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How to Define the Right Strategy
Written by Björn Otto on Jan. 07th 2020
"The Kiss of Death"

In the 1970s, Michael Porter worked on the relationship between a company's market success and its strategy and found in a series of empirical studies that

companies with a very small market share (specialists) and
companies with a very large market share (generalists)

show significantly high profitability. While other competitors - with average market shares - achieve low profitability and stuck in the middle. And that is just another name for "The Kiss of Death".

A very good example is if you have a look into the automotive industry. Companies as BMW, Mercedes oder Tesla are definitely differentiators while Japanese manufacturers are clearly the cost leaders. What do you thing how GM, Chrysler fit into this? Exactly!
Strategy vs Tactics

A strategy is a specific approach to reach a goal which you defined on a very high level. Also the strategy document outlines what the goals are. While tactics describe the actions to archive these goals and are way more specific.

The strategy is required to set the direction of the organization, whilst the tactics are required to define how you will actually get there. Or strategy is the WHAT and Tactics the HOW and WHO.

Development of a medium and long-term strategy

In principle, there are 7 elements to set up a successful strategy in a company.

- Define the core strategic elements and establish investment principles
- Structured identification of customer potential and identification of priority customers
- Strengths and weaknesses analysis to generate ideas (e.g. SWOT)
- Derive concrete customer development initiatives from the SWOT analysis
- Analytical evaluation and selection of measures
- Set ambitious and measurable goals (SMART)
- Development of the client plan incl. financing

Plan on a Page

A simple template to start is this Plan on a page. Feel free to use this to define your strategy. And feel free to share these information with friends or colleagues.
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About the Author
Björn Otto, born on 07 August 1979, is an environmental engineer and passionate marketer. 

He recognized early on his passion for explaining things and facts as well as selling and marketing them convincingly.
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