Strategy represents the choices we make about the future - where to play and how to win, to achieve our goals and ambitions. I like the sentiment of Roger L. Martin’s HBR article from 2014 The Big Lie of Strategic Planning as for me it characterises the challenges we all face when making decisions in light of an unknown future. He talks about how fear and discomfort are essential parts of strategy making and that if you are entirely comfortable with your strategy, there’s a strong chance it isn’t very good. I agree that ‘true strategy’ is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success. Making tough choices based on deep competitive understanding is the focus of this week’s post.
Over the past few weeks we have been exploring a 6D approach to competitive strategy based on experience working in this area within the Pharmaceutical and Biotech industry. We explored three areas so far, all focused on gaining a deeper understanding of the competition. First we summarised some simple tips around defining your competitive set. Week 2 we reviewed the importance of a discovery process, focused on deriving competitive insights. Last week we considered how competitive simulations can help you decode competitor strategy. This week we introduce the most critical component of the 6D process; distilling what this all means for you and your strategy…
A quick reminder of the 6Ds:
- DEFINE your competitive set
- DISCOVER insights about selected competitors
- DECODE their strategy
- DISTIL the implications for your own strategy
- DELIVER a competitive plan
- DASHBOARD to actively track competitor moves
- DISTIL the implications for your own strategy
Last week I introduced competitor simulations such as The Competitoroom as one of the best, and most interactive, ways of decoding competitor strategy. Competitor simulations provide an ethical, strategic test-bed for decoding the strategies that competitors could deploy and, if delivered well, provide a critical pressure to your current plans and/or thinking.
I suggested that competitor simulations can sometimes become over-engineered and that it is wise to consider a more qualitative approach. One of the key benefits of this ‘business is business’ approach is playing out various scenarios and role playing interaction between competitors’ actions and reactions. I believe this enables a richer understanding of the implications and consequences; what it will really take to win. Often, competitor simulations become too focused on the competition with little thought given to the implications for your own strategy and approach; ultimately a solid approach should lead to a clear definition your own strategy. Whether that is pressure testing an existing plan or generating a new one.
With the right process and challenge we can apply this ‘strategy is placing bets and making hard choices’ thinking to our competitor simulation. Having reviewed each competitor in detail, considered the interaction and interplay between competitors and possibly covered one competitor under multiple scenarios we must now define the competitive issues that our strategy must address. This requires discussion, evaluation, some iteration, criteria for decision making and a dose of good judgement. Ultimately you need to distil all of your competitive market insights and analysis into a set of strategic choices that address the identified challenges and opportunities. Remember that fear and discomfort are essential parts of strategy making and if you don’t feel slightly uncomfortable with your decision making or prioritisation, there’s a strong chance that you haven’t really made any tough choices.
TIP The process of ‘distillation’ required to identify the key competitive issues is best achieved by breaking down the challenge into manageable steps and objectively weighing up the findings, information and insights in a logical and thoughtful manner. For example it is often useful to consider the priority challenges by competitor before considering the challenges across competitors. Using some simple criteria (backed with data where possible) can help with decision making e.g. Timing of impact, probability of happening, threat to current strategy, level of risk, number of competitors focused on the same issue. Strike a balance within your simulations between large and small group discussion and debate alongside prioritisation exercises to drive decision making. Clearly capture gaps and leave time post simulation for reflection, iteration and where possible validation.
Competitive simulations are an extremely valuable test-bed for developing new strategy and/or identifying strategic options. For example you could use this platform for defining your strategy for a new product entering a new market place, for a launch plan, a franchise or portfolio plan or in developing plans for new follow-on indications. They are also a fantastic strategic planning tool, if used appropriately, within your annual planning cycle to pressure test your current strategy and tactical plans. I have found that playing out the competition takes cross-functional teams out of their everyday perspective and provides permission to pull apart the current strategy vs. the chosen competitive set. If this approach is done well then this allows the team to identify weaknesses and exposures in their strategy e.g. focus, segments, positioning, critical success factors. It also allows the team to understand their strengths and areas for differentiation e.g. culture, data, capabilities. This can be an invaluable approach to fine-tuning the strategy and increasing the overall odds of success.
TIP As part of the whole competitor simulation it can be useful to ‘leak’ your own strategic plan to the ‘competition’ to see how they view it; where they see the strengths and exposures are and wrap these findings into the whole distilled analysis. Practically, as part of your planning cycle, this will help you identify the areas of the plan where you need to devote greatest time and energy, where evidence must be generated, where to gather fresh customer insights or what competitive insights to source.
As we complete the process of gathering competitive insights, deepening our understanding and interpreting what this means for our own strategy it is time to look at putting our plans into action. Next time I will provide some thoughts on the 5th D; delivering a competitive plan…
Fear and discomfort are an essential part of strategy making. In fact, if you are entirely comfortable with your strategy, there’s a strong chance it isn’t very good. You’re probably stuck in one or more of the traps I’ll discuss in this article. You need to be uncomfortable and apprehensive: True strategy is about placing bets and making hard choices. The objective is not to eliminate risk but to increase the odds of success.