One of the challenges of being a CEO is that you must pick and focus the strategy for your firm. There are 3 major strategies….as much as you may want to claim all three….you can only deliver on one, to be effective.
A tool I like to use to engage in the conversation about strategy comes from a book by Michael Treacy, The Discipline of Market Leaders. The main premise is that to be great at something…..you must pick one of these three. The other two, just be OK….but you can not focus on all three to differentiate your firm.
The three strategies include:
Product or Service Innovator – someone who likes to be first in the field and have a superior benefit. Think Apple or Nike or Microsoft as examples of this. It is expensive to focus on innovation and most of the time….your product or service will be premium priced.
Operational Excellence – someone who likes to focus on being the most efficient and reliable in delivering the product or service. While not always the lowest price….this strategy is a focus on everyday value, at a reasonable cost. Think Wal-Mart or Southwest Airlines or Dell Computer. You don’t offer a lot of added value but the product or service applies to most people at a reasonable cost.
Customer Intimate – someone who likes to customize the offering and deliver the product or service the way your customer wants it. These are firms who want to keep the customer happy or experience the best relationship in working with you. Think Nordstrom’s or Ritz Carlton. They will go out of their way to create satisfaction….this also demands a premium price.
To be effective, you can not focus on all three of these. You will be trying to be all things to all people and will create a confusing message. So which area do you focus? Can you differentiate these?
Here is an interview where I recently described this approach. click here to view
Hope you find it valuable.