If you’ve been keeping up with my previous posts on the topic of planning you hopefully now have a vision for your business (or yourself) and have identified your key strengths, weaknesses, opportunities and threats. You’re well down the road to having an effective, results-producing plan and should already be starting to feel a better sense of focus and direction. Now it’s time to turn our attention to developing your strategy.
Let’s review what strategy is all about with a simple example. Take a look at the following summary SWOT analysis for Orion Security, a 10 year-old fictitious company that sells both residential and commercial security systems. Orion currently has 196 commercial and 376 residential accounts. Part of its three-year vision is to more than double these numbers—to 400 commercial and 800 residential customers. Note that an actual SWOT analysis would go much deeper. I’ve kept this one “short and sweet” for discussion purposes.
- Local company with ties to the community
- Long-term, experienced technical staff
- Loyal customer base
- Good relationship with local law enforcement (owner is a former police officer)
- Limited cash flow
- Sales leads limited primarily to passive referrals from customers and a few networking partners and yellow pages ad
- Growing population
- Burglary rate on the rise
- National companies advertising aggressively on price
- Potential non-response ordinance
Your Focus Needs More Focus
A company rarely succeeds or fails for minor or trivial reasons. That’s one reason I don’t believe in long, highly-detailed plans. The key is to focus on the big picture and not get lost in the weeds. (Sometimes referred to as “analysis paralysis. Or as Master Han put it in the remake of The Karate Kid: “Your focus needs more focus”.) That said, the questions raised by this simple matrix raise other important questions and suggest some potential strategic directions:
- The currently limited cash flow means that large expenditures on advertising are off the table. (Which, in my book anyway, is okay since traditional television and radio ads are relatively ineffective.) However, the customer base currently provides a number of passive referrals. What if the company became more proactive in leveraging the loyalty of its customers?
- How might the positive relationship with law enforcement be used in concert with the growing crime problem?
- What steps can be taken to avert the threat presented by the passage of a non-response ordinace?
- How can Orion counteract the price-based advertising blitz of the national companies?
Again, these questions and issues lead directly to the strategy.
What Exactly is a Strategy?
In a nutshell, strategy describes what you are going to do in a very broad sense. Once a strategy has been decided on, then a tactical plan is put in place that details the specifics of how that strategy will actually be implemented.
Strategy is typically focused on one of the four “P’s” of what is referred to as the marketing mix. Those “P’s” are Product, Price, Place and Promotion. For instance, a security company in a particular market area might decide to focus on providing the most technologically advanced security equipment available (Product). Another might decide its strategy will entail becoming the “low price leader” in its market area (Price). Another could focus on its ability to quickly install a system or offer DIY online sales (Place), while yet another could focus on becoming the most “visible” provider in its market area by flooding the market with advertising and other promotional efforts (Promotion).
Yes, all of these companies will cover all four “P’s” of the marketing mix. But from a strategic standpoint, their primary focus (strategy) will center on doing one of them extremely well in order to stake out a specific position (image) in the marketplace. Deciding on a specific strategic focus helps crystallize what should be done in terms of tactical implementation to reach the strategic goal. Once again, strategy describes the what and tactics detail the how of a marketing plan. (In case you’re wondering, why and when are detailed in your vision and goals. Who defines the people responsible for achieving specific objectives in your tactical plan.)
Beyond the Four “P’s”
While the traditional four “P’s” of the marketing mix are a useful starting point, I’m going to strongly recommend that you don’t use any of them as a strategic focal point. Why? Because for security providers there is another “P” that is far more effective. One that creates a powerful competitive advantage for the companies wise enough to focus on it as their primary positioning strategy. I’ll cover that incredibly potent fifth “P” next time around.