130 Which Approach to Strategy

#130 Which Approach to Strategy

 

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Carol’s topic for discussion: Examine strategy approaches to make your business non-displaceable in your market? 

As our regular listeners know by now we invite people to send in questions or subjects they’re wrestling with on business practices and we select one to try to build a show around. As a thanks, we also started sending them one of our new “Get a Second Opinion” Ceramic Mugs. We are building this episode off one of them in particular that we thought might be interesting to our audience. The subject was, “What do the longest surviving or highest impact companies do when the is space for ethical great offerings get clogged, being sustainability or fair trade does not seem enough. The good guys are at war for a limited customer niche.”

  • They all want to be the breakout business or to keep their hard-earned market position. You don’t get the runway to keep doing good things and making a difference if you can’t create financial effectiveness. 
  • We have some help for sleeping well by having a more solid approach to strategy; one that is tried and true for decades. And people can test what we say with their own business, those they invest in, or other they see in the limelight. 

We first look at four approaches to guiding a business with strategic thinking and see how well they do on bringing about longevity in a dynamic market that gives you non-displaceability without trading off your values, financial effectiveness or competitiveness.

  • Let’s start with the four approaches that are common. We call the first strategic approach Continuous Improvement Strategy because we know you cannot be static and survive. This is what 85% of companies use and have slow or no growth as a result That are looking backwards and trying to do better. 
  • The second approach we call More or Less Strategy. This is about doing more of what seems to work and less of what does not in the market. And this includes assessing for ecological and social impacts. Do less that causes harm and loses position and more of what helps ecosystems and sells. 
    • This sounds sustainability and also positioning our business relative to competitors. Both keep us looking sideways. What steps are competitors taking we may need to counter. Or what practices have we learned that are giving us a better reduced footprint on land and communities.
  • The third approach to strategy is Lead the Pack or Dominate the Market. This is a more active, even aggressive, approach believing we have the best ideas and execution. These first three approaches represent the majority of recommended approaches in Harvard Business Review. 
  • The fourth one comes from a Regenerative paradigm. It is always based on the Essence of the business, what sets it apart at a core level and gives greater unique capacity to people to transform their lives and succeed on their own terms. So, we call it Express Essence. What the Essence of your business provides the best place to start and continue. 
    • It is the most effective for gaining steady cash flow, great and fair margins on your offerings, and a community of stakeholders who ensure enduring earnings you can reinvest for evolution of your business and the lives of your stakeholders.
      • This sounds like a fantasy at first, but it is more concrete and certain to pay off. There is a story about Adidas who nearly lost its way. But it went back to its founding Essence, because it is there from the beginning, and reimaged their business. Stopped competing with Nike and turned away from chasing trends. 
        • The results were a reinvigorated business that has its own unique place in a large market. They were founded on creating “what is best for the athlete.” And did well for decades. Then lost their way. But by going back to their founding essence, Adidas transformed itself from an also ran player in the industry into a brand worth 10X its bottom rate and industry position and created a higher margin offering as Nike was losing its footing. Here is the link to this story. 
          • And it is not about doing what they did before but knowing the heart of the business that sets it apart. Companies such as Adidas, Lego, Burberry, and Apple have lived through phases during which their founding Essence was ignored, their identity was blurred, and their strategic focus was lost. 
            • Through understanding it founding Essence. They are good examples of how businesses have lost their way when they lose touch with Essence which happen far too easily in a leadership transition. 
              • The annual Regenerative Business Summit on November 19th is focusing on this idea of revealing essence this year. And Jeffrey will be sharing some of his story virtually.
                • A Fusion of local and virtual for businesses who want to guide their organizational decisions and actions based on what is at the heart of who they are but is not front and center most of the time.

We suggested at the beginning of the show that the ability to focus, position offerings and execute on strategy would be good guides for assessing a strategic thinking method.  

  • The Continuous Improvement method works on staying focused by being incremental and breaking down into smaller parts. For positioning they use a template they have had for decades likely or borrowed. Such as what niche/segment they are in or time to get a product to market, or adoption phases like early middle late adopters. 
  • The More or Less Strategy method keeps focus by assessing last year’s results and forecasting sales for the coming year. They are focused on what they currently do. Easy for workers to understand.  It keeps the focus on what currently exists and not who they could be and what they could offer as a result. Positioning is on “relative competitive position”. 
    • The business’s eyes and attention are sideways as they compare and pace themselves with others in the industry. This method does allow a business to extend their sustainability goals. Overall, the method is a way to position the goals for sales and eco-impact based on what they and the market are currently doing.
      • Execution is directed by functional departments with what is considered best practices in the industry for management and sustainability.
  • Let’s look at the third strategy method, Lead the market or Industry you are in. Here focus comes from certifications and detailed plans that are usually customized. It is always about raising the bar or standards in the industry and for important stakeholders. 
    • Positioning comes from a values framework and identifying with a purpose or mission. It is more about collaboration and partnering with ‘competitors”. Feels friendly and makes sharing easier. 
    • Execution is lead from ecosystem awareness. People are draw in as workers and customers. The business still has to have efficacy in products and innovation. They are the base on which execution is build.

So how do Essence based businesses guide themselves?

Focus come from a compelling corporate direction that is founded in the Essence of the business. We are going to give a start on this at the Summit. It is a bit of work to reveal Essence, with some special skills to get to it, but we will give a starting look at the Summit. 

  • Once you reignite this connection to the singular Heart of the Business, everyone in the business stays connected to that. It is not difficult to see why something is being done with a bit of engagement and they get a grasp of the Essence.
  • Who the business uniquely is and often the ability to understand how financial effectiveness is integrated by redefining how earnings margins and cash flow are built with a regenerative philosophy. It is the most common complaint we get from Capital market investors who want to also have a social and planetary impact. “people trade off stakeholders instead of making the system more whole.” Investors that appreciate consciousness in a company love our work because Financial Effectiveness, from a regenerative perspective, is integrated.
  • Much better than grappling with pieces of a delegated fragmented plan. Plus, to learn to see the Essence of your distributors, buyers, and how you can work with them for its expression in a way that only you can do.
    • This is the positioning. It is Essence to Essence with you and each unique buyer group, usually only 4-6 in any company. Our experience after almost 45 years of doing this. And their execution comes from a radically different way of organization execution that engages everyone in personal and business develo9pment for the entire time they are in the company. It stops all distractions internal politics and miscommunications.
      • But with the Express Essence Strategy, each child is unique and has an Essence. You help them discover that and find education and opportunities to grow it into fuller potentially. And because a unique voice based on who they are and what they see as their work in the world. They are more likely to thrive early rather than wait until middle age to follow their dream.
        • It seems crazy, but with living systems thinking this is true of every being including a business which has a founder, a living being with an essence to express. And they do it in a business. 

 

Join Carol and The Regenerative Business Alliance for the Summit and learn how to bring this into your business. Or tell some business you know about it. They can even become a Champion for the Summit, create a gathering place and invitations to people to join and work on their business. Then you attend free.  Got to www.TheRegeenrativeBusienssSummit.com and learn more. Or send an email to Carol at carol@carolsaford.com for more info.

 

And thanks to Ethan Roland Soloviev,  the co-producer of The Regenerative Business Summit and Research Director at How Good,  for suggesting our topic. We are sending you a Get a Second Opinion Mug, which holds 11 oz of your favorite beverage. If you want one of our Get a Second Opinion Mugs, send us your ideas. You can email carol@businessSEcondOpinion.com or find us on Twitter @Biz_Second_Opinion . We send it along we use it to develop an episode. Also, your ratings and reviews on any platform helps people find us and spread the word. Sign up for our newsletter so you get connections to the show notes and much more. 

Harvard Business Review and Strategy and Business Articles: Used for this episode

Do you own analysis using our guidelines on each show

  1. Blue Ocean Strategy  Harvard Business Review • October 2004

by W. Chan Kim and Renée Mauborgne

  1. Strategy Needs Creativity  by Adam Brandenburger

Harvard Business Review  MARCH–APRIL 2019 ISSUE

  1. STRATEGY & BUSINESS:  CONSUMER & RETAIL  August 24, 2015 / Autumn 2015 / Issue 80   How Adidas Found Its Second Wind

by Nicholas IndOriol Iglesias, and Majken Schultz

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Her books have won over 15 awards so far and are required reading at leading business and management schools including Harvard, Stanford, Haas Berkeley and MIT and almost 100 other academic institutions. Carol also partners with producing Executive Education through Babson College, Kaospilot in Denmark and University of Washington, Bothell, WA, sponsored by The Lewis Institute at Babson.

 

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Carol Sanford and Zac Swartout, co-producers

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