Why is Strategic Competency so Scary?
Focusing on a single strategic competency can be scary. There are two big reasons for this. The first is the basic struggle with focus – we often feel unsafe putting all of our eggs in one basket. The idea that two competencies will double your chances of success is a false one, though. Two competencies usually means you’ll have half the chance of success as someone who is just learning to be the best at one of those competencies.
Strategic competency is damaged by trying to be very good at too many things
The second reason has to do with distinction. In my work helping companies with their strategy, I often see highly fragmented markets. No one has a clear lead in market share, because no one stands out. This usually happens because everyone is trying to be very good at too many things. In many cases, the most successful question I can ask is “What if you just gave up one of your advantages, in order to excel at another?”. I find that this is easiest when a company can identify a measurable cost advantage, but that means commoditization. For many companies we work with, the specialty strategies we employ require advantages in other dimensions such as service, quality, technology, innovation or effectiveness.
The problem with non-cost dimensions is that we usually feel that differentiation is impossible to value
This is largely true. Where a cost advantage can be stated numerically, a value advantage can only be measured in the mind of the customer. Many companies pursuing a specialty strategy struggle to even identify the target customer who will buy their products or services. An Apple customer, for example, is quite different from a Sony customer or a Samsung customer, but no customer walks about with a sign on their back that tells us who they are. This means that the best way to identify the true customer, and get a good sense of the value we create is experimenting with different values and prices. And price experimentation almost always comes with fear of failure: “What if they don’t buy our product/service at this price?”.
If you are unable or unwilling to experiment on price, it’s impossible to quantify the value of what you do
There is no easy way around this issue. If you are unable or unwilling to experiment on price, you’ll find that it’s nearly impossible to quantify the value of what you do. If you can’t quantify the value, you will often be tempted to work on the easily quantified attributes, especially cost. This is why so many companies choose the commodity strategies. Commodity strategy, of course, puts you in an arena where there can only be one winner. This is terrible for many companies, especially small and medium sized companies.
You must be willing to set your strategic competency on value that is not well-quantified or experiment on price
The ultimate lesson in this is that you must either be willing to experiment to find the value of your offering and its features, or you must be willing to set your strategic competency on value that is not well-quantified. If you are afraid to do either, you will end up not choosing a good strategic competency. The failure to choose a clear competency is a choice in itself, and it’s never a good one. The best favor you can do for your company is to spend the time and money to make the strategic competency choice well, and then stick to it.
Does your company struggle to focus on a single strategic competency? Attend the Simplified Strategic Planning Seminar for more instruction on how to determine your strategic competency as well as all other aspects of Simplified Strategic Planning.
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