Answering Four Key Questions to Develop a Good Strategy
David Kryscynski: A good strategy provides clear and concise answers to four key questions. First, where do we compete? In other words, what competitive arenas or markets will we be active in? We define markets as industries, product markets within those industries and geographic markets.
David Kryscynski: Second, what unique value do we bring to win in those markets? In other words, why do our customers choose our products and services, when they could’ve chosen the products and services of any competitor out there? Our unique value could be cost, or differentiation, which includes image, customization, styling, reliability, etc.
David Kryscynski: Third, what resources and capabilities do we utilize to deliver that value? Do we have exceptional human capital, superior technology, unrivaled network connections, or a unique reputation? Resources generally refer to the things we have in our toolbox.
David Kryscynski: These things could be tangible such as a diamond mine or oil field, or they can be intangible, such as a reputation. Capabilities generally refer to the things we can do, or our ability to use the things in our toolbox.
David Kryscynski: Fourth, how do we sustain our ability to provide that unique value? Are there barriers to imitation, are there factors that keep our competitors from being willing or able to replicate the value we create for our customers? This last question focuses on understanding what factors allow us to continue to win over time.
Vocabulary:
concise – short, clear, and using only a few words without wasting time or space, “The manager asked for a concise summary of the team’s weekly sales report.”
competitive arenas – specific industries, product types, or market spaces where businesses fight against each other for customers, “The tech giant entered new competitive arenas by designing electric cars and smart home devices.”
geographic markets – specific physical locations, regions, or countries where a business chooses to sell its products or services, “The clothing brand expanded into European geographic markets to increase its worldwide sales.”
unique value – the special benefit, lower cost, or high quality that makes a company’s product stand out as better than its rivals, “The bakery’s unique value is that all its bread is made fresh every morning using local ingredients.”
differentiation – the process of making a product or service stand out from its competitors by giving it unique features or qualities, “Product differentiation is highly important when selling items in a market full of similar choices.”
customization – the act of changing or modifying a product or service to fit a specific customer’s needs or choices, “The car company offers endless options for customization, including custom paint and leather seats.”
reliability – the quality of being trustworthy, dependable, and consistently performing well without breaking down, “Japanese cars are famous worldwide for their mechanical reliability.”
utilize – to make practical and effective use of something that is available to you, “The design team needs to utilize every tool in the workshop to complete the project on time.”
exceptional – unusually good, outstanding, or much better than average, “She received a major award at work for her exceptional performance this year.”
human capital – the total skills, knowledge, experience, and talents that employees bring to a company, “Investing in training programs is the best way for a company to grow its human capital.”
unrivaled – better than any other; having no equal, match, or competition, “The historical museum has an unrivaled collection of ancient gold coins.”
tangible – real, physical objects or assets that you can clearly see, touch, or measure, “A corporate office, factory machines, and cash are all examples of tangible assets.”
intangible – things that are highly valuable but do not have a physical presence and cannot be touched, “A strong brand reputation and trademarked logos are intangible business assets.”
capabilities – the specific skills, talents, or operational abilities that a person or company has to do tasks successfully, “The software firm has the capabilities to build advanced mobile apps for international banks.”
sustain – to maintain, continue, or keep an activity or advantage going successfully over a long period of time, “The athlete ate a healthy breakfast to sustain her energy levels during the long marathon.”
barriers to imitation – economic factors, rules, or protections that prevent competitors from copying a company’s unique product or strategy, “Strict patent laws create strong barriers to imitation for new pharmaceutical drugs.”
replicate – to copy, repeat, or reproduce something exactly, “It is very difficult for smaller coffee shops to replicate the massive global success of Starbucks.”