Strategy for Business Units and Functional Organizations
Business strategy is an integrated set of choices about where you choose to compete and how you will win. These decisions must take into account not only your own capabilities, but how they compare to competitors’; and they must reflect a clear understanding of the needs and capabilities of your target customers. Eos consulting can bring fresh perspective by helping you identify, make and integrate strategic choices, including:
- Which products and services, geographies, and customers you can best compete for (informed by our tested product, customer and competitor segmentation methods)
- What value proposition to those customers best leverages your strengths and exploits competitors’ weaknesses
- What business model(s) and asset configurations will enable you to deliver that value proposition most effectively
“Where to Compete” is the entry point for many business strategy changes. Lately, many American and Chinese firms are reconsidering how they compete in each other’s home markets, and more midsize firms are considering entry.
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A plan is not a strategy — neither is a goal
The term “strategy” is often employed to make direction-setting and tactics sound more thoughtful and important than they really are. But to be effective, a strategy must describe a coherent set of choices governing action, taking others’ behavior into account. These choices are about where to compete and how to win. A strategy meets three conditions
- It comprises choices governing action, not merely the actions themselves. These choices are decisions about which principles to follow, thus guiding action in a variety of circumstances. That way, strategy has “legs” – it doesn’t need to be defined in every variant for each conceivable (or unanticipated) situation. Real choices require tradeoffs. A strategy is as much about what you will not do as what you will.
- It is a coherent set of principles — so they are mutually reinforcing and consistent (or at least not contradictory). A business strategy needs to specify not only “how you win” but “where you compete” — that is, in what markets, products, and services, and for which customers.
- It takes the behavior of others into account — it considers what others might do, particularly in response to your own actions. These may be competitors, partners, or regulators — anyone whose actions could affect the outcomes of your actions.
While a business strategy’s scope encompasses the entire business (or business unit), a functional strategy focuses on one of the functional units that typically make up a business: sales, marketing, engineering, manufacturing, etc. A functional strategy describes how that function will deliver on its responsibilities within the business strategy: what decisions does the function have to make as part of the business strategy? What distinctive capabilities are required of the function for the business strategy to succeed? What does the function need to be able to do better or differently than competitors’ functions? What should be done in-house, versus outsourced? We help you to define and make these choices quickly yet rigorously, guiding you through our proprietary processes for making and communicating strategic choices. Examples of functional strategy include:
- Manufacturing Strategy: What and how much to build (or source) and where
- Sales Strategy: How you will sell into targeted segments to beat competitors
- Design Strategy: How to design and configure products and services to deliver the capabilities promised in the value proposition
Client Engagement Examples
Global Business Strategy
A good strategy will struggle without appropriate governance; governance without good strategy is just ritual; and neither is effective without the right people in a suitable structure.
Strategy, Organizational Architecture and Governance need to be aligned for the organization to succeed. A good strategy that is poorly executed due to ineffective operating governance or an unsuitable organizational structure is likely to fail (or at least underperform). A reorganization that doesn’t take into account dynamic strategy is less likely to meet its objectives; and operating governance, to ensure the right people are making the right decisions, must take into account the organizational architecture and the strategy.
Any of these elements may need to change due to new competitors, changed regulations, different input costs, new technologies, or any of the other myriad ways the business environment is continuously evolving. That doesn’t mean they all must change or that they must change together — successful companies carefully evolve as the environment changes, and we can enter in any of these practice areas to begin to make improvements.
We employ distinctive techniques (such as business wargaming and organizational simulations) across all our practice areas, as well as proprietary frameworks and processes.