Strategic Analysis and Selection
Netflix is known for being a global leader for innovation. Beginning with their mail to home DVD rental service, they pivoted quickly into the video streaming business. This brought forward a new life as content creators. Disrupting an embedded Hollywood monopoly, they found themselves turning the entertainment industry upside down.
During this transition they produced several hit television series while also producing several failures. Their aim though was to have a balanced hit rate for if they didn’t have their failures their perspective was that they were not taking enough risks.
Similarly, Amazon joined a very crowded device market in 2014. They developed their Fire Phone, that only lasted a year being considered an abject failure. However, by pushing the edge of technology, they made significant technological breakthroughs in developing and commercializing the Amazon Echo and Alexa.
Sears and Roebuck got their start in 1892 beginning as a mail ordering catalog revolutionizing the retail industry. Growing into brick and mortar stores they truly hit their sales pinnacle in the early 1970’s as the do everything store for America. The model of drop shipping companies or direct to sellers is based off the early Sears model.
Sears has always been known as a company of reinvention. As innovation leaders they took on risky products and at one time they even held a program of “socks and stocks” where you could buy socks and invest in the same purchase.
Unfortunately, Sears didn’t take the slow growing threat of Walmart or Best Buy serious. Their landmark catalog continued to bleed money. They were left with the option to where they could fix the store or fix the catalog. Choosing to drop the catalog and fix the stores didn’t prove to be enough though. This led to numerous strategic fails of constantly using sales for pricing, anchoring in malls instead of independent centers, and the ill-fated purchase of Kmart. After a century of well-placed bets, Sear’s analysis proved to be insufficient as they filed for bankruptcy in 2018 and operate today as a shell of their old self.
You have run all your strategic tests. Your reward is a wealth of data. This shifts your focus onto analyzing the results which will provide the intelligence of how to move forward. This becomes your competitive advantage. This process gives vision to look for places to play that will enable you to attack from unexpected directions, along the lines of least resistance. To keep you from attacking walled cities.
Do not look through your data set with rose colored glasses or with the hopes of just confirming your suspicions. You will want to make special note of the factors surrounding the tests. You will want to understand if the results skewed due to unforeseen market shifts. Are the results an accurate representation of what will happen? Are there any red herrings and what does that mean when you move forward?
When all these factors have been considered, then you will want to make the decision. Beforehand you will determine what is the deciding factor and let the data guide your decision-making process. If you go against it, make sure it is backed by logic and not just your gut feelings or intuition.
Sometimes you cannot hit the enemy with effect unless you first create the opportunity. Then create a two-move approach based on your perceived competitor’s response. You cannot make the effective decision unless you exploit the second opportunity that comes before he can recover.
When market intelligence is currency, strategic testing will make you data rich. This knowledge sets the stage for a competitive advantage. You will have offered the market and your competitor feints, and they will be forced to show their cards on how they will or will not react. There is no need to keep your tests private or secret from your competitor, one of the goals is to see the impact that it makes upon them.
During the test you will see how the multiple strategies interact with the environment and market variables. It is natural to adjust the tests in process on how to fit better in the ecosystem and how to differentiate. This turns the testing into an iterative process which then lowers the risk profile of a major resourced backed miscue.
Essential to the selection process is compiling the evidence that it is the right direction to go. Strategy is the map, but change management is the car. To get your organization and investors into the car you must sell to them the strategy. If your choice is logic based, their change journey becomes much easier.
Going through the decision process, open the event up to the entire team. This will help eliminate confirmation bias and further enhance the rigor of the process. Then follow the selection criteria on what will be most important to the organization. Have a team select and identify what conditions can be shaped to make it better. This relieves you of the burden of being the sole selector. The job of the leader is to create conditions that will enable the strategy.
The simulation of multiple strategic positions before testing is ideal. When you do not have an ability to run live strategy tests, simulations won’t be equivalent but will help you gain insights. These virtual tests are not as accurate however they further uncover perceived data mines. To enhance the effectiveness of a simulation, make it a competitive team-based simulation to further mimic reality and award you the chance to judge reactions.
During 2020, the market was chaotic. I set out to test the likelihood of being able to supplement companies with change management services. Targeting companies with more than 100 employees and less than 1,000. I wanted these companies in the Boise, Idaho region which were financially struggling due to the Covid-19 Pandemic. The target conditions were an economic downturn, companies looking to reduce their workforce, yet they were caring leaders that wanted to transition their outgoing employees respectfully.
The strategic tests centered on client acquisition of testing three methods: 1. Online Advertising; 2. Direct Sales; 3. Referrals. For the following eight weeks I was able to monitor numerous metrics focuse4d on potential client interactions, but the overwhelming deciding factor was the number of engagements secured and which test created the opportunity.
At times our world is one of chaos. This severely impacts developing a strategy. In times of uncertainty hedge bets by applying strategic options which include temporary organizations, exploratory, acquisitions, and modular work set-ups. You will want to keep as many options as possible open until the dust settles.
I want to reemphasize that the goal for you is to focus your efforts. To concentrate your fire. A good strategy draws power from focusing minds, energy, and actions on pivotal objectives, power leverage. If you walk out of a strategy session to work on 5 or 6 key objectives, you’ve already failed.
Running your own business or being responsible to people’s livelihoods can bring constant thoughts on risk. How to eliminate all risk or mitigate it. Unfortunately, you can never eliminate all risks but must learn the art of taking calculated ones.
Alexander the Great was a very young but an effective commander. His total exposure to risk turned out to be his secret weapon to total victory. By taking unprecedented actions in battle, he would catch his opponents by surprise as well as forcing his army to fully commit to winning.
Like Alexander, General Ulysses Grant held a high propensity of risk. During the Battle of Vicksburg, he ran his forces past the city of Vicksburg to land south. There he split the Army to fight General Johnston in the city of Jackson and then drew out General Pemberton from Vicksburg. Grant put the Union army in and exposed position without a supply line. However, Grant knew the right time to go all in and risk it all for the rewards outweighed the failure.
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