AI, machine learning, multi-sided platforms, big data, crowdsourcing and the ‘internet of things’ have changed everything – but not the need for strategy.
Writing for Harvard Business Review, Kevin J Boudreau says it’s easy for entrepreneurs “steeped in tech and devoted to product” to overlook the need for a clear and coherent business strategy. Here he explains the very basics of how to put that right.
WHAT IS STRATEGY?
Strategy answers the basic questions every business must ask:
- Who are we serving?
- What are we offering?
- How will we deliver?
- What makes us hard to copy?
An effective strategy integrates the answers to these questions in the best way possible to serve the customer – and make money.
WHO DO YOU SERVE?
Define your customers based on attributes like age, sex, gender, interest area and the needs these engender. Like LinkedIn, whose multi-sided platform caters for jobseekers, recruiters and consultants, it’s fine to identify more than one group of clients.
WHAT ARE YOU OFFERING?
“You can think of the value you intend to create in a marketplace as akin to a position on a game board.” How does your product or service – your value proposition – meet your customers’ needs? What do they want? Will you compete on price, speed of delivery, or personalisation and how do your relative strengths and weaknesses compare to those of your rivals?
HOW WILL YOU DELIVER?
Your operating model is the result of a series of tradeoffs and decisions which work together to ensure that your product, and the way you deliver it, is the best it can be in relation to your customers’ needs and your rivals’ competing offerings. LinkedIn’s business model, for example, offers easy access, free registration and a mechanism for building scale.
WHY CAN’T YOU BE COPIED?
What makes your product or service unique – its competitive advantage – could be based on its rarity or its scale. LinkedIn’s free registration creates scale; scale is what makes it hard for other companies to compete by offering broadly the same thing.
There are myriad strategy models you can use to help with the process of determining the future direction of your company. Make sure that however you go about it, you cover the basics: who, what, how and why.