There are many ways to assess a company’s strategy. First I think we should clarify the differences between a strategy and a tactic. A strategy is a long term plan, with KPI’s different than that of a tactic. A tactic has more liquid goals, and is a means to an end, the end being the strategic goal.
Here is a quick HBR video by Harvard Professor Porter explaining the most widely used evaluator of competition:
There are many ways to consult a business.
A few of my favourite recommended by Bain and Company:
Employee Engagement surveys
Mission and vision statements
Supply chain management
Change management programs
As well McKinsey and Co. have some good ideas:
GE-MicKinsey nine-box matrix
Porter’s Five Forces
BCG growth-share matrix
Core Competencies Assessment
The case studies are very insightful as they provide relevant content that can be often parallel to what you will find on the job.
If you google… cause google is a verb now… “(firm name) case study practice” you can find interesting stuff! Check out BCG’s Practice Interview Cases!
With the rise of the social consumer it is also beneficial to analyze the customer’s social network. This process is called Social Network Analysis (SNA). SNA allows companies to see the cluster of interactions of their consumer. This gives insight to see like minded, potential customers who have not yet been targeted.
Now lets talk about strategy. Strategy, I believe is satisfying intentional tactics to achieve an overarching goal. To better understand strategy at its core, lets think about chess…
“1. You learn to look ahead.Only those who can foresee several moves ahead can play a good game of chess. Taking the effort to make a good forecast is critical to the success of any business.
2. It teaches you the value of sacrifice. In chess, there are situations where you can sacrifice a piece to gain an advantage later on. This is similar to making investment decisions in business, where you spend on things like additional capacity with the belief that you can make a larger return later on.
3. It develops your memory. To be able to look ahead, you must learn how to memorize a large number of potential moves. Since memory is an essential element of thinking, it should be of help to enhance business decision making.
4. You learn the value of preparation. During the peak of my chess preparations, I was studying chess for fourteen hours a day for over two months to fight in a national tournament; but this was rewarded by many victories. I have since acquired the habit of long preparation to increase a business’ chances for success.
5. You learn to be honorable. There is a rule in chess tournaments called “touch move.” This means that when you touch a piece, you must move it. If you have completed the move, you can no longer take it back. While in informal games this rule is often relaxed, it is strictly enforced in tournaments. Quarrels sometimes break out when somebody takes back a move that official watchers may not have noticed. Although you may get away with it if there are no witnesses, you will quickly gain a notorious reputation that will eventually destroy your credibility. This is also the case in business when you cheat your customers with false or exaggerated claims; word eventually gets around and your reputation will be hard to salvage.
6. You learn the value of patience. In chess, you need time to place your pieces in the proper position before you can attack effectively; a premature attack will backfire. This is very similar in business where you must patiently restrain yourself from making rash moves until everything is set. You conduct market research and feasibility studies first before risking your capital.
7. You learn to anticipate your competitors’ moves. When making a move in chess, you must also anticipate the probable responses from your opponent because they are planning to defeat you. This idea of a thinking foe must be incorporated into the making of business plans. In the real world, competitors would react to your moves so you must be prepared for the counter attack.
8. You learn to think outside the box. Although chess has strict rules, the expert player knows how to use his creativity to come up with surprise moves to defeat the enemy. The Chess legend Bobby Fischer shocked everybody when he used a transposition to a queens pawn opening against the then reigning world champion Boris Spassky, although everyone expected him to start with the king’s pawn as he usually did. An entrepreneur must come up with an innovative marketing campaign if he is to prevail against giant competitors.
9. You learn to play by the rules. Chess has rules that must be followed or else you’ll be disqualified. Business, too, has its own rules that if violated may lead to severe penalties or even imprisonment.
10. You acquire the discipline to focus your thinking for hours. Since chess demands hours of total concentration, it is a superb training to focus your mind. This is excellent therapy especially for those whose minds have a tendency to wander or get tired too quickly.”
- HBR Article “Strategic Intensity“
Also here is a quick plug about the tactics involved around negotiation, a very needed skill in business:
Process/ Performance improvement is all about finding workarounds with sound efficacy and relativity.
Here is a live matrix that shows how the preferences of methods have changed over time by Bain and Company, it can be found here.
Just to really reiterate the importance of frameworks here is a closer look at some of the methods discussed above:
Benchmarking is the process of comparing your company metrics to the metrics of your industry competitors or to those of innovative companies outside the industry.
Common metrics for benchmarking include:
- Production costs
- Employee turnover
- Process cycle time
Read more about benchmarking at Bain & Company Business Insights: Benchmarking and Harvard Business Reviewblog: Beyond Benchmarking: Why Copy the Competition?
2. Balanced scorecard
The balanced scorecard is a framework for tracking important aspects of company strategy and for facilitating organizational improvement or change. It measures metrics beyond typical financial metrics to help companies keep long-term strategic goals in focus and spot trouble before it appears in the financial statements.
The scorecard is a comprehensive and quantitative set of objectives that can be measured over time. Common components include:
- Market share
- Employee morale
- Customer satisfaction metrics
Read more about the balanced scorecard at Bain & Company Business Insights: Balanced Scorecard.
3. Porter’s five forces
Developed by Michael E. Porter, Bishop William Lawrence University Professor at Harvard Business School, Porter’s five forces is a framework for industry analysis that is used as an input to a strategic plan.
The five competitive forces that influence profitability in any industry are outlined in Porter’s model:
- Competitor rivalry
- The bargaining power of buyers
- The bargaining power of suppliers
- The threat of new entrants
- The threat of substitute offerings
4. The GE-McKinsey nine-box matrix
This matrix was developed by McKinsey & Company in the 1970s to help General Electric prioritize its investments in its numerous business units. It’s widely used to help companies assess the relative merits of various opportunities.
Business units or opportunities are categorized as “high,” “medium,” or “low” within the two axes of the matrix, which are “industry attractiveness” and “competitive strength of the business unit.”
For more information, read McKinsey Quarterly’s Enduring Ideas: The GE-McKinsey nine-box matrix.
5. The BCG growth-share matrix
This quadrant matrix, developed by Boston Consulting Group (BCG), is a tool companies use to assess the relative strength of product lines within their portfolios.
Product lines are assigned to one of four quadrants:
- Cash cows
- Question marks
6. Core competencies
The process of identifying your company’s core competencies helps you define your company’s positioning and competitive advantage. A core competency is a proficiency in an area that is not easily replicated by competitors. It allows your company to deliver unique value to customers, thus giving the company a “leg up” on the competition. One example is how the employees and unique culture of Southwest Airlines allows them to provide better customer service and faster turnaround times for planes.
Read more about this framework at Bain & Company Business Insights: Core Competencies.
**This blog is not all original content- I do not own all the content. The purpose of this blog is to collect valuable insights across various channels, publications, and articles, and present them in a digestible and current way. Some material has been copied, and referenced in some articles, and should not be treated as original work.