The Essence Of Strategy

By M. Isi Eromosele

Differentiation strategies arise from both the choice of activities by a company and how they are performed.

The essence of strategy is choosing to perform activities differently from competitors so as to provide a unique value proposition. A sustainable strategic position comes from an amalgamation of activities, each of which reinforces the other.

As a whole, strategy implies the transition of an organization from its present position to a desirable but uncertain future position. Since the organization has never been to the anticipated future position, its intended pathway will involve a series of linked assumptions.

These strategic assumptions can be described as a set of cause and effect relationships that are explicit and testable. The strategic assumptions require identifying the activities that are the drivers of the projected outcomes.

The key to implementing strategy is to have everyone in the organization clearly understand the underlying assumptions, to align resources with the assumptions, to test the assumptions continually and to adapt to resulting changes as required.

In executing strategy, it is imperative to define the set of near-term objectives and activities, the drivers that will differentiate a company from its competitors and create long-term customer and shareholder value.

The process begins with defining strategy from the perspective of the shareholders and customers. The following questions should be asked:

• What are the financial objectives from growth and increased productivity?
• What are the major sources of growth?

Once the financial issues have been specified, the process continues by asking:

• Who are the target customers that will generate revenue growth and a more profitable mix of products and services?
• What are their needs and how do you measure success with them?

The customer perspective should also include the value proposition, which defines how the company differentiates itself to attract, retain and deepen relationships with targeted customers.

The internal business processes, which include product design, brand and market development, sales, service as well as operations and logistics, define the activities needed to create the desired customer value proposition and the desired financial outcome.

The ability to implement internal business processes in new and differentiated ways should be based on the organization infrastructure, the skills, capabilities and knowledge of employees, the technology they use and the culture in which they work. These are learning and growth factors.

Implementing strategy should start with the desired financial and customer results and transition to the value proposition, business processes and infrastructure that are the drivers of change.

The relationships between the drivers and related results constitute the assumptions that define the strategy.

Organizations must always separate their strategies into several focused themes. These focused themes allow the organizations to deal with the conflicting priorities of long-term versus short-term or growth versus profitability.

Generally, strategic themes reflect what the top management team believes must be done to succeed. The themes do not reflect financial outcomes such as improved shareholder value or customer results such as higher customer retention.

These strategic themes reflect company executives’ view of what must be done internally to achieve strategic outcomes. As such, the themes typically relate to internal business processes.

Strategic themes provide pillars for the strategy and contain their own strategic assumptions and their own set of cause-and-effect relationships.

The transparencies in strategic themes allow them to be used to assign accountability for managing the implementation of the strategy.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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