It is the 2nd of January 2020.
In Mindspark 1, you identified the opportunities around you. You also made an analysis of challenges in your way of tapping into them.
A strategy is needed only when two things are present: an opportunity to tap into. Or a strategic challenge to solve. You cannot tap into an opportunity unless you address internal impediments to growth. It is against this background, we define strategy as “a process of making choices to win with stakeholders specifically customers against the competition.”
Back to your opportunities.
For each opportunity, categorize against the respective market niche or opportunity segment (Table 1). The list on top, columns, should be adjusted depending on your industry and chosen career direction. If well done, this helps you define your business model precisely.
Table 1, business opportunity mapping to the market segment
Identify the top 2 opportunities to pursue. There are three things to consider:
- Scalability – ability to increase supply to meet market demand. The opportunity you chose should not be restrictive in terms of supply-side. You need a business where you can easily meet the demand without incurring high marginal costs, in a way that your jaws ratio stays low.
- Wide market – the larger the market for your products and services the better. Utility companies are successful because of the mass market. The services are life-essential that all the focus is on production and operational efficiency. Since the demand side is assured if a quality product is offered. Platform businesses like Amazon, Google, Facebook, etc have a mass-market appeal and the reason for their unprecedented success. Such companies are also scalable – the same platform can serve 10000 subscribers or 1 million subscribers or 1 billion subscribers with a limited incremental capex.
- Contribution per product or service sold. Focus on products with small contributions but fast turnover. That is the ideal. As you tick off your opportunity matrix, you will understand your business and optimize it.
Next, clarify your strategic problem. What is your most pressing issue?
Defining your strategic challenge is key to finding a winning solution. Take a lot of time analyzing the problem. There are three possible choices to win:
- Low-cost focus
- Differentiated focus, and charge a premium
- A combination of differentiation and low-cost offering
Low-cost focus is an ideal strategy for companies that sell products targeting the mass market. Beverage companies aim at standardized processes to deliver low costs of operations so as to deliver a standard high-quality product that meets all the minimum health requirements and reasonably priced to be afforded by the mass market.
In differentiated focus, the company aims to offer a quality product to a special market segment – the A-class. For example, some car manufacturers focus on selling just 100-500 units per year. Each unit is highly-priced that only very few people can afford it. One would say, Apple’s products are not meant for the mass market.
For mixed low cost and differentiation is to try to reach a compromise – to meet the middle class. Offer a product that is not so cheap and not of poor quality as well.
Today, as consumers become more aware and technology developers to the level of AR/ VR, machine learning, AI, robotics and platform business, the best choice is a product that is high quality and cheaply priced. That is why a digital-driven business agenda is the best bet.
So, what is your strategic problem?
Inbox, or comment below so that we can discuss it.
Tomorrow, we discuss more about strategic choices for your personal strategy. Your homework. Get a piece of paper and list down all your personal and business challenges. Categorize them into operational, strategic and tactical. From the strategic challenges, further, classify them into – market segment, current capabilities, costs, competition and industry structure. From this, state the strategic problem that your strategic planning must solve.
In Mindspark 3, we explore further on this.
NB: Due to demand, I will take on 10 people as their accountability partners. If you are interested and you need someone to help you execute your personal career plan, drop me a message.
Copyright Mustapha Bernabas Mugisa, 2020. All rights reserved.