Developing a winning strategy for your company requires making some serious choices, which isn’t always easy to do. Even basic choices, like trying to figure out what to make for dinner, can be difficult. Developing a successful strategy is not an easy task, but requires you to make a choice of what is best for your company, and ultimately your customers. Former Procter & Gamble CEO, A.G. Lafley, one of the most successful executives in company history, has a strong opinion about the correlation between strategy and choices. “Choices are difficult, we want to keep our options open, choices involve taking risks, and not only risk to the business but personal risk. So I think there’s this sort of human resistance to making choices, and choices are the core of strategy.”
One of the biggest mistakes companies make is developing a to-do list instead of a strategy. But the problem is that execution without direction only creates short-term and inconsistent wins. It’s easy to pinpoint companies that don’t have a clear strategy – they are failing. Sears and J.C. Penney both come to mind. What went wrong? Both once very successful, they have continued to struggle while their competition evolves and thrives. It’s simple. Both companies made hasty decisions for short-term gain, without focusing on a compelling customer purpose. For example, dating back to 1981, Sears, made an expansion outside its core business, into financial and real estate services. These new business areas had few correlations with Sears’ target customers, thus causing a problem.
J.C. Penney made similar strategy mistakes when they abandoned their core customer base and changed their pricing strategy. Instead of offering coupons and deals like their competition, they believed customers didn’t need conventional sales to be lured into stores. While a company like Apple may get away with this because their products are highly anticipated with widespread usage, J.C. Penney’s product offering wasn’t unique enough. The marketing hype created a quick sales increase, but wasn’t a sustainable strategy. Understanding your customers is key in strategy development.
As individuals, we tend to want the next big opportunity. We often lose focus of where we are relative to our strategy as well as our planned endpoint. It all comes back to choices. Sometimes you have to take a step back and ask yourself a few key questions. What can this company do better than anyone else? Or, what do I want this company to do better than anyone else? When you can develop focused goals, the strategy comes next.
An example of a successful strategy is Airbnb. Now valued at $10B, the company was once barely making it at all. They had clear goals – to change the way people travel by giving more options and making it easier. With persistence and referral incentives, they were experiencing tons of site traffic, but not many actual bookings. The founders went door-to-door to all their NYC listings, capturing better photography and editing them. Within a month of implementing this strategy, sales doubled. This focused approached helped the company continue to grow. Now their solution is even scalable because they hire photographers to take professional pictures of owner’s listings. This strategy lead to success and continued bookings through the Airbnb site.
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