What Makes Businesses Special?
In a world where strategic planning often becomes a ritualistic exercise, the call for strategy therapy resonates as a transformative approach. Asking hard questions can uncover the true essence of a company and the strategic choices that define its future.
The annual strategic planning process is often perceived as a grand spectacle within companies, marked by high emotions and departmental defence of budgets. The inherent complexity of strategy planning is challenged by the need for increased honesty. Recently, there has been a transformative shift from strategy planning to strategy therapy, emphasising the significance of brutal honesty and self-awareness in organisational success and advocating for a more transparent and truth-driven approach to strategic planning.
The Essence of Strategy
At its core, strategy is not the convoluted concept many perceive it to be. It can be distilled into three fundamental questions: Where are we now? Where do we want to go? What is a credible path to get there? These questions, though seemingly simple, form the basis for effective strategic planning and therapy.
A significant hurdle faced by many companies is their inability to answer the first question, ‘Where are we now?’ with genuine honesty regarding their strengths and weaknesses. Market leaders often find themselves in this predicament because their success is inherited, leading them to lack a profound understanding of their source of strength. On the other hand, non-market leaders might assume weaknesses without acknowledging potential strengths.
To address this, strategy therapy introduces three sub-questions forcing leaders to confront their core beliefs:
- What is the one thing that makes our business special?
- How special is the one thing that makes our business special?
- How far are we willing to go to make this one thing truly special?
These questions encourage leaders to be unapologetically honest about their products, company, and category, fostering a deeper understanding of their position in the market.
Unmasking the True Source of Specialness
The first sub-question, ‘What is the one thing that makes our business special?’ urges leaders to identify the true source of their competitive advantage. Whether it is the product, company, or fortuitous timing, the exercise requires confronting uncomfortable truths. The transparency gained from this process accelerates subsequent strategy planning by aligning all stakeholders on the same page.
The second sub-question, ‘How special is the one thing that makes our business special?’ delves into the significance of the identified strength within the broader market context. Price elasticity, marketing mix modelling, benchmarking advertising spend to sales, and source of volume analyses serve as analytical tools to objectively assess the true impact of the perceived specialness. This rigorous evaluation separates genuine uniqueness from perceived superiority.
The third sub-question, ‘How far are we willing to go to make the one thing truly special?’ introduces three levels of specialness – being better, being the best, and being different/unique. Most companies tend to settle for being better, emphasising competition and market share. However, being the best involves improving and increasing the price premium, while being different requires a radical shift in product, business model, and data innovation.
Choosing a Path: Winner, Best, or Different
The profound impact of a company’s strategic choice is to recognise who they want to be – better, the best, or different. Many companies default to a ‘be the winner’ strategy, viewing competition as a zero-sum game. However, examples like Apple and Microsoft show that companies can evolve into complementary entities by choosing to design different futures. The choice is deeply rooted in a leader’s belief system, whether it leans towards scarcity or abundance.
Toyota envisions itself as ‘the most successful and respected car company in America,’ embodying a ‘be the winner’ strategy. Meanwhile, the BMW Group aims to be the ‘most successful, most sustainable premium manufacturer for individual mobility,’ aligning with a ‘be the best’ approach.
In contrast, Tesla’s mission statement, ‘accelerating the world’s transition to sustainable energy,’ reflects a distinctive ‘be different’ strategy. Notably, Tesla has embraced this approach by opening its charging network to other brands, open-sourcing patents, and offering to license its full self-driving software. While these actions may carry short-term costs, the long-term implications prompt a contemplation of whether traditional industry leaders like Toyota or BMW would make similar choices.
Leaders who default to scarcity often prioritise short-term gains and market share, neglecting the long view. In contrast, leaders embracing abundance fall in love with innovation and category design, creating a new future that addresses problems existing markets cannot solve. The essay emphasises that executives must critically examine their core belief systems to make informed strategic choices.
Moving forward, the superiority of strategy therapy over traditional planning cannot be stressed enough. Strategy therapy, marked by brutal honesty and an abundance mindset, allows leaders to embrace transparency and create innovative possibilities. By delving into the core beliefs of leaders, strategy therapy becomes a superpower that unlocks the potential for the greatest strategies.
