Eyes that look are common – eyes that see are rare – J Oswald Saunders
There are three phases to business strategy; market analysis, strategy development and strategy execution. Each phase builds on the next so a poor market analysis leads to ineffective strategies, closely followed by weak execution. Here’s a story about a company that got it right from the start and literally drew out their strategy to be seen by all.
A foreign exchange company called EFS sent their managers into the field to observe customers and non-customers who were involved in foreign exchange transactions. The managers listed of all the reasons they found that a customer would do business with them. This turned up some surprising conclusions. What EFS prided itself on most was its relationship managers. In fact, EFS believed these relationship managers were a “Key Success Factor” to their business. In a cruel twist, customer feedback showed they actually hated wasting time with these people. Customers felt that the relationship manager’s only role was to make excuses as to why their transaction wasn’t completed.
EFS managers recorded their findings on a value map which created a visual display to support their conclusions (see map below). They plotted the customers’ rankings and added a scale showing low to high importance for each attribute. Analysis revealed that price and relationship managers were not important to the customers where easy, reliable, fast and trackable service was. EFS managers presented this to the upper management team which led to a refocusing of their efforts.
Plotting the business strategy helped galvanize the team’s ideas and also assisted them to explain the strategy in a visual format to others. Authors Kim and Mauborgne in their book “Blue Oceans Strategy” talk about the importance of visually presenting a strategy on a ‘strategic canvas’. This step forces the team to build the strategy accurately and know it well enough to explain it easily.
A great company never out sources its “eyes”.1 There is no substitute for seeing things for yourself. Strategic insight comes first from observation for the goal of all strategic thinkers is “to see what everyone has seen before and think what no one else has thought before”2. Focus on your customers – understand their needs and draw your strategy to win over your market like EFS did theirs.
Figure one: Plot of EFS’s product attributes before (in yellow) and after (in red) their new strategy. A fictitious competitor is plotted in green.
(IIBD’s perceptual mapping software can assist you plotting customer’s opinions. For a copy of this software please contact me at CTipping@iibd.com)
1. For more info see Blue Ocean Strategy, W.Chan Kim, Renee Mauborgne, Harvard Business School Press Boston 2005 PP 85 – 87