Should We Stay or Should We Go? – Part One

By Paul Wiefels, managing director & co-founder of Chasm Group, LLC


A new year brings with it fundamental questions for organizations: Do we stay the course, adjust it, or change it significantly? Staying the course is relatively easy when compared to changing it. Change of any sort represents uncertainty, risk, overcoming inertia. Teams can get stuck figuring out where and how to start, what to consider, what’s of primary versus secondary importance and so on—potentially resulting in a lot of wasted effort. Or they engage in their “usual process” which can seem rote or overly quantitative.

We prefer a practical, efficient framework comprised of a set of questions that guide leadership teams through a systematic review of the elements that both reflect and create, value. This supports a structured inquiry to inform what organizations can do—at any point—to improve their overall performance and competitive standing.

The goal is to answer the question “Do we need to change our strategy? And if so how, and by how much?” This decision requires evaluating the output of the remaining questions in the framework. The first three questions that precede this question delve into the environmental contexts that will inform your answer.

First, ask “What is going on now?” What’s changed since you last reviewed your fundamental approach to how you can improve your competitive position and thus potentially justify both preferred status and a higher valuation?

The primary objective of boards and their leadership teams is to increase the value of the enterprise, typically reflected in revenue and/or earnings realized in the present; and managing the probability that future prospects for both will remain both favorable and reasonably predictable. Present day results are a function of your relative competitive advantage. Answers to this question might include, for example, customers are changing their buying habits which no longer favors incumbents. Or variously, a competitor has launched a successful new product that puts ours at risk. Or we’re now being outspent in demand generation and/or distribution capacity.

Data and analytics are important tools here to be sure. But to quote Bob Dylan, “You don’t need a weatherman to see which way the wind blows.” There is a premium on realizing and acknowledging clear-eyed, objective truths. Quickly. Beware of mistaking a mirror for a window.

Next, ask “How has our category changed?” Is it growing in importance, static, or diminishing relative to other categories competing for a buyer’s budget? This informs how long and persistent the future earnings potential remains for the category as part, or all, of your portfolio. Before customers and investors choose companies, they first choose categories (particularly in B2B). Much of this choice hinges on how valuable the category is perceived to be, measured in its ability to create substantial, meaningful advantage relative to other categories.

The answer to this question comes with myriad decisions that may include a fundamental rethink of how you approach your position in it that could include exit, M&A, specialization and greater focus on how you create and convey value. Or simply remain patient and stay the course.

Now, ask “How are we doing relative to the category?” Are you winning, losing, or keeping pace relative to your reference competitors?

Often this is a function of your relative and relevant differentiation compared to your reference competitors. It is common practice (and conventional wisdom) to differentiate on your features or functionality in an effort to create performance differentiation. What is often overlooked in tech markets particularly is basing your differentiation on other skill sets which might include operational excellence to create a price or delivery difference; customer intimacy to create customer preference and loyalty; and disruptive innovation to create, at least initially, paradigm or alternative usage differentiation.

The strategic principle underpinning each is to differentiate from competitors by outdoing them (or “majoring”) in one or more of these areas. Note: do not attempt all four. Finally, do not overlook the potential for differentiating on the basis of who you serve and why, as your first point of strategic clarity. That is, determining which customers will find you more or less attractive, and focusing on the former. No market entrant in any economic competition serves all. It’s a big world and there are plenty of customers. If you see only scarcity, you may be looking in the wrong place, and for the wrong reasons.

Next time, we’ll ask the question, “Do we need to change strategy? And the questions that that underpin whether it can work in practice.


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