Peter Christo

Business principles that facilitate the development of strategies which result in a competitive advantage and therefore increased chances of business success are probably the most overlooked and least understood business activity.

A well thought out strategy should underpin your business plan.  In other words, the plan should go beyond being a detailed account of just how you plan to work.  Rather, it becomes a detailed road map to success.  The strategy (aka; how we plan to win) should be as crystal clear in your head as your own name.  Its merit and chances of success should also be obvious.  If someone commercially astute were to read it, and then was still not clear on how you pan to execute and compete successfully, you best stop right there.

8 Steps to a winning strategy .

I offer eight main steps in developing a sound strategy like this.
1.    Determine the demand driver for your customer and in the B2B case, your customers customer.
2.    Determine the value chain of the industry and identify where you fit in the process.
3.    Identify what all the value propositions are in each segment you represent.
4.    Rate each item in the value proposition as to whether you:

• Do it well
• Should do it well and thus need training
• No need to do it yourself and thus can outsource

5.    Identify what market your competition is targeting
6.    Identify what your competition is communicating in terms of a VP to that market.
7.    Determine a better mix or alternative VP (it could be the business model remember)
8.    Communicate this VP in everyway possible to the market.

Demand Driver
Fundamentally, every industry and therefore every business, is underpinned by a demand driver.   For example, the fishing industry is underpinned by the demand driver – hunger for fish.  That is something that is undeniable. People want and will continue to want to eat fish, drives a while industry.  The telecommunications industry is underpinned by the demand driver around the need for us to communicate with each other, and the superannuation industry is underpinned by the need to protect, grow and get an income from our savings/investments.
If you are in a business to business  (B2B) organisation, then your demand drivers are simple.  In fact every business has the same demand drivers.  They are:

• Generate revenue, the more the better.
• Minimise costs, the less the better.
• Manage any risks that could affect the above two.

It flows that to effectively service a business in the B2B space you need to know your customers customer also and their demand drivers.
The question you need to ask is what drives demand in my industry and/or for my clients?
Value Chain Development
All industries have three main stages.  Going back to our fishing industry example; these are the capture stage, where the fish are actually netted and end up at a processing plant, the second stage, to be categorised, canned, filleted etc. and then the third distribution stage, where the fish ends up in its new form at the shops, supermarkets, restaurants, wholesalers etc.

If you think that this framework doesn’t apply to your industry, then think again.  The resource for the industry that catches motorists speeding is of course the speeding drivers (not all get caught).  The net is the camera and the production is about undertaking the activities necessary to comply with the law and issue the infringement to the speeding motorists.  Collecting the money is merely delivering the result.  Demand is driven by you and me, as the people of the state who want safety on the roads and for our kids crossing the roads for that matter.

A final example is the financial services industry which is underpinned by us all wanting to protect, grow and get an annuity from our nest eggs.  The list goes on, but I guarantee you every single industry and business fits into this framework.

Resource –> Capture –> Process –> Deliver –> Consumer
Value Proposition Identification and development
This part is hard work.  A value proposition is best described as “the benefits to your customer.  For example; low cost is a value proposition, as is quality, and is the way one can pay, how fast they will get their product etc.  Having access to information easily say via a 1300 number is also a value proposition.

Using our fish guy again, the VP from the fisherman to the production guy is what?  Fresh fish (maybe a specific fish, like Snapper) delivered by 11am, at a great price, and guaranteed (ie: no poingt in doing it once and a while, business needs consistent supply).
In most businesses, the VP between segments could number in the dozens.

Rating the VP’s
Focus is the key here.  The underpinning principle is that you don’t waste effort on non core activities.  Core must be delivered with exceptional quality and effectiveness.
Go through the VP list and choose which items you offer as part of your own business VP. Rate each one as core or non core, and determine your level of competency as a business in each one.
Eg:

1. Fishing – core (10/10)
2. Navigation – core (6/10)
3. Knowledge of snapper core - (7/10)
4. Boat cleaning – non core – (2/10).

I would, maintain 1, do some training on 2 and 3, and outsource 4.

Competition’s Market
Look at the type of consumer your competition is going for.  Are they twenty something’s?  Are they full next stage 1 (with young kids) or empty nesters.  To be super strategic, use Mazlow’s hierarchy of needs to identify what the need the message is targeting (is it communicating at a sustenance level or at an esteem level?) and where in the ‘normal’ life stage they are.  Obviously don’t forget the pink market, DINK by choice.

Competition VP
Look at your competition and determine what VP their marketing communications are claiming.  If they simply claim to be the cheapest, and they actually are, then don’t compete on that unless you know you can beat them.  Identify up to three of your most obvious competition and map where each has positioned itself.  Ideally, you position away from them and add dimensions to your VP that they can’t deliver on.

Communicating your VP to the market
Now that you know how well thought out or not your competitions message and VP is, you can structure your business service, message and collateral accordingly.  In the fishing example, Pete’s Fishing fleet could be an “on-time, specialist at delivering snapper to the market at a great price”.  Develop your message in an appropriate way as to avoid the competition and extend the VP.  Make yourself untouchable.  Your VP could relate to the service or product, or how they pay (the business model) or where the product can be found (easy to access).

As for delivering the message, given you have done most of the work now, leave this to the pros.  But if you have to do it yourself, keep it succinct and clear.

This process is not just for entrepreneurs.  This is a great process for established big and medium businesses and it  applies whether you are an entrepreneur or a CEO or even a manager dovetailing your department’s services into the broader business (eg: HR, IT, Marketing etc).

Now you that you have this done, you can start writing your business plan.