I enjoyed reading the “Can you say what your strategy is?” article this week because it prescribes specific elements needed for a well-crafted and actionable strategy statement. The authors advise that leaders address the objective, scope, and advantage in the statement, as well as a time frame. The inclusion of a time frame (which I’m sure induces anxiety along with excitement in leadership) commits the business to the strategy’s achievement.
With regard to competitive advantage, Collis and Rukstad talk about how tradeoffs are what distinguish companies strategically. This concept frames the things that are excluded in a strategy statement as just as important as the things that are included. In other words, it requires leaders to carefully distill a company’s competitive advantage to a segment or direction of an industry, anchoring the process of strategy-making.
Applying these principles to the Edward Jones case study, the fact that the brokerage firm has not extended its scope in other directions beyond targeting the “delegator” type of investor is its secret to success. It facilitates EJ reaching the strategic sweet spot of meeting customers’ needs in a unique way and “reap[ing] the benefits of simplicity, standardization, and deep experience.” The authors go on to give several descriptions of how everything from their branch locations to the office culture links back to this common strategic denominator of consumer focus.
Zipcar is a parallel example of a company that, at least from the outside, seems to have a cohesive and articulate strategy reflected by their business practices. The car-sharing service targets a unique segment of customers: millennials living in the city, who cannot afford (or simply do not want) to buy a car but need one on an occasional basis. Zipcar primarily uses Twitter, Facebook, and other social media as channels to communicate with consumers and quickly respond to feedback, as well as for promotions. The company has achieved the strategic sweet spot where its capabilities and its customers’ needs align in a way that competitors cannot match. Its latest move, to expand to college campuses, reflects a deep understanding of their consumer base.
Again, it is significant to note the company’s deliberate tradeoffs. Zipcar is not popping up in suburbs or remote locations in the United States. The move to expand to college aligns with their strategy statement and facilitates a natural progression of capturing more of the millennial market segment, since college campuses offer them large concentrations of potential customers.
One last key takeaway is that a strong strategy statement is not enough in and of itself. Strong leadership and decision-making regarding timing, execution, and human capital are key factors to success. Through these practices, Zipcar is able to replicate EJ’s success in the car-sharing industry with focus, simplicity, and standardization.