Your corporate strategy sets the direction for the entire organisation, especially the sales and marketing teams. It defines the language and focus of the company and is designed to align the business more closely to its market.
When developing your competitive advantage, you need to develop differentiation that is sustainable and real in the eyes of the customer. If your competitors can duplicate your differentiation without a large effort, then you are in trouble. The other side is if the marketplace or customers do not see your differentiation as important, then your competitive advantage does not matter.
Often you will see the differentiation shifts the company well away from the customers as the development has been done internally from a group view rather than from a customer view. The company has spent time finding what they believe is a gap in the market and may not have taken the time to understand the priority of that gap with their customers or target market.
Depending on where your company is operating, your corporate strategy may take one of these routes to the creation of differentiation:
High-performing companies often believe their product offering or services are leading the marketplace in a new direction. One of the most costly positions to take and usually comes off the back of a few growth years. The company executive confidence is high, and they believe they are market leaders. The company’s differentiation suffers from a false sense of superiority.
Lower-performing companies often convey a point of differentiation that customers do not prioritise nor pay for. That is a complete waste of time and effort, often leading to a downturn in revenue.
Although companies spend enormous amounts of time in the development of a corporate strategy, for many, the view is one-sided. Often we see businesses that are sold on the idea of their differentiation, more so than their customers.
Marketing departments can lead companies on journeys creating great materials and communications, but they do not resonate with the market. Internally they are seemingly connected to the market and make sense on some level, but never gain traction with customers.
The real test for differentiation comes when your sales team are in front of prospects and customers, and you see how they respond. The response of a prospect can be noticeably different to that of a customer.
A customer will show some excitement out of respect for your relationship, whereas a prospect has no loyalty. They are the true test and the highest priority target point for taking market share. If the prospect shows some excitement but there is no priority for engagement in further discussion, then you probably have not developed the right differentiation.
Sales teams can be great testers of differentiation. A sales team that can think independently and not be covered to provide the answers the company wants to hear. CEOs must invest time in the selling process and hear the information first-hand from customers and prospects. Test their ideas before committing to a strategy.
As CEO, the questions you should be asking yourself when in front of prospects are:
- Did they respond to that differentiation and are engaged and committed to taking the sales process forward?
- Are they replying to a presentation politely and deflecting their engagement to another point in time?
- Is your offer compelling enough to make them move quickly?
- Are they willing to pay for the differentiation even in a price-pressure market?
Differentiation can be engaging to a customer, but are they unwilling to pay more for it? If not, then it is valuable to you. If the customer is only replacing another product but you are not increasing profitability, then the differentiation is lost. These are unsustainable differentiations. They are gaining sales, but differentiation is designed to achieve increased market share and profitability. If these are not achieved, then it is a false differentiation.
Another differentiation is the development of unique technical talent or patented intellectual property. These are the strongest positions in the market, but the questions a CEO must ask are:
- How much capital needs to be invested in creating a unique talent or property?
- How long will this take to create, and will the marketplace still want it?
- Can others create a property that diminishes the value quickly?
- Are we investing in property that others have already exited?
- How long will it take to gain a return on investment?
- How much sustainable market share will be gained?
The creation of corporate strategy is a task that is often delegated to external consultants or other parties to develop, and the CEO makes a decision on what they present. This is most often the process that fails to deliver real value to the company.
The CEO’s primary role is to have the vision and understanding of where the company can go and the level of investment and risk they are willing to take to make that journey.
For a great corporate strategy that provides sustainable growth, the CEO must own the strategy and deliver the first draft. They must be connected to the market through sales and understand the challenges of the customers and competitors. A CEO’s first approach is then unfiltered with a concentrated view of where your company can go in the next three to five years. Then you can bring together a team and have them develop it further. Understand the impact on the company and the customers and the extent of change required for the strategy to be delivered.
The corporate strategy should be scoped for its revenue and profitability value in the market and understand how much market share will be gained. It must have the flexibility to meet changing markets and continuously be adjusted for alignment with customers.
To discuss methods CEOs can apply for strategy development, please contact Adele Crane directly.
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