Evaluate Big Strategic Choices
When you really want to win big, you can’t afford to miss a potential opportunity for success by going too cautiously or too slowly. When it’s time to evaluate big strategic choices, make sure your organization is fully armed with a clear strategy that will support your big move and reduce your exposure to risk.
The Big Picture
To effectively evaluate big strategic choices, you need to be diligent and do your homework. This means objectively evaluating your strategy for growth through multiple viewpoints. It is rarely enough to just look at the financial implications; you need to look at the big picture effects in terms of your marketplace, strategy, culture and talent.
A Guide to Choosing Your Bold Strategic Move Wisely – Three Factors to Consider
1. Financial Performance Perspective
Like any business case, you must start by understanding the specific financial implications of your big strategic choices. How will your choices add value to the business both now and in the future compared to other available alternatives? For example, one client recently launched its first product as a big strategic move into the consumer packaged goods marketplace.
This was a big bet with big financial implications. Their current service offering runs at 80% gross margin while their new product will average close to 40% gross margins. Yet, the move made sense because they are expanding revenue channels and using their services to drive products and visa-versa.
Another client invested heavily into entering an adjacent market to meet aggressive growth targets. Unfortunately unexpected pricing pressures that did not match their value proposition forced them to scrap their big growth plans pretty late in the game. They did not understand the structural attractiveness of the market or their target buyers.
The financial perspective is a great place to start to evaluate big strategic choices and market potential. Use it as a checkpoint to ensure that it is worth the time and effort to keep your big bets moving forward.
2. Capacity to Deliver Perspective
Even if you assess financial performance and market potential wisely, if you don’t have the capacity in place, your strategy will fall flat. You need to have the right organizational structures, workplace culture, people, systems and processes to execute your plans. Without the foundation for an implementable and successful strategy, your bold move will falter.
For example, one client recently made a big strategic choice to sell software and services instead of their legacy hardware products to combat a declining and shifting market. Unfortunately, they failed to invest in the customer centric culture or consultative selling skills required to be successful. Combined with misaligned metrics and reward systems, their foray into a more attractive market has missed the mark.
3. Unique Customer Competitive Advantage Perspective
This factor is all about competitive advantage. How well do you set yourself apart from the competition in the eyes of your ideal target customers? Bold strategic moves require that you deeply know your company, your target customers, and your competitors. The better you understand your capabilities vis-à-vis your competition and marketplace priorities, the better able you will be to choose your bold move with confidence.
Do you have what it takes to win with your target clients the majority of the time?
The Bottom Line
No one said that designing a winning strategy, let alone one that includes a bold move or two, was easy. But it can be done and done well. Analyze your current position carefully and objectively; build in what you know about market opportunities and your competition; and allocate and invest the resources you will need to accomplish your goals.
To learn more about how to evaluate big strategic choices, download How Strategic Clarity Distinguishes High Performing Leaders
4 Steps to Create Strategic Alignment
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