Understanding the fundamentals of strategy is all about doing things different, not better. In this short video, I offer examples of strategic difference, and the questions you can ask yourself in order to create strategic clarity in YOUR organization.
This transcript of the video is provided for your convenience:
“How do you create strategic clarity in the organization? It’s the foundation for performance and I’ll explain why in a minute. And what I want to convey to you is what we notice is that most organizations don’t really understand what strategy is. They confuse continuous improvement with strategy. Continuous improvement is about doing many of the same things your competitors are doing but trying to do them more efficiently. That really is not strategy. It is a good thing to do, but it doesn’t make you different.
Sustainable profitability in market position is based on being different in a way that’s important to customers. And the questions that we suggest you ask, Jim Collins has a great illustration in his book, “Good to Great,” ask these three questions:
- What will make us different?
- What do we have a passion for?
- And, what will drive our economic engine?
And if you can drill down on those three questions, you’re starting to approach the idea of what a strategic position is or a strategic difference, a sort of a focused vision. And I would like to illustrate how this works with one particular example that is used by Michael Porter in his work, who’s a strategy thinker from Harvard.
And he talks about the story of Southwest Airlines. All of us have flown, and so we know something about the airline business. Southwest was started in the late ’60s by Herb Kelleher and today, Southwest Airlines has had more profit in their existence than the rest of the airlines put together.
And it raises the question, well, how did they do this? What strategy did they employ? And when they started back in Texas, there were many national, several national, international airlines, like Pan Am, and so it seems crazy to start a new airline when you’ve got all these giants competitors. What is it that they did that made them so successful?
And what they did was picked a strategy that made them different, not better. And what was different about their approach? They decided from the beginning to focus on short flights. Regional connections where there was no baggage change and where they could use one model of airplane. And the result was that kind of focus caused them to be different than all the other competitors. And, in a way, you could say they were better than all the other competitors as well, at least when it comes to short flights. And so this sort of illustrates what we mean by real strategy helps you discern something you can do to serve a segment of the market that is not being very well served. And it’s transforming in terms of the success. Southwest is amazing. Now this principle can apply to nonprofits, and it can apply to universities.
It’s the same process: what’s the passion, what will make us different, and what’s the economic driver?”