Every company that turns its lights on every day is competing. Winning is the aspiration, but there’s a big difference between competing and winning. Simply competing does not guarantee winning. Why do some companies win and some simply compete?
Most companies have a strong notion of their aspiration to win and it typically starts with strategy that defines how their product or service uniquely and directly addresses a specific market need. The challenge, or the reason why some companies only compete and some win, is because most companies don’t focus on where their product or service fits best (“where to play”) and what they specifically need to do (internally and externally) to demonstrate a unique value proposition and win in those places (“how to win”).
What are the four things you need to consider as you build your organization’s approach to “where to play” and “how to win”?
1. Segment your existing customers.
Figure out which ones are the most valuable today and which ones have the potential to be the most valuable tomorrow. Also, identify those that drain your time, resources and profit. Make the hard choices around what you’re willing to do as an organization around the most strategic customers — as opposed to high-maintenance, transactional customers.
2. Fully understand the cost of customer retention versus acquisition.
The least sexy but most cost-effective thing you can do as an organization is to sell as much as possible of your existing products or services to existing customers (given you want them to be your customers). Understand exactly what resources you need to apply to those customers to do just that. Get underneath the barriers to expansion and value chain incentives preventing customers to do more with you. Exhaust that line of thinking before you do anything else.
From there — based solely on your competency, competitive advantage and marketplace position — allocate resources to some combination of new products and services for your existing customers or new markets and channels with your existing products or services. Your strategy should help define that path.
3. Don’t be distracted by shiny pennies.
Imagine walking down a path. Along the way, you see, out of the corner of your eye, a shiny penny. Many of us will stop and pick it up. Every day, organizations are distracted from their goal by shiny pennies. They often come in the form of big, non-strategic revenue opportunities that weren’t planned and require you to allocate resources or do something different than what you do today. You have to understand the risk to the business and the organization if you don’t have the intestinal fortitude to pass up shiny pennies along the way.
4. Know thyself.
Be honest about what capabilities you have — and what you don’t. Understand what core capabilities you need to deliver on your aspiration and your promise.