By David Paschal, Managing Director, Owner Resource Group
Founders often ask us how ORG can be helpful with their company’s strategy.
From our experience, a lot of people use “strategy” to describe things that aren’t strategy at all. Mission, vision, and core values matter, but they aren’t strategy. A list of priorities isn’t strategy. “We treat our customers well” is not a strategy either, it’s just table stakes.
So what is strategy?
Strategy is something a lot more specific; it’s a deliberate set of choices about how the company can create more value than it does today.
Well…what is value then?
Value is the gap between what your customers (or potential customers) are willing to pay for your goods or services minus the full cost to deliver those goods or services. The wider that gap…the more value you’ve created. So, if that is value, and strategy should be geared to widening that gap, there are two ways to do that.
- Increase what customers are willing to pay (through real or perceived differentiation)
- Decrease the cost of delivery (efficiency, scale, improved processes)
Strategy, impacting either or both levers, is the set of choices that the company makes to widen that gap. Easy enough! Well, not quite…
Not all advantages last
As founders and executives know from experience, not all strategies are made equal, because not all strategic actions are as durable as others. A strategy that can be easily replicated is a temporary advantage. Easily replicated initiatives can still be worth pursuing, but don’t expect value to endure. The best strategies endure. Look for options that will continue to pay off over time, like increasing switching costs, adding proprietary processes, or increasing capabilities.
Where we can help
With our Partner Companies, we typically start with an offsite strategy session. We revisit the mission, vision, and core values, then get to strategy: where does the company win today, and why? From there, we help leadership identify a few clear choices to widen the gap, and test whether those advantages will last. If you’re thinking about where to take your business next, we’d welcome the conversation.