Wednesday, June 14, 2017

Critical Elements of Strategy Part 2


1. Internally-Driven:
  • Most businesses are internally-driven.
  • This means that their strategy is driven by what they have done in the past.
  • Their thinking is from the inside out – they decide what to make, how to make it, and then how to get customers to buy it.
  • The weakness of this strategy is that organization members are not anticipating changes in the marketplace and so fail to be adaptive and innovative. This results in the buggy-whip syndrome in which they keep making buggy whips, which they are good at, in an era of automobiles.

2. Customer-Driven:
  • Organizations that are customer-driven try to develop a business strategy by "being close" and "listening" to the customer.
  • They ask the same questions as the internally-driven organization: "What products should we make and sell?"  However, now they want the customer to answer these questions.
  • The consequence of trying to be to customer-driven is that these companies end up trying to be "all things to all people."  They fail to link what they do to their core competencies, how they want to differentiate themselves from their competitors, or how they add value as an organization.

3. Market-Driven:

  • This strategy is based on making conscious choices about which markets organizations will serve and how they add value to their customers.
  • They seek to differentiate themselves from their competitors by identifying the specific benefits they will or will not provide and organizing around the delivery of those benefits.
  • This is not the same as asking customers for their input and feedback. It is based on making decisions about how they want to compete.
We believe that it is through a market-driven strategy that organizations will best compete in the present and plan for their future.

Until next time...

Sheryl Tuchman, SPHR, SHRM-SCP

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