An anatomy of Strategy

What are the key elements of a business strategy and how do they relate to each other?

The above chart maps these out. It includes the key elements of operations which strategy must direct.

The components of the strategy are:

Mission: defines why the organisation exists; its purpose.
Vision: defines what the world will look like when the organisation succeeds in its mission. See also: Strategic Vision: 3 tests
Values: are what the organisation holds dear. They are important in choosing what the organisation will and won't do, and how it will or won't do it, to achieve its mission.

Purists will argue that the Mission, Vision and Values are not part of the strategy itself, but set the context for the strategy. That's true. But most organisations consider them part of their strategy anyway.

Goals: describe in more detail what the business must achieve to achieve its vision. Goals are often described as defining the financial, customer, operational and learning and innovation perspectives of the vision. See also: Strategic goals versus operational objectives.
Objectives: break the goals down into specific, measurable, achievable, relevant and time-bound (SMART) achievements.
KPIs: define the specific measurements which will measure the achievement of the objectives. See also: Six tips on how to pick the best KPIs for your strategy and Getting the most out of KPIs.
Targets: define what must be achieved. They are expressed in terms of a KPI, within a defined time period.
Actuals: define what is actually achieved with a period for a measure. If this is inconsistent with a target, then review and remediation may be required.
Initiatives: define specific changes to be made to the business. They should have a clearly defined end state. They are the actions to be taken to achieve the goals. See also 6 techniques and 5 tips for developing strategic options and How to tune and prune your portfolio of strategic initiatives.
Tasks or Actions: are the specific steps that need to be taken to achieve the end state defined for an initiative. They define exactly who needs to do what and by when. They may also define what they need in order to do it, and who they are doing it for.

The components of the operations are:

Processes: what the business does on an ongoing basis. Processes transform the input it receives from its suppliers into the output required by its customers.
People: who perform the processes.
Structure: how the people are organised to do so.
Skills: knowledge, experience and capabilities that the people require to do so.
Capacity: the number of people required to do it.
Technology: the systems and equipment required to perform the processes.

For more insight into strategic operations, see How to design a Target Operating Model (TOM).

All of these components, and the relationships between them, can be defined in StratNavApp.com, the online collaborative platform for business strategy development and execution.

Other components included in StratNavApp.com which support the strategy whilst not being part of it include Strategic Insights, Stakeholders, Risks, Issues and Decisions.

Everybody Lies: The evolution of market research

"Everybody Lies" by Seth Stephens-Davidowitz, is one of the most fascinating books I have read in a long while.

Stephens-Davidowitz documents and evidences in page-turning style a view I have held for some years now:

We can now observe how people actually behave, especially when they don't think anyone is looking, in ways which were previously not possible.
What we observe is often very different from:

what they say they do or will do, and
how they behave when they think someone is looking.

I would guess that Stephens-Davidowitz borrowed the title of his book, whether knowingly or not, from the byline of the TV series "House M.D.". The lead character says "It's a basic truth of the human condition that everybody lies. The only variable is about what."

Reading the book has given me pause to reflect on the evolution of market research. My personal experience suggests at least 3 waves of development.

Market Research 1.0

The first wave of market research consists of asking people for the views, preferences, intentions, wants and needs, etc. This can be:

quantitative, for example, in the form of a survey, or
qualitative, for example, in the form of a focus group, etc.

The obvious problem with this is, of course, that people have many reasons to lie, and few reasons not to. Reasons to lie can be very simple. For example, we may want to appear intelligent, or virtuous, or be liked or admired by the questioner.

Often, people won't even be aware that they are lying. As humans, we are excellent post-rationalisers. Cognitive Dissonance Theory suggests that when faced with a question we can't or don't want to answer, our brains simply fill in the blanks. We make up a story. We may not even be consciously aware of it. (Note: I'm using the word 'lie' here throughout, even when subjects are doing it unintentionally and unknowingly.)

Another problem is that people find it difficult to answer questions about subjects outside of their existing frames of reference. For this reason, market research 1.0 is even less helpful when developing novel ideas. As Henry Ford apocryphally said: "If I had asked people what they wanted, they would have said a faster horse."

Market Research 2.0

Market Research 2.0 attempts to build on Market Research 1.0 by showing customers examples of what future products or services might look like. Often, more than one version is shown. Subjects may be asked to interact with them, compare them and indicate their preferences.

This can go a long way to alleviate subjects inability to imagine a different future. And if all options are attractive and presented positively, this will also reduce some of their incentive to lie.

Market Research 2.0 requires more work than Market Research 1.0. It usually means that you first need to develop some ideas to test. If you're innovative in the development of those ideas, that helps. But the innovation is likely coming from the development of the ideas, rather than from the market research.

However, a number of examples illustrate the difficulties still inherent in the approach:

Subjects reportedly overwhelmingly rejected the idea of ever withdrawing cash from a hole in the wall, as opposed to from a bank teller. But today, 94% of UK adults use cash machines.
In market research, 68% of US customers said they liked the taste of New Coke. But 6 months after launch it was removed from the shelves, and the old formula relaunched. (Reference)
Research conducted between the announcement and launch of the iPhone found high demand in emerging economies like Mexico and India, but not in developed countries. It concluded that: “There is no real need for a convergent product in the US, Germany and Japan”. (Reference)

As I write, I can think of at least two factors which might contribute to this problem. I am sure there are countless more:

The Hawthorne Effect (also known as the Observer Effect). This is named after experiments conducted from 1924-32 in which it was shown that subjects' behaviour is altered by virtue of the fact that they know they are being observed.
Research subjects typically have no 'skin in the game'. For example, it is a lot easier to say you'd be happy to pay, say, £100 for an item than it is to forego the other enjoyments you'd have to give up in order to do so. This is probably exacerbated where they are positively incentivised to take part in the study.

Market Research 3.0

Market Research 3.0 observes:

how real prospects and customers behave with and use products and services,
in the normal course of their lives, and
when they don't think they are being watched.

As technology evolves it is increasingly possible to track:

how customers move through a store,
what items they buy, and
how they engage with and dispose of those products.

This involves developing and launching a product before market testing it. But with increasing software content in products and services (think the Internet of Things) and advances in technologies such as 3D printing, it is become ever cheaper to develop and pilot smaller batches of products or to mass-customise products and services.

Sample Application

I use these techniques to great effect in the development of StratNavApp.com in three ways. It is important to stress, however, that all three techniques are based on statistical analysis. They don't involve anyone ever looking at users' data or strategies. And they don't attributing the results to any specific individuals or companies.

Here are some common ways we measure and

Website analytics: using even a simple (and free) tool like Google Analytics, it is possible to understand

how users find the service,
which parts of it they visit most frequently and in what order,
how long they engage, and
from where they leave.

Using this insight, we can prioritise our development efforts to those areas and features users find most valuable. So, for example, we know that our SWOT analysis tool has been 24% more popular than our Strategy Canvas tool and 33% more popular than our Business Model Canvas tool (confirming our views on the continuing popularity of the SWOT).

AB Testing: almost all new features are first introduced to a randomly selected subset of users (the "A" group"). At the same time, the remaining users (the "B" group) continue to see the site unaltered. We can then measure whether the A group engages more positively (against our own defined Critical Success Factors) than the B group or not. If they do, then the feature is released to the remaining users. And if they do not, then the new feature is rolled back or adjusted and retested. Either way, the results are analysed to enhance our picture of how users use the service, and how we can further improve it.

By way of a very simple example, StratNavApp.com's byline "Collaborative strategy development and execution" was the winner from among a number of AB Tested alternatives considered.
Content Analysis: StratNavApp.com provides a unique insight into how users develop and execute strategies. By way of a very simple example, we know that the word 'Market' is used almost twice as frequently as the word 'Customer' when describing strategic insights. We may not know why that is. And we may not know if it is a good thing or not. But we can certainly use it to enhance our product. We can analyse word counts, numbers and lengths, etc. of all elements used in StratNavApp.com with a view to optimising users' experiences of the tool.

Privacy and Ethics

This is not intended to be a post on privacy and ethics. However, it goes without saying that privacy and ethics have always been a key consideration in market research. And it is right that there is ongoing debate and development of this subject as it evolves.

Conclusion

We've always known that market research is both invaluable and limited. As new technologies evolve, we are able to increase the value it adds whilst simultaneously reducing its limitations. Those organisations that explore and utilise these new approaches will be at a distinct advantage over those that do not.

Addendum

Watch Seth Stephens-Davidowitz talking about his book at the RSA:

Other resources:

The psychology of deceit

Understanding the 3 Horizons model

The 3 Horizons model is one of my favourite tools for helping people to think more strategically.

The 3 Horizons model suggests that a sustainable business plan should include a combination of 3 types of initiatives or projects:

Horizon 1 - Improve includes all the initiatives that you need to do to improve, maintain and fix your existing business. This includes:

continuous improvement programmes,
quality improvement programmes,
regulatory compliance,
systems maintenance and upgrades and
general maintenance, fixing and improvements to existing processes.

Horizon 2 - Grow includes all the initiatives that you need to improve and grow your business. This typically includes:

developing new products and services and
entering new markets.

Horizon 3 - Transform includes initiatives that will evolve and transform your business. This typically includes:

taking your business into new places in the value chain,
developing new business models and
disruptive innovation.

It should include at least one initiative that could transform your industry. The so-called category killer. The objective here is to disrupt before you are disrupted.

The 3 Horizons model was originally put forward by McKinsey Consulting in 2000. Since then, the exact definitions of the 3 Horizons has varied from time to time as the model is applied to different contexts. The exact definitions don't really matter that much. It is the concept that matters. That is why I prefer the quite simple definitions outlined above.

3 Horizons Example - Uber

You can easily see all 3 Horizons at play in a company like Uber.

In Horizon 1 it is grappling with challenges to its employment practices and from traditional taxi firms and licensing authorities. It is tweaking its pricing model in response to conditions on the ground.
In Horizon 2 it continues to expand into new cities and to develop new services.
In Horizon 3 it is investing heavily in the development of autonomous vehicles. These will undoubtedly change the very nature of car ownership and personal transportation.

To succeed as a business, it must operate successfully across all 3 horizons at the same time.

Problems the 3 Horizons model helps to solve

The 3 Horizons model is helpful in countering two problems I frequently encounter.

Businesses that use strategy development as a precursor to the annual budget cycle tend to omit or significantly under-weight Horizon 3 initiatives. Restricted budgets keep people focused on the immediate issues of the day. They demand only incremental growth from existing business. They see real change as an unaffordable luxury.
Businesses that approach strategy from a 'blue sky visioning' perspective tend to underplay Horizon 1 and 2 initiatives. As a result, the strategy is distant from most stakeholders' experiences of the organisation. It is removed from its day-to-day operations. In some cases, businesses go as far as developing separate skunk-works to progress the strategy. Whilst this has some advantages, it can make progress difficult to integrate back into the business.

An organisation which is too focused on visionary transformation may not survive long enough to see it bear fruit. An organisation which is too focused on the here and now may be overtaken by events and rendered redundant by the competition.

Advantages of using the 3 Horizons model

Applying the 3 Horizons model to your strategy has three advantages:

It quickly highlights whether your strategy is biased towards either the near term priorities or longer-term transformation.
It can help you rebalance your strategy by filling in any evident gaps.
It helps stakeholders to understand the need to balance all 3 Horizons and pay attention to all of them on an ongoing basis.

Mistakes people make using the 3 Horizons model

I see people making two mistakes when using the 3 Horizons model:

They mistake the 3 Horizons for a sequence. First do the Horizon 1, then do Horizon 2, and only after that do Horizon 3. It is important to focus on all three at the same time. It is important to start exploring and laying the groundwork for Horizon 3 immediately. That is why, for example, Uber is investing so heavily in autonomous vehicles event though it still has lots of work to do in Horizon 1 and 2.
They mistake the 3 Horizons as an expression of how long it will take for initiatives to deliver value. For example, Horizon 1 will deliver value within one year. Think low-hanging fruit. Horizon 2 in 2 to 5 years, and Horizon 3 in 5 to 10 years. Usually, there is some truth to the idea that Horizon 3 initiatives will take longer to bear fruit. But some industries operate on shorter change cycles than others. And sometimes, disruptive change can be just around the corner.

You can now do your own 3 Horizons analysis using the innovative StratNavApp.com online tool for collaborative business strategy development and execution. Simple click on StratNavApp.com, register or log in, and add the 3 Horizons tool in the "Planning" quadrant.

The chart below, illustrating the 3 Horizons, was produced using StratNavApp.com.

(Click to enlarge.)

Are we losing focus on strategy?

I recently had a look at the keyword 'strategy' in Google Trends and noticed a worrying trend. Have a look at the chart below, which tracks Google Trends for the search term 'strategy' since records began in 2014:

It seems that interest in 'strategy' as a subject has declined over the last decade or so by over 50%.

I gave some thought as to why that might be and came up with five possible reasons.

1. The anti-strategy movement could be gaining ground

Perhaps people are being taken in by mantras such as 'execution trumps strategy', 'culture eats strategy for lunch', and 'agility is more important than strategy' leading them to mistakenly believe that strategy somehow matters less than previously thought.

I have written on previous occasions explaining why I think this is misguided. See, for example: False dichotomies and the noise before defeat, and Agility needs a strategy.

2. People could be shifting focus to more specific aspects of strategy

Business strategy is a relatively young discipline. It only really rose to prominence in the 1960s. As it has evolved it has developed into several subdisciplines. Where these don't specifically use the word 'strategy' in their labels, and increasing interest in those might appear as a decreasing interest in 'strategy' as an overarching topic. Some example of this might include:

Target Operating Model (TOM) development
The first candidate I looked at was Target Operating Model Development. See for example: How to design a Target Operating Model (TOM). Google Trends analysis suggests that interest in Target Operating Models has increased significantly (albeit from a zero base) over the same period, as shown in the chart below:

Google Trends chart for Target Operating Model

It also revealed something I had not appreciated before: all of this interest is coming exclusively from within the United Kingdom.

Business Model Canvas, Strategy Map, Strategy Canvas and Digital Disruption
I then added some other strategic concepts I thought might have gained popularity into the mix. The chart below shows the relative popularity of the Business Model Canvas, Strategy Map, Strategy Canvas and Digital Disruption into the mix along-side Target Operating Model Development, over the same time period - see the chart below:

Blue | Target Operating Model: The chart highlights the fact that, whilst popular in the United Kingdom, Target Operating Model development barely features in the rest of the world.
Green | Strategy Canvas: I was also surprised to see that, the Strategy Canvas popularised in the book Blue Ocean Strategy, languishes at the bottom of the chart with the Target Operating Model. Further analysis shows that, in contrast to the Target Operating Model, interest in the Strategy Canvas originates almost entirely in the USA.

See also: How to draw a Strategy Canvas in 4 steps.
Purple | Strategy Map: Popularised in the book, The Balanced Scorecard, and its sequel, The Strategy-Focused Organisation, seems to be suffering a similar fate to the word Strategy itself, slowly losing popularity.

Learn more about The Balanced Scorecard.
Yellow | Business Model Canvas: Introduced in the book Business Model Generation seems to be the big winner. I am a great fan of the model, and given the ever increasing popularity of startups and startup culture, the popularity of this model is unsurprising.

See also: How to use a Business Model Canvas.
Red | Digital Transformation: Whilst not a model or specific concept in the same way that the others are, I included this one off the back of some research claiming that Digital Transformation now accounts for ~25% of all strategy projects. The Google Trends analysis certainly bears this out, and one can easily imagine Digital Transformation eclipsing the Business Model Canvas in the very near future.

See also: The digital spiral towards innovation at the core.

3. Attention spans could be reducing

In a world where even world leaders struggle with more than 140 characters, it could be that disciplines like strategy simply require too much attention for people to bother.

I'd like to believe that we're not living through the early scenes of the film Idiocracy. However, as the art of strategy evolves, strategists need to work with ever greater care and discipline in order to identify and extract value from increasingly competitive markets.

Perhaps that is simply something that fewer and fewer people are willing to do.

4. People could think strategy is really easy

In direct contrast to the previous points, perhaps everyone thinks they are now a strategist.

In the last 4 hours, I've read two blog posts in which the author picked holes in well-known business and claimed to have the fix for them. Both analyses were based on precious little data or other evidence, were over-simplistic and completely missed the mark. One basically criticised LinkedIn for not being more like Facebook, whilst the other thought Uber was doomed because after 4 rides they'd not asked him for an NPS score. (I'd only read them because the headlines had seemed promising.)

When you think strategy is that easy, why would you need to Google it or take any other steps to learn how to do it?

5. Google Trends could be too blunt an instrument

Search terms trends are a blunt instrument for measuring the popularity of something. In the first instance, who really knows how Google collects and presents this data. Certainly not I. There could be many other technical reasons for the trends we think we're seeing.

In the second instance, we don't really know why people are searching for strategy. They could be searching for strategy games, military strategy or any of a range of topics with little to do with business strategy at all. So the decrease in popularity of strategy could have little to do with business strategy at all. A quick Google Trends check on 'business strategy' reveals, however, a similar trend as for 'strategy' in general. However, I am not sure if that distinction is viable as I suspect few business strategists distinguish when searching.

Conclusions:

Having completed the above analysis, my conclusions are that:

The specific terms 'Strategy' and 'Business Strategy' do appear to be losing popularity.
However, specific sub-disciplines, particularly those labelled without including the word 'strategy' are thriving. (Tip: If you're developing a new strategy concept, leave the word out of its name.)
The popularity of some strategy approaches is much more regional than I had realised.

Over to you: Do you think we are losing focus on strategy? If so, why do you think that might be? Should we be concerned? What, if anything, should we do about it? Please drop your answers in the comments below.

How to evaluate and prioritise strategic options

Once you've developed a comprehensive list of strategic options, it's time to evaluate, prioritise, select and sequence the ones you want to pursue.

You should base your evaluation on four criteria:

feasibility,
strategic fit,
interdependencies, and
financial risk and reward.

Feasibility

An option may seem very compelling. But, if it requires you to build a time travel machine and teleport into a parallel universe, you're probably going to fail.

Feasibility is a measure of how easy it will be to execute an option.

One way to establish this is to cross-check the option against the strengths and weaknesses in your SWOT analysis.

Does the option capitalise on your strengths?
Would you have a distinct advantage over others who lack those strengths?
Does the option require strengths you don't have or where you are weak?
Would the option protect you from exposure to your weaknesses?

Of course, you may find the option requires capabilities which you simply did not evaluate when you originally did your SWOT. In that case, you may want to consider updating it.

Just because an option will be difficult for you to execute does not mean you should give up on it. When America decided to put a man on the moon, no-one thought it would be easy. But it is certainly an important consideration when weighing an option up against alternatives.

Strategic Fit

There is little point in starting to build a commanding position offering a product or service for which demand is in free fall.

Strategic fit is a measure of the future attractiveness of an option.

There are three techniques you can use to establish strategic fit:

Cross-check each option against your strategic goals and objectives. Options which make a greater contribution to a greater number of your strategic goals are more attractive.
Cross-check each option against the opportunities and threats identified in your SWOT analysis, PESTEL analysis and/or Porter's 5 Forces analysis. Do industry trends suggest that demand for a product, service feature or attribute is likely to increase or decrease? Does the option capitalise on recent or anticipated changes in order to operate more effectively or efficiently? Do other external factors mitigate in favour of or against this option?
Cross-check each option against the strengths and weaknesses identified in your SWOT analysis and/or McKinsey 7S analysis. Is it a unique fit to your specific relative strengths and weaknesses? Or is it a me-to undifferentiated move?
Cross-check each option against your scenarios. Options which produce good outcomes across all scenarios are better than those which produce even better outcomes in some scenarios, but poor outcomes in other scenarios.

Typically, strategic fit for Horizon 1 will be more impacted by strengths and weaknesses. Conversely, strategic fit for Horizon 3 options will be more impacted by opportunities, threats and scenarios.

A rigorous assessment of feasibility and strategic fit should also stop an organisation from meandering aimlessly in pursuit of the next shiny idea. Instead it helps to develop a portfolio of strategic options which is holistic and based on sound analysis.

Interdependencies

It is important to remember that not all strategic options are independent of each other. There may be:

Trade-offs and mutual exclusions. This is where going in one direction may make it harder, or even counterproductive, to go in another.
or
Dependencies. This is where executing one option first may make it easier to implement another one second.

It is important to identify these before proceeding to look at financial risk and reward, as these interdependencies can have a significant impact on financial costs, benefits and risks.

The matrix below illustrates a simple approach to bulleting out the potential interdependencies between options (additional supporting documentation may be required):

Financial Risk and Reward

Financial risk and reward is probably the most widely written about of the 4 criteria. It is also the least strategic in that it can be applied to any project on a standalone basis. However, having worked through the other three criteria have a significant impact in understanding the costs and risks of implementation (feasibility & interdependencies) and the size and risk of the prize at stake (strategic fit and, again, interdependencies).

There are a number of ways of assessing financial risk and reward, including NPV, Profitability Index, IRR, Payback Period, Discounted Payback Period, etc. each with its pros and cons. Discussion of these is beyond the scope of this post. (If there is demand, I may consider a future post - please let me know in the comments.) All of these methods are based on future expected cash flows. Again, there are numerous ways of calculating these, and again, they are beyond the scope of the post (but could be the subject of a future post if there is demand).

It is self-evident but never-the-less worth stating that all of these methods of assessment are only as good as the forecasts on which you base them. Garbage in - garbage out. Furthermore, forecasts are notoriously unreliable, and probably more so as the options you're evaluating get more innovative and strategic.

It is important to undertake financial risk and reward forecasts as they force you to confront difficult to answer questions. However, it is equally important not to then believe that your forecasts are somehow factual or accurate.

Bringing it all together

Once you've evaluated all of your options against each of the 4 criteria, you're in a position to review your portfolio and to start making choices.

Start by assigning a simply High, Medium and Low score to each option for each of Feasibility, Strategic Fit and Financial Risk and Reward. The result can easily be translated into a total score from 3 to 9 by giving one point for a Low and 3 points for a High. The options can then be sorted based on that score. Finally, where there are dependencies, you can remove any lower scoring options which are mutually exclusive with higher scoring options. Also, if any preceding options score less well than their succeeding options, move the preceding options to just before the succeeding options.

The strategic portfolio analysis matrix provides a useful way to visualise the solution.

This basic approach will yield a prioritised list of options from which you can build a roadmap for delivering your strategy. There will inevitably arise situations where you disagree with the result. Any system for prioritisation will give you an indication but not a definitive solution. So if you really think you should change what the formula spits out, then do so. But do it consciously. And make sure you document and agree your reasons so that you're not left second guessing yourself later.

Once you've evaluated and prioritised your strategic options, you're ready to move on to build your implementation roadmap. But that will have to wait for another post.

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7 techniques and 5 tips for developing strategic options

So, you’ve completed your analysis. You now understand everything there is to know about your firm, the market in which it competes, and how you anticipate the future might unfold. Well, maybe not everything, but as much as you reasonably can.

Now what?

The next step is to develop strategic options for taking the firm forward. Options are simply things you could choose to do or not do.

But how exactly do you do that?

Contrary to popular belief, you don't have to rely on vague notions like 'blue-sky thinking'. Nor must you simply hope that inspiration strikes like a bolt from the blue (although a little inspiration never hurt anyone!) In contrast, there are specific processes you can undertake to develop strategic options.

7 techniques for generating strategy options

There are a number of ways to generate options, for example:

Use Ansoff’s matrix to consider all the possibilities of selling:

existing products to new customers (new geographies, customer segments, etc),
new products to existing customers, or even
new products to new customers (learn more).

Use the innovation templates for a systematic approach to developing new products and services (learn more).
Use Porter’s generic strategies as a framework for choosing between and developing options based on either:

Cost Leadership,
Differentiation or
Focus (learn more).

Add, change or remove a competitive factor on your Strategy Canvas (learn more). This best done using the Voice of the Customer (VOC) off the back of customer research.
Develop options which flow directly from the insights in your SWOT analysis (see below).
For a portfolio of businesses or products, use a BCG Analysis (learn more) or a Pareto Analysis (learn more) to understand and develop your options for shaping the portfolio.
Ask people for ideas (see below).

Developing options from the insights in your SWOT analysis

Weaknesses:

Strengthen your capability or acquire the resources
Partner with some who is strong at it
Avoid it by focusing on customer segments who value it less highly
Discount opportunities which rely on it

Strengths:

Find other products, services or customer segments which rely on it
Promote it to your customers
Target customers who prize it most highly

Opportunities:

Invest in building and using related strengths
Position and promote yourself as a leader in the field
Conceal your intentions so that competitors are less aware of the opportunities

Threats:

Exit or de-emphasis directly affected markets
Capitalise on a competitor's weaknesses in this area
Seek to neutralise it

Look especially for examples where your strengths play into opportunities. And take evasive action where your weaknesses most expose you to threats.

Don't forget to just ask people

In addition to using the other techniques, don't forget the simplest one of all: just ask people what they think you could or should do. You could ask colleagues, customers, distributors, suppliers, and, of course, professional consultants. When doing so, it is best to follow the brainstorming guidelines of suspending judgement of those ideas until later.

5 tips for generating strategic options

The purpose of developing options is to allow for choice. As Porter said:

Strategy is about making choices, trade-offs; it's about deliberately choosing to be different.

Here are some tips to ensure your options allow for real choice.

Don't just stop once you've found an option you like.

If you'll do, you'll never know if the next option would not have been even better. Work through the full range of options.
Look for options which are mutually exclusive and/or involve tradeoffs.

This will help to ensure you're making the really tough calls to differentiate yourself in the market, and not simply executing as many of the ideas as you can.

For example: Airline brands must typically choose to position themselves as either 'discount' or 'premium'. By eliminating meal options, discount airlines can reduce flight turnaround times and costs (well beyond the cost of the meals themselves). However, this would deter premium customers.

Far from being a limitation, such mutually exclusive options are strategically valuable. They allow different competitors to take up different positions without competing head-on.
Beware Hobson's choice.

Hobson's choice creates the illusion of choice by positioning one option as the only alternative to either doing nothing or failing. I've seen people do this when they only really have one option (see tip 1).

For example: We must replicate a competitor's last move or lose market share. Instead, ask: What else could you do to retain and even grow market share?
When faced with a large number of options, group mutually reinforcing options into themes.

Strategy is a pattern of decision making, rather than a number of decisions made independently of each other. Grouping options into themes can help to highlight those patterns. Some options can be included in more than one theme.

In extreme case, themes can have their own vision and mission statements. Values, however, should remain consistent across all the options and themes.

Theming options presents you with two levels of choice:

which themes to pursue / not pursue, and
which options to pursue / not pursue within them.

Suspend judgement until the end

Resisting the temptation to judge options as either good or bad too early in the process. This will cloud your judgement. An option which does not appear very good in isolation might be a vital component of a very powerful theme.

Once you're done, you're ready to move on to the next step: How to evaluate and prioritise strategic options.

Which of these do you already use? Which of these do you planning on trying out next? Please share your stories and plans in the comments below.

Image adapted from: marfis75 decisions ( #cc ) via photopin (license)

Porter's Generic Strategies and how to use them

Diagram showing Porter's Generic Strategies

As far back as 1980, Michael Porter wrote that all firms must choose to compete on the basis of either cost leadership, differentiation or focus. Firms which attempt to compete on more than one of these three risk wasting precious resources with incompatible strategies. Porter described such firms as "stuck in the middle".

Cost Leadership

In cost leadership strategies, firms compete by lowering prices (relative to value) in order to appeal to a broader target market (especially cost-conscious customers who might otherwise not purchase the product) or to sell higher volumes of product to existing customers.

Cost leadership firms retain profitability by keeping costs low through:

increasing asset utilisation: for example, an airline that can turn aircraft around more quickly at the gate, a restaurant that can turn tables more quickly, or a management consultancy can charge more billable hours per member of staff and/or have fewer support staff, a factory can run expensive machinery 24 hours a day, etc.
increasing economies of scale: for example, manufacturers that produce and sell higher volumes of goods can negotiate better deals on raw materials and distribution, and use more specialised equipment and processes.
utilising the experience curve: for example, firms that repeat processes more frequently and over a longer period of time can use statistical and other methods to learn about and improve those processes.
standardisation: offering few options on products and services, like the Model T Ford "any colour as long as it is black" approach. This will help to drive asset utilisation, economies of scale and the experience curve.
process innovation: for example, by finding a substantially cheaper way to produce something.
employing other low-cost strategies, including operating from low-cost locations, outsourcing, etc.

Firms pursuing cost leadership can deter new entrants to their market by threatening to retaliate with reduced prices. They can lock in powerful distributors with attractive deals, and neutralise supplier bargaining power. Given low prices, customers are less likely to consider more expensive substitute products or services. Rivalry can become an issue if two cost leaders enter into a price war, commoditising the market and competing all of the profits away.

Examples:

Walmart: Known for its "Everyday Low Prices" model, Walmart achieves cost leadership through large-scale operations, efficient supply chains, and aggressive vendor negotiations.
Ryanair: As a budget airline, Ryanair minimises costs by operating a single aircraft model, using secondary airports, and offering no-frills service.
IKEA: IKEA keeps prices low by offering flat-packed furniture, self-service warehouses, and efficient global sourcing.

Differentiation

In differentiation strategies, firms compete by offering superior products or services to customers, usually at higher prices.

Firms achieve differentiation through:

customer intimacy: having strong relationships with their customers and knowing what they want and value.
product or service innovation: developing new products, services and features to satisfy those wants and needs (learn more).
brand building: to convince customers that a firm's products or services are somehow superior to a greater extent than what they really are, or to convince customers that they want product or service features the firm offers more than they actually need them.

Firms must find ways to protect their differentiators, for example using copyrights, patents, and/or exclusive/monopoly contracts. If their differentiators can be replicated by competitors, they will lose their competitive advantage and may be forced to compete on price against firms which lead on cost.

Firms using differentiation must rely customer loyalty to fend of new entrants. Differentiators can negotiate with distributors on the basis of such customer loyalty and brand pull - that is consumers will want distributors to carry their products. Differentiators have less bargaining power with suppliers but are better able to pass supplier price increases to customers. Differentiators rely on the utility of their value-added features to fend of substitutes. Rivalry is resolved by convincing customers of the superiority of the product or service, which can require clever marketing.

Examples:

Apple: Apple differentiates itself with sleek product design, user-friendly interfaces, and a strong ecosystem of devices and services.
Starbucks: Starbucks creates a premium experience with quality coffee, customisation options, and inviting store atmospheres.
Tesla: Tesla differentiates through innovative electric vehicles, superior battery technology, and a commitment to sustainability.

Focus

Firms achieve focus by targeting one or more specific customer segments or niches. They then pursue a strategy of differentiation with regard to the product and service features with the attributes most highly desired by those segments, and cost leadership (or even elimination) with all other attributes.

Whilst focus combines elements of both differentiation and cost leadership, it should not be seen as a hybrid or blend of the two. Strict separation should be made between those product and service attributes where cost leadership is to be applied and where differentiation is to be applied, and this strict separation should be based on the particular wants and needs of clearly identified niches.

Examples:

Rolls-Royce (Luxury Cars): Rolls-Royce uses differentiation focus by catering to the ultra-luxury market with bespoke cars and high-end materials.
Whole Foods Market: Whole Foods employs differentiation focus by targeting health-conscious consumers with organic and natural products.
Spirit Airlines: Spirit Airlines uses cost focus by offering ultra-low-cost services to budget-conscious flyers in specific regions.

How to use the generic strategies

Decide which of the three generic strategies you want to pursue

It is often, but not universally true that larger firms must choose between cost leadership and differentiation, whilst smaller firms must pursue focus. This is usually because large firms will struggle to find niches of sufficient size, and because small firms lack the resources to compete on cost leadership or differentiation.

In large businesses, such as conglomerates, it is possible to for different part of the business to compete using different generic strategies. In such cases, the business may pursue different generic strategies under different brands in order to maintain that distinction in the market.
Actively develop strategies and pursue which are aligned to and strengthen that position

See the three descriptions above for examples of the kinds of strategies you might pursue under each of the three generic strategies.
Identify and phase out any activities you currently undertake which do not support your chosen generic strategy.
When evaluating new opportunities, eliminate those which are not compatible with your chosen generic strategy.

Introducing the Enhanced Business Model Canvas

The Enhanced Business Model Canvas combines the Business Model Canvas with the Operating Model Canvas.

The Operating Model Canvas was proposed by Andrew Campbell, Mikel Gutierrez and Mark Lancelott in their recent book by the same name. (See to the right). The Business Model Canvas was proposed by Alexander Osterwalder and Yves Pigneur in their book "Business Model Generation". I previously blogged about it here.

In suggesting this combination, Campbell, et al, argue that it provides a more operational perspective to the left-hand side of original Business Model Canvas. This directly addresses "important issues such as people, organization structure, location and information systems that are critical to the operating model, but often given too little attention when thinking about the business model."

Here is an example of what an Enhanced Business Model canvas for Uber might look like.

(Please note: I have constructed this canvas by way of example only. I used publicly available information without any privileged knowledge of Uber. As such, I cannot vouch for its accuracy. If you do disagree with anything in this example, this will only serve to demonstrate the usefulness of the tool in fostering understanding.)

I drew the example above in StratNavApp.com. StratNavApp.com is the collaborative online tool for business strategy development and execution.

The Enhanced Business Model Canvas provides more context and granularity than the original Business Model Canvas does. For starters, it considers 11 elements of the business model, compared to the original 9. And some elements have been altered. The changes are:

Locations and Organisation have been added. These are both welcome additions.

Location: Michael Porter's work on the strategic importance of location should be enough to convince you. If not, just think of the importance of, for example, Silicon Valley to the tech sector.
Organisation: Please see my previous blog about why Structure follows Strategy.

Key Partners and Resources have been removed. I would argue that they have, in fact, been replaced with Suppliers and Information respectively. In both cases, the new category appears to be slightly narrower than the original.

In the case of suppliers, the greater specificity is probably a good thing. Distributors, for example, may be a Key Partner, but they fit more logically on the right side of the model, which focuses on customers, under Channels.
The addition of Information is very welcome in today's data-intensive, big data-driven world. Some other Resources, such as a preferential Location, now have a home of their own. Others, such as patents or exclusive contracts may struggle to find a home in the enhanced model.

Key Activities have been renamed as Processes. They are also placed within a horizontal chevron shape, instead of the non-descript blocks in which the other elements reside. I am neutral regarding the name change. Arguably, the shape and orientation of the category make absolutely no difference to the analytical process. However, I can't help but feel that the change highlights the active nature of the Key Processes. It also serves to make the model more distinctive.

Only time will tell whether the Enhanced Business Model Canvas will achieve the popularity of the original. For now, StratNavApp.com offers the ability to use either. Undoubtedly, it does add something to the debate on how best to understand, represent and analyse operating and business models. And I'd certainly be interested to hear your thoughts in the comments below.

Strategic Analysis: Old Mutual changes its replatforming partner

The most interesting story of the week in UK financial services must be Old Mutual Wealth's (OMW) decision to switch its replatforming exercise from IFDS to FNZ.

Strategically, I think it is interesting on a number of levels:

1. Sunk costs really are irrelevant

Every finance and decision making text will tell you that sunk costs should not influence a decision. However, behavioural economists have ample data to illustrate how difficult most people find it to apply this simple logic, and how seldom they do so.

OMW's decision is a masterclass on the subject. It successfully disregarded £330m of sunk costs in making this decision. (Although, I am sure that not all of that investment was thrown away and presumably OMW will have build up a significant library of requirements analysis and other IP that it can carry forward into its implementation of FNZ.)

In OMW's case, not all the costs are financial, and they would also have had to factor in any potential loss of investor confidence as they approach the break-up of their parent group (Old Mutual plc).

2. Financial cost is a secondary criterion

Even after setting aside these sunk costs, the advertised cost of implementing FNZ (£120m-£160m) is still greater than advertised costs of completing the IFDS implementation (£110m). The decision does not make sense based on those costs alone.

There are two other factors which would have swung this deal:

Benefits: that is the benefits promised by FNZ outweighed the those promised by IFDS.
AND/OR
Risks: that is the perceived risks of IFDS exceeding budget, over-running schedule, or failing to deliver benefits exceed those perceived risks for FNZ.

All of which only reinforces the view that if the negotiation hinges on costs, then you've already lost.

3. Doing is the best form of marketing

I don't know what either FNZ or IFDS spend on sales and marketing, but I suspect that the impact of this one press release outweighed the impact of all of their other sales and marketing activity combined.

FNZ must be grinning like a Cheshire cat right now. In contrast, I suspect there are a lot of difficult questions being asked at IFDS.

Of course, this story isn't finished, and all eyes will be on OMW and FNZ over the next 18 months to see if FNZ can get on any better with OMW than IFDS did.

4. Systemic risk in the sector is shifting

This is perhaps not 'new' news, but this story brings it back to the fore. To put this in perspective, figures from Platforum show that 84 per cent of platform assets are expected to be held on platforms backed by just four technology firms by the end of 2018.

This level of market concentration inevitably attracts regulatory scrutiny, and ultimately intervention.

In the 2008 financial crisis, it was the banks that were considered 'too big to fail'. In the next financial crisis (isn't it inevitable?) it may be the technology providers supplying the financial institutions which take this role.

5. Technology is eating their lunch

According to the Financial Times Global 500 rankings, 5 of the top 10 companies by market capitalisation as of 31 March 2017 are now technology companies (Apple, Alphabet, Microsoft, Amazon and Facebook), as the industrial and financial conglomerates that dominated until recently slowly slip down the rankings.

As the financial services value chain fragments and the number of vertically integrated financial services companies (like Hargreaves Lansdown) declines, it becomes ever more important to understand to where in the value chain the value will flow.

The key motivation for disaggregating your value chain and buying core systems from a third party are that you believe a third party can do the job better and more cheaply than you can. A write-off of £330m is a big negative in that evaluation.

Given the combination of concentration and market cap factors outlined above, it seems likely that value will flow away from financial services providers and towards their technology suppliers, leaving the financial services providers increasingly commoditised, whilst still bearing the capital burden.

As the old adage goes: in a gold rush, it's the shovel-maker who gets rich.

Strategic Learning: A practical guide to strategy development and execution

Regular readers of this blog will know just what a complex and multifaceted subject business strategy can be. For those without the time to study the subject in all its guises, actually getting on with the job of developing and executing business strategy can be a daunting task.

That is why I wrote my first eBook:

Strategic Learning: A practical guide to strategy development and execution

In it, I distil what I believe are the absolutely essential steps and considerations for developing and executing a business strategy which creates real value, rather that one that sits on the shelf collecting dust.

You can download your free copy now.

I'd love to know what you think. Please feel free to leave your feedback in the comments below.

Agility needs a strategy

Agility is another idea frequently posited as being superior to strategy.

The argument goes that the world is changing too quickly for long-term plans and strategy to add value. So, firms should instead just focus on being agile and quick to respond to change.

Once again, this presents a false dichotomy. (See also False dichotomies and the noise before defeat.)

Agility is not an alternative to strategy. In fact, as a goal, agility itself requires a strategy:

What should firms do to become (more) agile?
How should firms avoid the pitfalls of agility?
How do firms decide where to pivot and where to stick? etc.

Agility is a well-developed concept in the field of software engineering and development. A cursory review of the literature will reveal how many different approaches and methodologies for agility there are. Each has pros and cons. Each is likely to be more or less suitable under different circumstances. That same literature is also full of cautionary tales of firms who have failed to implement these approaches well.

Strategy itself is not only about the long term. Strategy should also be about the here and now. In fact, this is one of the advantages of a solid strategy process. It ensures that the myriad decisions that firms face on a daily basis can more easily be made in a way which aligns towards a common goal.

Strategy facilitates agility. When faced with an unforeseen event, stakeholders can more quickly agree which responses most closely align with the strategy. They can then respond more quickly and with greater confidence and alignment. Contrast this with a firm which makes each and every decision independently. Decisions will take longer and involve more frequent changes of direction and even reversals.

However, agility often conceals strategy. Commentators easily observe apparently agile changes without appreciating the underlying strategy which guides them. As Sun Tzu said:

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.

Update 13 July 2018: I am honoured that Scott Adams seems to have taken up this cause. See his Dilbert Comic for 2 July 2018.

photo credit: Sebastiaan ter Burg Design A Better Business Workshop @ Zoku Amsterdam via photopin (license)

The digital spiral towards innovation at the core

The nature of what the digital revolution means is evolving as organisations adopt digital in more mature and fundamental ways and as AI becomes an increasing factor in organisation's digital strategies.

Digital started at the edge of the organisation, where the organisation touches its customers and has evolved ever deeper into the organisation to where it now enables completely new ways of creating and delivering value.

This evolution is a continuum of change. But, I find it helpful to divide it into four distinct phases.

1. E-commerce

The first phase allowed businesses to market and sell their (existing) products and services to more customers more easily over digital channels. It started with marketing. Using informational websites, email and social media to reach customers. It gradually grew to include selling and eventually servicing.

This first wave of e-commerce is often referred to as Web 1.0. A myriad of startups flooded the market selling everything from books to pet food, whilst established pre-e-commerce business struggled to keep up. The inevitable bust which followed the boom left a much smaller number of massive winners (think Amazon.com), a much larger number of failures (think Pets.com). Almost no businesses exist today without a website.

E-commerce had more fundamental impacts on business strategy, though. Most importantly, it exposed how a lack of integration within the organisation and its system made it difficult if not impossible to deliver coherent DIY and self-service solutions to the end customers. From this, the concept of customer-centricity was born. (Although this term has now taken on a life of its own and been widely misappropriated.)

2. Supply chain automation

Whilst the focus of this first phase of e-commerce was on end consumers, the second phase tackled the B2B relationship between corporate buyers and their suppliers. B2B e-commerce sites quickly evolved to provide more direct integration between buyer and supplier systems. Standards, such as XML, evolved to facilitate this, and more recently we've seen a drive towards API-first business models.

Supply chain automation makes existing exchanges of information more efficient. It also increases the flow of information. For example, RFID allows retailers, distributors and manufacturers to track stock levels and movement, automating stock management and better integrating with robotics.

Not only did this improve efficiencies, with smaller orders and faster delivery cycles, but it also allowed previously monolithic organisations to disaggregate into networks of smaller interdependent and more specialised suppliers.

In 2017 McKinsey & Co estimated that whilst 49% of companies invest in E-commerce, only 2% of companies invest in digitalising their supply chain. A more recent 2023 study by PWC, found that 83% of executives said their supply chain technology investments haven't fully delivered expected results and that few said their companies are using or panning to use technology to enhance the execution of their supply chain over the next 24 months. A 2024 study by KPMG, in contrast, found that 50% of supply chain organisations will invest in application that support AI and advanced analytics, and that 2/3rds have already adopted low-code int their supply chains.

3. Workforce automation

With both the customer and supplier ends of the value chain being digitised it was inevitable that digitisation would begin to encroach on the work done by employees in between.

Although we've had expert systems for many years, it is the development of digital customer and supplier interfaces which generate the data required to move them towards true artificial intelligence. For an explanation of this effect, see More data usually beats better algorithms.

The now general release of Generative AI has significantly accelerated this trend.

Information-based jobs will inevitably be hardest hit first. Think of insurance underwriters and claims managers, fund managers, accountants, etc. But inevitably most jobs with any element of repetition will be impacted. Taxi drivers are at risk from autonomous vehicles, for example, and there is already talk of robots performing some surgeries more accurately than skilled surgeons. There is already evidence that banks are hiring fewer people with finance backgrounds to do the work, and more people with technology skills to automate it.

I prefer to think of workforce automation in terms of augmentation, rather than replacement of people. The industrial revolution provides a well-established narrative of technology replacing labour and yet somehow creating new and different jobs in the process. Most of us are grateful that we don't have to do the heavy labour now replaced by machines. And future generations will be grateful not to have to do some of the repetitive and uncreative jobs many people do today. (The emerging millennial workforce is already rejecting much of this kind of work.)

Ultimately, however, we should expect that computers and machines will eventually become better than humans at all tasks.

It strikes me as anachronistic that organisations are slow to adapt and to provide their employees with the same level of tools to use in their jobs as other companies provide them to use as their customers. Ultimately, this flows through into the customer experience when call centre operators are unable to provide quick and definitive solutions, leaving you with the impression they are still switching between multiple disconnected systems to get answers and process requests.

4. Digitisation

The resulting end-to-end digitisation of the value chain opens up possibilities. Not just for delivering existing products and services more effectively. But also for creating entirely new products and services.

Again, this started with information-based products. Think of the development of subscription-based streaming media services, compared to purchased physical media or broadcast services. But it is now moving increasingly into physical products as well.

This is enabled by the Internet of Things (IoT): a network of sometimes semi-autonomous things able to sense elements of the real world and communicate with each other and controlling systems. Already we have devices fitted in cars which can collect data about the performance of the car and can communicate this to service technicians and insurance companies. We also have activity trackers. These measure things like sleep, activity levels and heart rate on a continuous basis. They upload this data to servers for more detailed analysis.

Of course, it is still hard to imagine where this could go. Imagine that your calendar/organiser is able to determine where you are now, where you need to get to for your next meeting, and can arrange for an autonomous vehicle to take you there, all without you needing to do anything.

Note only does digitisation replace or enhance physical products, and create completely new entirely digital products, it also often develops whole new ecosystems of digitally connected organisations, people and devices which collaborate together in previously unimaginable ways.

In 2017 McKinsey and Co research suggested that 70% of companies approach digitisation without changing their overall strategy, but that the 30% that do, generate 3 times the profit. More recently, in 2021, an Infosys MIT Technology Review survey of more than 250 business leaders and senior executives revealed that more than half of the enterprises realised new business models because of participating in the data economy. (Source)

When I look at offices and factories full of people hunched over keyboards, screens and other equipment, I always get the sense that somehow it is the people working to satisfy the requirements of the machines. I read today a prediction that in 10 years time, most interfaces will not have a screen. I believe that is because the machines will talk to us, as we now talk to each other, and talk to each other silently using some form of wireless protocol. In a fully digitised world with a fully developed IoT, you can imagine that finally, it will be the machines who serve the people, fading into the background as they do.

Lessons

I think there are two key lessons from understanding this evolution of digital strategy:

Organisations who remain focused on e-commerce alone will eventually be outcompeted by those that embrace all four stages of digitisation. All organisations must now look at all four phases of digital in parallel in order to remain competitive.
Organisations where a high proportion of the total labour cost is direct (that is directly proportionate to the volume of products and services provided to customers) rather than indirect (that is devoted to researching and developing new and improved propositions) will fall behind. Employees should be firmly focused on creating new sources of value, and not delivering existing sources of value.

False dichotomies and the noise before defeat

I was reading yet another blog post the other day about how, in today's fast-changing world, execution is more important than strategy. That strategy has somehow become irrelevant, even. I find such articles to be a bit unhelpful. As unhelpful as the similarly argued ones about how culture trumps strategy.

The problem is that they are based on a false dichotomy. That is, they assume that we need to choose strategy OR execution (OR culture). The reality is, we need strategy AND execution (AND culture, etc.) to succeed.

Arguing that execution is more important than strategy is like arguing that the heart is more important than the lungs. Without the lungs, the heart would pump unoxygenated blood, and we'd die. Without the heart, the oxygenated blood would not circulate, and we'd die just as quickly.

The film, Titanic, gives a great example of what happens when you focus too much on execution and not enough on strategy. The journey starts off splendidly. So much so, that the captain orders the crew to increase speed so that they can arrive in New York ahead of schedule. Execution was humming.

Unfortunately, all that extra speed just meant that they hit that iceberg even harder!

What they lacked was strategy: a process which might have resulted in them identifying and anticipating icebergs earlier, loading more lifeboats, sticking to the planned speed, charting a different course for New York, etc.

Execution without strategy simply takes your business in the wrong direction more quickly.

The saying, often misattributed to Sun Tzu, goes:

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.

Yes, it is true that the world we live in now is quite different from the world in which the authors of the classic texts on strategy lived. But a read of Sun Tzu's 2,500-year-old text, The Art of War, shows that many things remain remarkably the same.

One thing that has changed is the very pace of change itself. New ideas spread more rapidly now than they ever have before. But the pace of change has been accelerating since at least the invention of the printing press. And we can only expect that it will continue to accelerate. So, in a sense, even this is nothing new.

The accelerating pace of change makes the importance of strategy even greater than before, and certainly not less. To suggest that we abandon strategy in the face of accelerating change is a folly akin to suggesting a driver closes his eyes whenever the car exceeds a certain speed. (Tweet this) At higher speeds, we need better systems for sensing, anticipating and responding to what is coming. And, as the case with cars illustrates, we need to increasingly rely on technology to do so.

In short, strategy needs to evolve alongside everything else. It should not be abandoned or subjugated.

So, let's be done with false dichotomies. Let's accept that we need strategy AND execution (AND culture, and a whole host of other things). Let's redouble our efforts to do develop and execute better strategies even more effectively.

Experience trumps promotion

Some years ago, I wrote about a positive experience I'd had as a regular flier on British Airways, and how I suspected it had been part of a well-executed campaign. You can read the post here: British Airways just made my day.

More recently, I met a lady who'd worked in British Airways's marketing department around that time, and so I asked her about it. Her response slightly surprised me: "How did you know about that? We didn't really promote that campaign."

In marketing, it is easy to get so caught up in what we tell customers about our company / product / service, that we forget that what matters so much more is what they actually experience.

The holy grail, of course, is for the two to align completely: for the marketing message to help existing customers to better describe the experience they had, and to help new customers look forward to the experience they will have. And we all know what happens when the marketing message promises more than the experience delivers: disappointment and mistrust.

British Airways delivered me an experience that made me feel even better about being a regular customer. That they did it without fanfare probably made the experience feel even better.

photo credit: BriYYZ via photopin cc