Let’s face it. The Corporate Strategy carries a lot of weight. This is where the direction for the company is defined. It needs to pull insights from the external marketplace and use those to make choices such as “why do we exist,” “which markets will we choose to compete in,” and “what strategic advantages will we develop.” One of the main goals of the Corporate Strategy is to enable the functional strategies to be developed.
Here is how best-in-class CEOs define that corporate strategy:
What is a Corporate Strategy?
Corporate Strategy is the allocation of people, money and time to generate profitable growth.
What does a Corporate Strategy do?
A Corporate Strategy puts the company in the best position within the marketplace.
What does it mean to use a Corporate Strategy?
Using a Corporate Strategy means the entire organization has the direction they need to achieve the Corporate objectives.
Okay, you understand what defines the Corporate Strategy. So, what’s next?
There are eight steps to defining the right Corporate Strategy: Mission, Vision, Values, Brand, Objectives, Markets, Competition and Advantages. In the rest of this section we will detail each of the steps and provide guidance on how to pull them off.
Follow these eight steps to set the direction for your team to grow revenues organically. This will allow your entire team to align their strategies, your strategy and one another’s strategies.
Market Research – The primary feed into your Corporate Strategy. Market Research will tell you about the external environment in which you operate. You need that grounding to ensure the strategy you set for the rest of the company is one that will serve the marketplace well.
Product Strategy – The Product Strategy needs to know how to focus their product investments. The product decisions will impact all the downstream functions and therefore need to be given the proper guidance.
Marketing Strategy – The Marketing Strategy will open up opportunities in the markets in which you choose to compete. Your strategy will direct them on where to focus, determine who to compete against and what advantages to stress, resulting in your company gaining an advantage.
Sales Strategy – The Sales Strategy needs to complete the value chain started with Product and Marketing to ultimately turn prospects into customers. Your strategy will set in motion the necessary alignment, which will end with actual sales meeting the revenue objective.
Talent Strategy – The Talent Strategy needs to recruit people to execute the strategies. The direction your strategy sets will be used as a recruiting tool for talent and guide the Talent team on the type of people your company should attract.
PHASE 1 – MISSION
Define why we exist.
If you don’t know why you exist, you have no foundation upon which to grow your company…
A company that has not defined why it exists has no foundation to build upon and no basis for growth. External customers will be confused about your plans and goals. Your employees will not be unified in pursuing your objectives. Investors will have concerns about your survivability. Is your company in jeopardy because it is not built on a solid foundation?
Complete the Mission phase by answering the following:
- What is the driving force behind our company?
- How do we benefit customers?
- What are the main products we offer?
- What markets do we serve?
- What is our commitment to survival?
- What are the philosophies that guide the organization?
- What do we want our public image to be?
Phase 2 – VISION
Define what we want to become.
If you don’t know what you want to become, you have no direction to pursue…
With no vision of what you want to become, you have no idea where you are going. How do you lead the company without knowing where you are headed? Are you wasting resources because you haven’t set a clear vision?
Complete the Vision phase by answering the following:
- What does the future hold for us?
- What is the purpose we are working toward?
- What do we want to ultimately achieve?
- What is a stretch goal to rally around?
- What would inspire our people?
- What would be memorable for our customers?
- How do we want our leaders to allocate resources?
Phase 3 – VALUES
Define how we behave.
Values are more than words on paper; they are the principles never to be violated…
Many companies have values that are just fluff. They spent time thinking about how they should behave, but they never made the values real through their actions. Values should set the tone for the company, drive the culture, and determine the rules of engagement to use with buyers. Your company is at risk if your values aren’t guiding how your teams act.
Complete the Values phase by answering the following:
- How should we behave?
- What rules will we never tolerate breaking?
- What are our rules of engagement internally? Externally?
- Are we willing to stand for our values even when they are tough?
- What values will set us apart from the competition?
- What behaviors will result in a rallying cry for employees?
- How can we live up to our values today? In the future?
- What impact will our value decisions have on employees? On customers?
Phase 4 – BRAND
Define how we serve customers.
You made a promise to your customers but fail to deliver against it at all times…
If a promise gets broken, trust is lost. You can’t afford to lose trust with your customers. With the reach of social media, a single mistake in how you serve customers can go viral in a hurry. Therefore, the promise you make with your customers must be sound and something you can live up to. Have you considered the best way to serve your customers?
Complete the Brand phase by answering the following:
- How do we add value to customers?
- What promise do we make to our customers?
- When a customer hears our company name, what do we want them to think?
- How do we want our market performance to reflect on our brand?
- How do we want our offerings to reflect on our brand?
- How do we want our mind share with customers to reflect on our brand?
Phase 5 – OBJECTIVES
Define the objectives we must achieve.
You set objectives but have no plans to measure them…
If the Corporate Strategy doesn’t set Companywide objectives, then the functions within the company have no common definition of success. Each is then left fending for the isolated objectives they believe are important, or possibly ignoring the objectives because they are not constantly being measured. Objectives need to drive daily decision making from the CEO down to all levels of employees. Do your employees really know what objectives they are working to attain?
Complete the Objectives phase by answering the following:
- What are the company objectives that must be met?
- What are the Product objectives that support the Corporate objectives?
- What are the Marketing objectives that support the Corporate objectives?
- What are the Sales objectives that support the Corporate objectives?
- What are the Talent objectives that support the Corporate objectives?
Phase 6 – MARKETS
Define the markets we will and will not compete in.
Too many markets, too little money…
Market choices aren’t easy, but are necessary. If you haven’t defined the markets in which you will compete, you leave it up to each individual employee to make that decision. That leads to conflict and competing priorities. Are you leaving the market choices up to your people or have you given them the guidance they need to be successful?
Complete the Markets phase by answering the following:
- What is our definition of a market – industries, geographies, segments, products, buyers, etc.?
- What defines an attractive market to us?
- Which markets are we not going to serve?
- Why are we focused on serving these markets today?
- Why would we be interested in serving these other markets in the future?
- What is the size of the markets we want to pursue?
- What is our share in those markets?
- What are the critical success factors required to have success in those markets?
- Who buys in the markets we choose to serve?
- Who are the key users of our products in our markets?
- How can we best reach buyers and users in our markets?
Phase 7 – COMPETITION
Define the competition we face in each market.
You don’t know your competitors, so you can’t beat them…
No market is without competition. You have to be prepared to compete and ultimately win. You need to know your competition and have clear strategies defined on how to beat each of them while also being prepared to defend how they are going to try to beat you. Do you know the competition well enough to develop your win strategies?
Complete the Competition phase by answering the following:
- Who are our competitors in each market?
- How do our competitors beat us?
- How do we beat each competitor?
- What future moves are our competitors likely to make?
- How will we respond to our competitors’ moves?
- What are our strengths vs. each competitor’s strengths?
- What are our weaknesses vs. each competitor’s weaknesses?
- What is our best capability vs. each competitor’s best capability?
Phase 8 – ADVANTAGES
Define the unique advantages we will have in the marketplace.
You aren’t certain what you do better than your competitors…
There are three sources of competitive advantage: Price, Product and Customer Experience. If you have not picked one, your customers will pick one for you: Price. If you have not optimized your cost structure for Price, it will cost you revenue and margin. Have you proactively defined your competitive advantage and invested in achieving it? Or are you letting your customers pick Price for you?
Complete the Advantages phase by answering the following:
Which of the three sources of competitive advantage should we pick: Price, Product or Customer Experience?
- If we pick Price, how are we streaming our cost model to deliver our products to market at a price lower than the competition?
- If we pick Product, how are we investing in our product so it is superior to the alternatives in a way that buyers value?
- If we pick Customer Experience, how are we creating a unique experience that our buyers are willing to pay for?
- How have we ensured we do not suffer from false differentiation – differentiation that is not important to the marketplace or is a false presumption of superiority?
- How have we ensured we do not suffer from uneconomic differentiation – differentiation that customers are not willing to pay for?
- How have we ensured we do not suffer from unsustainable differentiation – differentiation that is easily imitated?