How do you set yourself apart from your competition? That’s an essential question that every successful business has a readily available answer for – and for those looking to get a competitive advantage, clarifying your company’s distinct competitive positioning from among different types of business strategies is a strong starting point.
While many business leaders think they have a handle on how to implement successful business strategies, the statistics show otherwise: only about one-third of organizations reach their strategic business goals.
So why do strategies fail? Frequently it’s because leaders fail to specifically define their business strategy and get their teams to internalize the implications of the choices they’re making–including what they are saying “No” to. Too often leaders only share a directional idea of what they want to accomplish in the market but lack a fully fleshed-out set of objectives and tactics that will accomplish those desired goals. Lacking unity, they struggle to optimize the allocation of resources to drive the desired results from their competitive strategies.
Considering that 61% of senior executives acknowledge their organizations have done a poor job bridging the gap between strategy formulation and day-to-day implementation, it’s clear that in order to reach your business objectives, you must understand the various types of business strategies and how to implement them.
With that in mind, let’s start with a business strategy definition, followed by business strategy examples that demonstrate how to effectively position your business for growth.
The Common Confusion With Business Strategy
A frequent point of confusion when defining a business strategy is distinguishing between operational effectiveness and a differentiated business strategy.
Being more efficient isn’t a sustainable strategy. Why? Because productivity and efficiency are too easily replicated across the industry via best practices being aped by competitors. Good strategies are far more difficult to reproduce because they focus on differentiation.
An effective business strategy, then, focuses on defining a set of mutually reinforcing choices that create a unique, sustainable, and valuable position for your company in the market. To create sustainable growth within your target market, your strategy should focus your organization on performing different activities compared to rivals, or performing similar activities in different ways.
While there are many distinct components of a business strategy, there are two greatly important considerations that can’t be overlooked.
Don’t Overlook These Critical Business Strategy Considerations
The first is that strategy has a shelf life. While you set strategies for the long-term, the best planning in the world can’t possibly account for all the unpredictability of a rapidly evolving market. Business owners must regularly review the market, adjusting and adapting their strategies to emerging information and technologies.
The second is that you’ll never achieve 100% agreement across the organization – and that’s okay. A differentiated strategy means targeting specific activities that will set your business apart from competitors, and by definition, that means disproportionately resourcing internal activities, even to the point of complete exclusion of others.
You may get pushback for this.
But it’s vital to recognize that your business can’t be all things to all people (that’s precisely why so many business strategies fail). Committing creates focus and that will cause unease for many leaders on your team. But clarity is hugely important as it helps arbitrate disagreements within an organization when executing your strategy.
With the ‘what is business strategy’ question resolved, we can now move on to identifying specific company strategy examples.
Company Strategy Examples
When you break down the types of business strategies, the thing to remember is that they’re all different ways of achieving the same objective: profitable growth by establishing and preserving a different, unique product or service relative to competitors.
Your integrated set of business choices, how you allocate resources to support orchestrated execution will send clear messages of how you intend to win. Several ways of differentiating your position are explained below:
Differentiate on Cost
If you provide a product that can undercut the higher prices of a competitor while delivering similar or fair-priced quality, then your business strategy will power growth.
For successful examples, see the proliferation of budget airlines across the globe. Ryanair, for example, gives you none of the frills and add-ons, but for a much lower price. This has helped the company carve out a loyal customer base of budget flyers.
The above is an example of cost-based focus, which is different from cost leadership strategy. Cost leadership involves creating an entire business model that is built around producing a near-equal product to rivals for a reduced cost, instead of the above, which offers budget prices for budget services.
Differentiate on Service
By targeting a very specific product line, niche market, or catering to an edited set of types of business, you can create a differentiation strategy revolving around service.
Jiffy Lube provides a very specific, narrow set of services (auto lubricants only) to a very broad customer base. This differentiates it from rival auto-service companies that offer all-in-one care. But by doing this, they can offer higher service levels for lower cost as they create a laser focus on their specialization.
This example also perfectly illustrates the fact that strategic positioning by definition means forgoing some services in order to focus on what will really differentiate you in the market. Jiffy Lube had to close itself off to the other auto-repair services in order to specialize, but that helped build a specific value proposition and brand reputation in consumers’ minds to fuel their growth.
Differentiate on Innovation
Competing through introducing innovative products and services in the market can be difficult to achieve but is highly rewarded when successful. This differentiation is based on producing or delivering a good or service in a novel way that sets you apart from the competition.
A classic example is Netflix, which destroyed the Blockbuster bricks & mortar delivery model first through mailing rentals directly to consumers, then by taking advantage of rapidly evolving technological innovations to further satisfy consumers’ desire for convenience through its streaming service.
This is also the perfect example of a company that had an adaptable strategy. They didn’t rest on their laurels with postage-based rentals and instead became an international juggernaut by being a first-mover in the streaming sector. Now, they are a major competitor in proprietary content generation, competing directly with television and film production companies.
Differentiate on Speed
Being faster at delivering your product or service relative to competitors is another key differentiator.
Amazon is a perfect example of a company that has access to a broad selection of consumer products with the speed of delivery as a key strategic component of its business plan. In the e-commerce industry, after all, speed of delivery to a “want-it-now” consumer base is a distinct advantage, and being able to trump competitors in this way has helped build Amazon to become what it is today.
Successfully Executing Your Business Strategies
Starts Here
There are ultimately hundreds of activities that a business needs to engage in to differentiate itself from the competition. Your integrated set of choices ultimately drives the capabilities you must build within your organization to successfully deliver your promised value to the market.
If you want your business strategy to be one of the few that succeeds in all its objectives, then Navalent has the expertise, resources, and knowledge to help you attain that goal.
Contact us today for a free 15-minute strategy session to discuss your business strategies and how to best execute them.