Evolving a Strategic Mindset
There are many books and articles on the market about strategy and what it takes to be strategic or to plan in strategic ways. These are mostly written by either academics for their college undergraduate or MBA classes or senior executives and CEOs who have had some success with a past strategy and want to share how they approached the task. Neither of these approaches is wrong but they both may miss an important point – strategy should be a practical mental discipline or “mindset” that every leader can evolve and develop frequently in the moment and not a multi-step formula or recipe applied every few years that regularly only serves to make things complex and often confuse people. The author Chuck Bamford is one of the few people who advocates for this more practical and “mindset centered” practical approach in which strategy is sequential and continuous, and in this brief article we will explain how this is best evolved.
When many leaders are asked how they think about strategy they often immediately suggest a SWOT analysis (standing for Strengths, Weaknesses, Opportunities and Threats) as a primary tool to use in order to shape it. However, not only is SWOT an old and many would say outdated tool but is, at best, a very static look at a given organization and broadly relies on people’s gut feelings and opinions and misses many other key factors that would help better form good strategy. Bamford proposes three major approaches to thinking about strategy.
The first of these consists of both an external and internal analysis of the organization as a whole. External analysis consists of thinking about the “perfect” customer(s) and the choices that they can make in terms of your product versus the available competition. Internal analysis consists of realistically determining what parts of the organization are standard/routine or ordinary versus which parts are exceptional, extraordinary or truly differentiating. This is important in then ensuring that most of our investments and resources are going in the latter.
Secondly, and perhaps most substantively, Bamford proposes that strategy should be shaped by using what he calls a “resource-based analysis” (or RBA for short) in order to get leaders into the right strategic thinking mindset. There are fives factors to conduct RBA and determine what sets any organization apart. These are as follows: Is the product or service the organization offers:
- Relatively non-substitutable
- Relatively non-tradable
Offering a rare resource or capability can make a business exceptional or in some cases even unique. Bamford suggests that to define what’s rare, ask, “How many competitors do exactly what we do?” If the answer is one (or none), that qualifies as rare. If the answer is more than one, then what you offer isn’t unique.
Durable products/services or whole businesses separate themselves from rivals by securing their rareness long enough to lock in higher returns and sustained profits. These businesses outlast competitors and make it hard for them to invest the funds to catch up.
A product or service that’s relatively non-substitutable means that customers lack viable alternatives or substitutes if they seek a similar product or service. If customers can find other suppliers that offer the similar offerings or even broadly the same product or service at slightly better value, they are likely to substitute.
A relatively non-tradable product or service possesses something that it wouldn’t trade to competitors. Examples include holding a patent or intellectual property—or exercising exclusive license to a cutting-edge technology.
Although making sure that a product or service is truly valuable is last in Bamford’s RBA model (and only needs assessment if they have passed the earlier four criteria), assuming that this is the case it should be readily determined and allow the organization to not only attract a premium price but avoid price wars with competition altogether.
Finally, in Bamford’s third and final phase of evolving the right strategic mindset, he proposes that we can now craft a compelling mission for the organization, which creates a high level of focus, structure our resources appropriately (and develop well designed metrics to measure that these are working) and align people’s efforts in intelligent ways. This final step of alignment is where the “rubber really meets the road” in as much as it is ideal if every single person in the organization (and certainly every leader) have in their hands a one page “strategy map” that guides what they should be doing in the most practical terms possible.