19 Jun The Ten Commandments for Crafting Successful Business Strategies.
Skimming the Internet one evening looking for one thing or another, I happened upon a presentation entitled “Principles of Strategic Management,” by Richard D. Irwin. What intrigued me was the simplicity of the commandments. Somehow we all get caught up in the latest, newest business-strategy toys that titillate us at the moment, such that we lose interest in anything that seems — well, not new.
As I read through Irwin’s points, immortalized in the early days of the World Wide Web in a college professor’s hypertext lecture notes, I couldn’t help but notice that, in one way or another, they sounded awfully similar to the advice and counsel we’ve proffered over the years, though in slightly different language. Maybe this is why I liked these commandments so much, or maybe it’s simply because they’re valid and they work.
Actually, Irwin provided 13 commandments for crafting successful business strategies, but I’ve collapsed the list down to the 10 that apply most to IT services firms.
Here they are with bits of color commentary along the way:
- “Always put top priority on crafting and executing strategic moves that enhance a firm’s competitive position for the long term and that serve to establish it as an industry leader.” Or, in our vernacular, strive to be the No. 1 or No. 2 player in the markets you carve out for your firm.
- “Understand that a clear, consistent competitive strategy, when well-crafted and well-executed, builds reputation and recognizable industry position, whereas a strategy aimed solely at capturing momentary market opportunities yields fleeting benefits.” Avoid the AFAB syndrome: “anything for a buck” business.
- “Endeavor not to get ‘stuck back in the pack’ with no coherent long-term strategy or distinctive competitive position, and little prospect of climbing into the ranks of industry leaders.” Make your company relevant by forging a specialty that gives you competitive distinction and insulation.
- “Invest in creating a sustainable competitive advantage, for it is a most dependable contributor to above-average profitability.” It’s not just enough to have a specialized focus — you have to market it, relentlessly.
- “Play aggressive offense to build competitive advantage and aggressive defense to protect it.” Expect a more aggressive market as companies look to make up for lost ground over the past two years; expect a tougher battle for new customers and more aggressive assaults on your customers.
- “Avoid strategies capable of succeeding only in the best of circumstances.” If you’re coming out of the recession in good shape, then you did right by this strategy. If not, well, now you know for the next time.
- “Avoid rigidly prescribed or inflexible strategies — changing market conditions may render them quickly obsolete.” One of the immutable laws among IT services companies is that you’re never more than 18 to 24 months from the jaws of death, because no industry moves with the warp speed of IT. Learn to love change and make it a competitive advantage.
- “Be judicious in cutting prices without an established cost advantage.” As one of our clients so wisely advised: “Never, never, never try to win on price. It’s a sucker’s game. Create value or get out of the business.”
- “Employ bold strategic moves in pursuing differentiation strategies so as to open up very meaningful gaps in quality or service or other product attributes.” What can I say, except: differentiate, differentiate, differentiate or die!
- “Be aware that aggressive strategic moves to wrest crucial market share from rivals often provoke aggressive retaliation in the form of marketing ‘arms race’ and/or price wars.” What a great position to be in. Winning market share because your distinctive focus and No. 1 or No. 2 position in the market forces your competitors to compete on price. That’s Valhalla, but don’t get too cocky — the tide of battle can change instantly
If you have further thoughts or comments on the commandments we look forward to hearing from you.