Featured Product
This Week in Quality Digest Live
Quality Insider Features
Yoav Kutner
Let salespeople spend more time on customer service, market research, and competitor analysis
Nicholas Wyman
As the pandemic continues to affect millions of jobs, getting people into apprenticeships has never been more vital
Bruce Hamilton
A story of teacher and student
Ryan E. Day
Boeing officially endorses voluntary grounding of its 777 aircraft after Feb. 20, 2021, engine failure
Gleb Tsipursky
Effective engagement can foster productivity and stronger financials

More Features

Quality Insider News
Precision optical instrument helps ventilator maker increase specialty valve production in response to shortage
Single- and three-axis shop-floor dimensional measuring machines for industrial manufacturers
Interfacial launches highly filled, proprietary polymer masterbatches
Allows team to focus on quality control in dimensional measurements and overall machining process
Provides synchronization, compliance, traceability, and transparency within processes
Contactless sensors measure rotating shafts in industrial benchtop and test and measurement applications
‘Completely new diagnostic platform’ could prove to be a valuable clinical tool for detecting exposure to multiple viruses
Design, develop, implement, continually improve risk management in systems and software engineering

More News

Angelo Lyall

Quality Insider

What Successful Strategies Have in Common

Keys to designing a strategy

Published: Wednesday, June 15, 2011 - 04:30

Clarity is extremely valuable for building profitable strategies and conducting sustainable business. Without clarity many firms refrain from taking strategic steps in fear of the unknown, leaving them stagnant and eventually uncompetitive. Only by understanding the key concepts that underpin successful strategies, can a firm confidently take steps along the strategic pathway of their choice.

The profitability of an organization’s strategy is a function of:
1. Strategic decisions made in favor of cost, benefit, or niche provision
2. Operational execution of the strategy

 

Given these variables, I have created what I call the “Strategic Profitability Frontier Curve” (see figure 1) to visually understand a firm’s position on the competitive landscape and plot it in relation to its key competitors.

Figure 1: Strategic Profitability Frontier Curve

Note that a niche provider is a unique position in which a firm combines specialized benefit advantages with the cost advantages of experience and economies of scale.

Strategic decisions depend on a firm’s ability to translate market knowledge into innovative (i.e., unique) tactics involving the product, service, price, brand image, promotion, and processes required to maximize their return on investment. Execution is the extent to which a strategy’s elements are successfully implemented. Given that marketing and innovation are the key functions required for success, firms must be committed and passionate about both. The absence of either function can be crippling in the long term.

The importance of marketing and innovation within a firm is shown in the matrix in figure 2, using the simple metaphor of a car.

Figure 2: Sustainability matrix

Worn tires: With worn tires, a vehicle has limited traction. Without adequate marketing, a business may use its innovative skills to develop products, services, and processes that ultimately fail to deliver value to their customers and fail to produce adequate return on the investment. The lesson in this case is that businesses must not only do things right, but they must also be sure that they are doing the right things.

Broken-down vehicle: A broken-down vehicle does not move. In the simultaneous absence of marketing and innovation, a firm is left standing still in a race, competing against other firms that will inevitably overtake its position. This is the least favorable position on the matrix.

Running on fumes: A vehicle running on fumes may be moving forward based on momentum, but it can only continue to do so based on that momentum because it has no gas left to create more power. Without an effective, innovative presence in a firm, it is left to marketing to fight an uphill battle of building brand image and incentive programs to compensate for the firm’s inability to keep current and relevant.

Race ready: A race-ready vehicle is one that has a full tank of gas, and working parts. A business that has effective marketing and innovative functions has the ingredients for long-term sustainability.

Is your business race ready? Is it fully committed to marketing and innovation so that it may combine informed strategic decisions with differentiating tactics to generate profit? If the answer to either of these questions is no, then this must be reconciled before making an organized effort to compete and attain long-term sustainability and profit. I strongly urge all businesses to focus on building a deep understanding of marketing.

Discuss

About The Author

Angelo Lyall’s picture

Angelo Lyall

Business Economist Angelo Lyall is a partner with Anderson Lyall Consulting Group, a Toronto-based consulting and advisory firm that helps firms develop their competitive advantage. He draws upon his background in economics and competitive strategy to help firms build profitable competitive strategies, business models and marketing plans, as well as to gain valuable market knowledge. Lyall helps companies understand and gain new insights into their business environment in order to create or strengthen competitive advantages. He has advised clients in the manufacturing, service, and distribution industries on issues of competitive strategy, marketing, pricing, and customer profitability.