Approaches to strategy

Is strategy worth the effort? Perhaps this tale, once told by the Nobel-winning Hungarian physiologist Albert Szent-Györgyi, has the answer:

Lost in the Alps

A small group of soldiers was on military manoeuvres in the Alps. Its young lieutenant sent a reconnaissance unit out into the icy wilderness just as it began to snow. It snowed for two days, and the unit did not return. The lieutenant feared he had sent his men to their death, but on the third day they returned.

Where had they been? How did they find their way? “We considered ourselves lost and waited for the end, but then one of us found a map in his pocket. That calmed us down. We pitched camp, lasted out the snowstorm and then with the map we found our bearings. And here we are.”

The lieutenant took a good look at the map and discovered, to his astonishment, that it was a map of the Pyrenees...

A sense of direction

The future is unpredictable, but having some kind of plan in your pocket – even if it’s not the right one – can help steer you to survival, even success, when the unexpected takes place.

The truth is that many companies don’t bother with strategy. They don’t have a long-term plan. Amid the thrill of making a quick sale, they lose sight of the bigger picture. And they fail.

So, how do you formulate a good strategy? Let’s look at three different approaches...

Market-based strategy

The classic strategy texts suggest the secret to increasing profits is to make your product stand out in the customer’s mind. In essence, you should aim to be either the cheapest or, in at least one regard, the best.

Unfortunately, it is rarely possible to achieve either in today’s competitive markets. If your products are successful, other companies will copy them, and usually someone can make and sell them for less. Still, it helps to be conscious of what it is that makes your offering special.

Resource-based strategy

Even if your competitors do have what it takes to copy your product, they probably can’t replicate your resources. That’s why looking at your company’s internal strengths is the starting point for the second approach to strategy: ‘resource-based’. Markets can be hard to predict, but if you know where your strengths lie, you can plan how to manage risks and adapt to whatever change the future throws your way.

Customer-based strategy

The third approach, ‘customer-based’, focuses on building relationships with customers. It’s one thing to ask customers for feedback on a product you’re developing already, and another entirely to ask customers what they need and only afterwards, when you know what that is, develop it from scratch. Tesco takes this approach: it uses what it learns from its key asset, its customers, to decide what products and services to develop: everything from banking and insurance to DVD rental and home broadband.

Of course, it’s possible that all three of the approaches in this article might prove useful to your organisation. To talk more about marketing strategy, please contact us.