popular currency now alright. People are talking about it as an alternativemethodology to underpin success in changing times. Few though have grasped its pivotalrole in business strategy.Only the other day I read of Reckitt and Benickiser’s intense focus on productivity through aprogramme called ‘Extrim’.Productivity is ongoing. It is about getting the most from your human resources. It’s aboutnot under-spending or over-spending, but having just the right amount of people, workinghard, to achieve, and even surpass, sales targets.Productivity methodology protects and helps grow ‘revenue’, due to focus on continualservice improvement and customer delight. Price is currently an important factor for buyersbut is it the only important factor? Absolutely not! It’s now what customers expect so it isn’ta very persuasive tool, is it?Customers expect better service and gratitude in return for spend and you must not losesight of this. However, in some cases an INCREASE in labour spend might make all thedifference. So for ‘big ticket’ items, more service should lead to better conversion and this isa way of protecting share when orders are down and conversion needs to increase.Irrespective of the domain you trade in and the micro-macro environmental storms that youweather - you need a continual productivity focus. WHY you ask? Simply to protectrevenue… and even possibly increase it when conditions are favourable and they suit yourcore proposition.This productivity focus includes regular gap analysis and review, and then generation ofmultiple labour models that enable a firm to quickly adapt to varying ‘storms’ that deluge thedomain you operate in, helping to ensure staffing levels will always be just right and arefirmly focused on maximising sales opportunities.In some cases it’s possible to increase sales whilst reducing labour costs, andthis is a very compelling reason for adopting a productivity methodologyregardless of the economic cycle stage.So if productivity is about getting the most from the right amount of people, working hard toachieve and even surpass sales targets what can you do to do this? Well take a look at this
  13. 13. 01280 844966 Page 14little list and let me know if you’ve thought of any of these possibilities – let alone apply themin your business.Reducing sales cycles and increasing conversionLet’s start with sales. You’d be surprised when I say that one major mobile network operatordiscovered that its customer facing staff was actually spending just 26% of its time withcustomers!That wasn’t too bad when you consider that the average is around 20%!!! Just think what anunderstanding of how much time your sales people actually spend on sales work - and howmuch isn’t! Combine this with an appreciation of your competitors’ sales cycle times andthink what you might achieve - potentially triple the amount (and quality) of customercontact work and conversion!The imperative for productivity methodology is therefore crucial.Establishing labour standards to budget betterA key step in productivity methodology is to review each process in the business so you canfine-tune it and take out unnecessary spend. You can do this by mapping and costing eachelement of a task so that you can produce labour models, showing the workload and budgetnecessary to give better service.Ramp this up to cover every major process and you get a ‘whole business perspective’. Whatyou achieve is the knowledge and therefore the satisfaction that everyone will do exactlywhat they are supposed to be do without adding time and cost to the simplest of tasks.Tesco is an obvious champion of a productivity methodology; their models enable them toget service right at the checkouts and this has been actively promoted as a differentiator, viatheir (“one in front”) ad campaigns.A large Co-op is an example of a convenience store retailer that didn’t have labour models inplace, and then when productivity measurement was performed and models introduced itwas able to increase sales and reduce costs at the same time.There is another reason why this sort of productivity data is important. Let’s say that youhave a labour model, complete with workload data, together with other criteria such ascapacity, budget and so forth, to achieve a given level of sales, you’ll have a clear picture oflabour needs whatever’s happening to demand in your market. In other words you’ll have asystem that will help you adapt to changes in demand brought about for whatever reason andeliminate labour budget.
  14. 14. 01280 844966 Page 15Exploit solutions in customer engagementNow let’s turn to customer service. It seems that in tough times customers’ intolerance topoor customer service sharpens. Buyers with hard pressed budgets - and even those withmore - expect to be treated well. Both categories expect an experience that matches theirdemands for value, diligence, gratitude and appreciation during the transaction.In contrast to other initiatives, i.e. short term discounts that offer short-lived businessadvantages, customer engagement-high service quality is a much more long-lasting asset tooperate with.But you ask “What constitutes effective customer engagement?” And “How do you identifywhat potential improvements should be made and how can you achieve?” And these are allgood questions.Many things combine to create good customer engagement. It depends on individual andprocedure issues that raise pose points concerning improvements, namely:• Are customers being satisfied? Are queries satisfied knowledgeably and quickly?• How is time being spent? Are people productive and efficient in terms of task times andin areas that add value to the customer experience?• What percentage of the labour budget do non-value adding tasks absorb? A veryimportant aspect as this, as I’ve shown you, can free-up labour to concentrate on moreproductive customer-facing tasks• How long do activities take, by process? For example sales cycle times for a producttype? Where process efficiencies can be made?• How does the business compare with its competitors? A business could be performingvery well against its own customer engagement performance metrics and yet failing incomparison with its competitors.What capacity does the business have to act on our service initiatives?Identifying and exploiting ‘quick wins’Finally, knowledge on how time is spent in the business, will give you opportunities toachieve some really compelling short-term ‘wins’. For example, if 20% of time is actuallyspent not working, typically between 7 to 9% of this can be taken out (if staff contracts allow)for cost savings, or you can reallocate it to more value-adding tasks to increase sales frombetter conversion, stock replenishment and so forth.Gains from effective outside advice and support!While productivity methodology is really advantageous, such improvements come from amethodical and systematic approach. This is something that could be done by specialist
  15. 15. 01280 844966 Page 16performance improvement companies. What you would expect would be a thorough reviewof current performance and help to roll out new more productive ways of working.One large food and drinks operation seeking operational improvements and savings used anexternal productivity consultancy identified a productivity improvement of some 27%. Allthe delivery processes and customer interface activities were measured; working practicesexamined and revised new methods implemented. The results of this assignment wereachieved within three months and impacted directly on the Company’s performance andtheir ability to win new business.If you decide to recruit outside, make sure your chosen partner has the necessary experience.This is vital as you need trained eyes to view issues and recommend improvements toprocesses. Also make sure your prospective experts have a track record in deliveringsolutions that show a return on investment on each productivity initiative.The character of productivity methodologyTypically such productivity methodology provides a combination of:1. Streamlined processes and accurate standard minute values2. Effective software to quickly model workloads and shift plans considering the processand measurement data obtained from (1).3. Specialist productivity knowledge and practical operations experience (experience isessential as you need trained eyes to view issues and recommend improvements toprocesses)4. Retailer’s unique guidance to reflect their environment, proposition, and cultureTypically this ‘productivity model’ translates £GBP budgets into a labour hours currency,that gets spent through a store-specific model to optimise service, maximise revenue, drivedown costs, and retain customers.Results from the productivity methodology – the impact of a productivity methodology inplace is huge for all the business stakeholders, in particular the Financial and OperationsDirectors – can you imagine how helpful it is to achieve the results below in changing times;• Less labour spend for the same productivity• Less labour spend for more productivity• More labour spend for more productivity• Same labour spend for more productivity
  16. 16. 01280 844966 Page 17The stage for productivity offers a platform for ingenuity far removed from the accountant’sscalpel. Those retailers that envision the strategic and tactical merits of output and yield willalways ensure that they are THE BEST THAT THEY CAN BE regardless of any dance ofexternal disorder!Using the baton of productivity and a fair measure of agility, a retailer will always achieve abalance between its business and customer service objectives. Anyone can get into thebudget and cut labour, but this only leads to a carnival of future troubles and a maze of lostservice and sales opportunities.
  17. 17. 01280 844966 Page 18HOW TO WITHSTAND EXTERNAL DISORDER ANDMAINTAIN MOMENTUM!It is a fact that managers and business owners over the years have invested heavily in effort,time and money to improve operations create a solid platform for business. Now, in themidst of a dramatic change in market conditions many have become afraid of the future.This means that these same managers, with all their investments and all their efforts to buildup the strengths of their businesses, have not really succeeded in developing their companiessuch that any external change will not have a devastating effect on them.Surviving unforeseen market ‘shocks’It is apparent therefore that very few saw the downturn coming and more to the point fendoff trouble before it arrived and get on with the task of adjusting to change. The issue is thatanybody responsible for strategy formulation needs to adopt a questioning attitude, anapproach that continually challenges the status quo – no matter how successful the businessis.However, as most managers see and follow only an upward trend line to achieve growth itfollows that they are entitled to ask, “Why would we want to change? Change is a dangerousbusiness!”The difference between most people responsible for strategy formulation and a handful ofstrategic innovators seems to be that this latter group have a window on the future. Strategicinnovators seem to know a few years before a crisis impacts that they must circumvent itand, indeed, set out plans to do just that!Successful companies question the status quo, even when they are financially successful.They monitor indicators of financial - as well as strategic - health, such as those shown overthe page.
  18. 18. 01280 844966 Page 19While this is not an exhaustive list of indicators, the important thing to appreciate is thatthey exist and that you should identify and track those most relevant to your company.The great benefit of doing all this is that you are endowed with:• an early warning system that allows you to question things before a crisis occurs• a means of remaining flexible enough to respond to an ever-changing environment andto consistently pull off a dynamic fit with that environment• a means of identifying new positions to sustain growth.The challenge facing managersIf you can watch your market and still be creative in seeking fresh opportunities to add valueto your customers you can protect your company against external pressures.The challenge facing managers is how to do this. In other words; how to reinvent business,design new ways of doing business, ac hive greater productivity, lead the way in creatingvalue for customers and stakeholders, and cope with major change in the knowledge that thisis the only real way to survive and move forward.Increasingly, the really devastating competition for a company or a product does not comefrom expected and anticipated sources – the traditional ‘me too’ same technology competitor– it comes from someone you’ve never even heard of, let alone expect to take your businessaway from you. For example;Financial Health• Profits• Cash flow• Shareholder value• Growth rates• Trends in financial healthStrategic Health• Customer satisfaction• Customer loyalty• Market share• Employee morale• Staff turnover• Employee communications• Financial health relative to competitors• Innovation and new products• Relative manufacturing costs• Product quality• Manufacturing flexibility• Quality of management team• Distributor and supplier feedback• Strength of company culture• Fit with the industry environment• Fit with the macro environment+
  19. 19. 01280 844966 Page 20• Did we really think easyJet could change the face of air travel in Europe?• Did we really think traditional retailers actually expect the internet to happen and work?Not in the least!Strategic innovators such as; Tesco’s, Xojet, Starbucks, Apple and countless others have all‘broken the rules of the game’ and achieved unique strategic positions.Most strategic innovators are invariably new entrants in their respective markets – anachievement in itself. Most go on to dramatically increase their market shares. The questionis how did they do it?First of all, they avoid a head-on collision. Instead of ‘attacking’ established competitors intheir existing well-protected positions, these innovators found ‘space’ to compete with newrules.Second, in each case, these businesses all created a superior strategy based on:1. a clear purpose and vision2. a targeted customer need and profile3. an offer of superior customer value and loyalty4. a productive and reinforcing system of activities and strategic assets to support theirchosen positioning.The fragility of success!A prevailing view amongst many business leaders is that success is fragile. Many would claimthat as a company becomes more successful, the process of maintaining momentum becomesharder not easier. A quotation from Alice in ‘Through the Looking Glass’; “We have to runfaster just to stand still,” conjures up this sense of fragility really wellSize is no guarantee of profitability, and value creation can be weakened if competitors areinnovating more exciting and better quality products or services.I have argued, with examples, that a business can create a breakthrough strategy andchallenge the market leaders with limited resources. I have also presented the logic foreffective positioning and more productivity and proffered frameworks to do this.But it follows that any business must face up to threats from other strategic innovators, newentrants and strong competitors.You can only stay ahead by being better and more creative. Like the hare being chased by thehounds, it is necessary for the strategic innovator to run a constant race against a pack of
  20. 20. 01280 844966 Page 21aspiring competitors. Thus staying ahead is a never ending battle that has to be won manytimes over with will and skill.How to stay aheadIn order to maintain momentum there are three key priorities, they are; vitality, stretchand leverage. And I want to introduce you to these three worthy friends. First vitality;VitalityThe most common cause of slippage from success is when a company loses a sense of vitalityand excitement, becoming complacent, jaded or exhausted. In such situations, the efforts atmaintaining the other two priorities; stretch and leverage are lost and fall out of balance.Many companies come perilously close to falling into this trap. Marks and Spencer in 2000is a case in point.Innovate or evaporate – is an important watchword. Without innovation or continuousimprovement, there is a serious danger that you could take your foot off the pedal. Typically,what tends to happen is that when people achieve their goals they relax and stop trying.Further challenge is of no interest.When tangible rewards for those that have given up sustained time and effort over a longperiod are not captured or distributed people will be disillusioned. Monetary reward is noteverything. Many companies have found that well publicized recognition within the “family”can have as much effect on motivation and commitment as money – perhaps more so.A further indicator of complacency is the loss of urgency. It is quite easy to be lulled into theview that there is plenty of time to take steps because rivals are far behind and jeopardize thesuccess that has been achieved.Being better than your rivals, overlooks the existence of indirect competition. For example;against the bench mark of the best service companies, you may not be first. There is alwaysplenty of competition out there that you need to beat.Clearly initiatives are required to maintain vitality to avoid such dangers. Most of these donot demand large financial resources but rather top management time and effort.When strategic innovators achieve success, benchmarking assumes a fresh importance.These people are keen to understand the progress businesses in their sector and othersectors at home and overseas have made in resolving a wide range of key issues.
  21. 21. 01280 844966 Page 22I heard of one CEO who had learned how a smaller company had adapted its product designsto achieve significant reductions in manufacturing costs and introduced changes in its ownprocesses.But benchmarking is not the only means of sustaining vitality. Some companies prefer to setgoals against a continuous rate of improvement within the context of benchmarks. The targetis set in the light of known and possible rates of improvement. The great thing about this isthat it builds on what benchmarking has identified as ‘having taken place’ amongcompetitors and deals with ‘possible future rates of progress.’Some companies – notably 3M – set goals and offer a prize to the winner, including fundsand time off, to develop an innovation. Such thoroughness helps ensure the spirit of vitalityand entrepreneurship in a business. Such systems are also used in both consumer facing andbusiness to business organisations.StretchStrategic innovators look for growth as a fundamental means of leveraging the benefits ofwhat they have achieved, but they guard against a dash for growth in a blind belief that big isbest. They invest in enhancing capabilities to provide strategic innovations that complementand build on those already achieved as well as exploring blue sky possibilities.To stay ahead, you have to deepen your appreciation of your existing capabilities, ensuringthat they do not crumble, possibly creating new steps on the strategic staircase. And you cando this in a number of ways.One is an incremental approach, requires only a modest investment in resources yet isvital to ensuring the best practice is everywhere identified and attained.Many of today’s retailers buy their way into the knowledge bases of their stakeholders. Whenthey find a supplier or distributor that has worked out a problem in a creative way itincorporates this know-how into its knowledge base and ensures that all their suppliersbenefit from the solution. These acquiesces because they know that each in turn will benefitfrom the innovations of othersThen there is a systems approach to building new advantage. This will help you exploitexisting capabilities and build more sustainable positions by degrees. Such investments arepotentially large in size, long in gestation, and greatest in risk.Typically a systems approach infuses the entire company. The record of Zara illustrates howan organisation wide systems approach can work.
  22. 22. 01280 844966 Page 23Although there are many stores on the high street that offer affordable fashion, Zara isunique. It follows its own production pattern, rather than the model used by the clothingindustry as a whole. The result is that Zara only needs a turnaround of 2 to 3 weeks to getnew products in store, compared with the seasonal approach adopted by most rivals.Relying on small and frequent shipments keeps inventories fresh and scarce – and compelscustomers to frequent stores to buy what is new now… because it will be gone tomorrow.What Zara has done is to fine-tune the sequence and focus of activities in the supply chain, inorder to obtain quicker speeds and ensure higher levels of customer service and satisfaction.Strategic entrepreneurs rewrite the rules of their industries, not just once but sometimesseveral times. Xojet provides a kind of private jet time sharing service and on-demand travelsolutions built especially for frequent corporate business jet fliers.Xojet and Zara are example of how innovative thinking can reengineer an entire industry.The company’s strategy is to combine the service, access and exclusivity of owning a jet withthe efficiencies and operational rigour of successful commercial airlinesLeverageReaping – leveraging – benefits of profitable growth from existing capabilities that havebeen carefully built up also makes demands on companies. For example; failure to leveragecan result in loss of effort, disaffection, or even the loss of skilled staff and the threat oftakeover by others.It’s worth pointing out here that by profitable growth I mean that which adds value not thepursuit of size. It’s important to distinguish between the two. For some the goal is size.But size can be downright destructive; it does not necessarily bring advantages, especially ifit is not building on existing capabilities and competencies. Moreover, building scale in abusiness should be considered as a means to achieve specific ends, not an end in itselfLeverage requires many different forms of activities, including organic expansion,acquisition and all forms of alliances. Each has a different risk profile. Leverage also requiresconstant attention to the proper choice of strategic domain. A company must be continuallyalert to changes taking place in the environment, harnessing and controlling them.The experience of many successful strategic innovators suggests that each route to growthhas its merits, the choice depending on particular circumstances.
  23. 23. 01280 844966 Page 24Zara combined organic growth with some partnerships with suppliers to achieve leadershipin fast fashion. The acquired resources has given it access to world markets, new productsthat complemented its existing activities, leveraging its previously hared won capabilitiesMaintaining entrepreneurship in the top teamBalancing these forces requires that new skills – even changes in leadership - be built-intothe top team.The first of these is to stay alert! Group think can be disastrous. It is important therefore towork with those that challenge accepted wisdom such that ‘refreezing’ is avoided.The second is high aspiration coupled with dissatisfaction. This is the force that seems tocause companies to continue to reach out to seek out fresh domains, respond to competitorsand stretch capabilities.When all is said and done, it is up to managers to create their own futures. The best willstrive for continual improvement of their companies and commit themselves to buildingtheir future. They will be adaptable people who are best suited to gain success and to surviveunforeseen market ‘shocks’. These managers are the winners, the ones for whom this book isfor; they exist in all industries and provide the hope for all our futures.
  24. 24. 01280 844966 Page 25BRINGING IT ALL TOGETHERSo, there you have it – All the Right Keys: A Guide to Going to Market Better than YourCompetitorsYouve just gone through a crash course on how to build and exploit a superior strategy bytackling the most important questions of the day!If you concentrate on raining productivity aligning your positioning to achieve greater valuefor customers you could reinvent your business to meet to-day’s tough time’s conditions. Ifyou do - this is what you can expect to achieve:1. Save your customers more money than your competitors2. Focus on what value you could offer your customers3. Do things differently, or do things that are different to your competitors to create a reallysustainable point of difference4. Break free from sameness and do something new that’s even better5. Find new routes to market that your competitors have overlooked6. Concentrate your company’s skills where they can achieve the greatest effect7. Maintain momentum and withstand harsh economic conditions in your business betterthan your competitorsIts been my pleasure to share my insights with you and I trust that they will provide youwith a roadmap of discovery as you explore your industry’s evolving terrain searching fornew and unexploited strategic positions.If you want to talk to Andrew about how to create a superior strategy for your businessplease call 01280 844966 for a chat without any obligation to you.
  25. 25. 01280 844966 Page 26For further supportCall Andrew Pearson on 01280 844966 oremail M PearsonAndrew M Pearson NDA, Dip M, MBA is considered to be a prominent expert in the fields ofstrategy, marketing and operations management. He tutors at Oxford Business School and isalso a visiting lecturer at Warwick University.In addition to UK business school experience he has led and presented seminars andworkshops at business forums throughout the world. He has extensive experience as abusiness coach, consultant and management speaker and has worked with managers andmanagement students in the UK, Europe, China and Libya. He focuses on issues of strategydevelopment, planning and implementation.Andrew set up his first business aged 25 and steered it to market leadership and a turnoverof £11m in 6 years. Since then, he’s held senior management and professorial posts at anumber of UK firms, including four years with Cargill, during which he founded pioneeringstrategies for business development in Eastern Europe.Clients include:• A P Moller Terminals• Andersons Consulting• BALI (SE)• Centaur Grain Ltd• Channel Express Ltd• Dart Plc• Edexcel• Everglade Windows Ltd• Fowler Welch Ltd• Hartley’s Nurseries Ltd• LEAF• Mack International Ltd• Palmstead Nurseries LtdFurther E-books and coaching support:• Transforming the Process of Going to Market• Rejuvenating the Mature Business• Challenging the rules of the game• How to build a business that runs without you• Customer Driven Market Change• Creating Time to Think and Plan• So You Think You Know Your CustomersFor more information:Please contact Andrew for a chat on 01280 844966and for more information visit