172 – Is Your Firms Strategy Driving Sustainable Growth?

  • October 23, 2018
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172 - Is Your Firms Strategy Driving Sustainable Growth?

Welcome to part two on Strategy, if you are a new listener welcome to Inspiring Greatness where we interview amazing business owners or share business tips on how to help you grow your business and increase profits.  If you have not listened to last week’s episode you may want to go back now and listen to episode 171 which was part one on this strategy segment.  I covered Simon Sinek’s golden circle understanding your WHY and core purpose.    Today we will identify what operational activities can you do… 3 to 5 activities that set you apart from the competition - These are process that your company uses to deliver your products or services.  What makes your company different?

In Michael Porter’s Harvard Business Review article ‘What is Strategy?,’ he defines and shares the value and example(s) of having 3 to 5 operational activities (processes a company does to deliver its product and/or service) to both differentiate and give a company a competitive edge in their market space. He also says, “The leader must provide the discipline to decide which industry changes and customer needs the company will responds to, while avoiding organizational distractions and maintaining companies distinctiveness.”   One of the leader’s jobs is to teach others in the organization to say NO!

What is very important is activities that set you apart and makes your company different.

Another important point is to not do to many even if you find two synergistic activities and implement them well you will see a big difference in revenue flowing into your business.

To help illustrate let me provide you with two examples, I highlighted in my last workshop with a group of accelerators at Entrepreneurs Organization.   First one is South West Airlines and the second one is Top Golf.

Southwest Airlines has drawn a lot of attention over the past couple of decades as a thriving company in the midst of an otherwise sluggish and seldom profitable industry.

I’m sure there are some on my listeners who have flown South West….  I have a while back and not only great value for money it was so much fun.  The flight crew were hilarious.  Regardless if you have flown with them or not they had such amazing strategy no other airline could compete. ‘Southwest Experience known as the ‘Company of Luv.’ They are one of the best examples of thoughtfully developing and using Differentiating Activities to outperform their competitors in the market and deliver industry leading profitability.

The difference, for Southwest, is that it simply does things differently.

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Michael Porter insists that “operational excellence” -- doing the same thing the same way as a competitor, or even doing it better -- will not yield a sustainable advantage. While the other major players in the airline industry have had a difficult time differentiating themselves from their rivals.  Only the paint differentiates one company's airplanes from another. In Porter’s view, strategy is “the creation of a unique and valuable position, involving a different set of activities.” Companies that are strategic in approach find a way to be different from competitors. Companies that adopt a “me-too” approach are seldom successful. In order to excel, moreover, companies must establish differences that they can preserve.  Competitive strategy is about being different.  It means deliberately choosing a different set of activities to deliver a unique mix of value.  Southwest uses a truly different business model. Southwest tailors the activities of the organization around its strategic focus on low cost travel:

  • Minimizing turnaround time at the gates by avoiding seat assignments and carefully managing the queuing for aircraft boarding.
  • Simplify operations by using one and only one type of aircraft – the Boeing 737.This means every pilot and mechanic is capable of working any plane in the fleet. Economies of scale on buying plane/parts on discounts
  • Use secondary airports and mid-size cities
  • Avoiding non-essential services such as in-flight meals in order to cut cost and enhance efficiency of operations.

This set of activities focused on competitive activities ensures that no full-service airline can compete with Southwest on cost.

In a nutshell, the secret to Southwest’s success is keeping the attention of its people on the work that differentiates the company from its rivals.  Choices and decisions at Southwest are made with the intent of keeping organizational design aligned with business strategy.  They were able to state their strategy internally in a simplistic manner that everyone could understand what activities they could do to contribute!  – Wheels UP!   How long can the seat be full as much as possible.  How quickly could the ground crew turnaround an aircraft? 25min. 

Another example in the golf industry.

TOPGOLF – Innovative leap in Customer Value Makes Companies Successful

Twin brothers Steve & Dave Jolliffe started Topgolf over 20 Years ago.   They wanted their driving range to appeal to a larger younger customer base looking for fun, active and socially connected sport/entertainment experience.

Do you like to golf?  Why or why not?  If you think about golf, it’s expensive, takes too much time, stuffy image, intimidating and complicated to learn, not much alignment with contemporary social life styles.  I remember one of my most embarrassing moments was with my mom taking private golf lessons.  We were on the driving range I hit the ball and it deflected off the divider and in less than a second, I could hear the instructor moaning.  I turned around to see him holding his forearm.  In a lot of pain, he said, “I have never been hit standing behind the golfer… This lesson is over!”

For those of you who have not experienced TopGolf, it’s like a combination of a driving range and bowling.  We took out boys to the one on the gold coast a few weeks back and everyone had so much fun.  It’s high tech with gamification.  You can have up to 6 people in each booth pick for a ton of games or courses.  They supply the golf clubs and balls have microchips to track points.  You can order food and drinks delivered to your booth.  You can watch a short video on our show notes page to get a better understanding of the venue.  For now, lets just look at Topgolf’s Eliminate-Reduce-Raise-Create grid to identify golf industry pain points & alternative-industry opportunities:

I hope those two examples got your brain thinking about your company and how you can differentiate yourself from your industry competition.  Now let’s review 5 key attributes of a company’s differentiating Activities.

  • Few, yet specific action on “How to” execute business
  • Differentiates you from your competitor’s execution
  • Synergistic when 3 – 5 actions are combined SW ground crew
  • Results in “barriers to entry” by competitors – TopGolf 22 Million to set up
  • Derived from the one phrase strategy – Wheels up

What handful of strategic, yet practical processes and activities will you take to differentiate yourself within the markets you compete? How do choose these Differentiating Activities? There are 3 practical steps to help you draft your initial set of 3 to 5 Differentiating Activities on the free worksheet provided on our show notes pack, they are:

  • Review your Brand Promise (and Core Customer). What is it that you are promising to your Core Customer, and what Execution activities (and processes) will help you do it better, faster and less expensively than your competitors (and ensure a superior user experience)?
  • Start with identifying 10 activities/ideas you can do differently or what systems/processes can you set up to fundamentally day in day help you scale and grow. Fill them in the bottom left hand circles on the worksheet.
  • With your team complete the right side of the exercise to discuss and pick the top 3 to implement.

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Quote from Micheal Porter “The essence of strategy is choosing what not to do”.

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