• Who should you target as customers?
• What products or services should you offer?
• How should you do that?

Strategy is about finding answers that distinguish the company from its competitors. The most common strategic failure is the failure to make clear and explicit choices…choices about

• What to sell, and what not to sell.
• How to sell it, and how not to sell it.
• To whom it should be marketed, and to whom it should not be marketed.

Edward Jones’ winning strategy concluded that the firm should sell only to individuals, not to institutional investors and to sell only long-term products, such as large-cap equities and highly rated bonds. In addition they avoid risky IPO’s, options, and commodity futures. They also decided to distribute services only through one-person offices in small towns or within a city area that has a sense of community.

Edward Jones made some very clear and difficult choices when they said no to some things and yes to others that would lead to long-range success.

However, we must be mindful that no strategic position remains unique or attractive forever. Through the 60’s and 70’s, Xerox was so strong that it rebuffed vigorous assaults on its market by Kodak and IBM.

Cannon, on the other hand, targeted a specific market, small businesses and individuals which were considered inconsequential by Xerox…

• Rather than leasing copiers, Canon chose to sell its machines through a dealer network that created more of a relationship sales atmosphere.
• Rather than emphasizing the speed of its copiers, as Xerox and previous challengers had, Canon touted its quality and price as distinguishing features.
• Within 20 years, a Japanese camera company… Canon… became the market leader.

In every industry, established companies like Xerox lose their leadership to upstarts like Canon that take newly created strategic positions and market them well.

Dell, for example, captured 10 percent of the global PC market in less than 10 years. Starbucks grew from a chain of 11 stores and sales of $1.3 million in 1987, to 280 stores and $164 million in sales in five years, and today, although Starbucks is closing some locations, it has more than 2,000 stores.

The common principle in all of these successful challenges was strategic product, service and marketing innovation. These companies created new and distinct strategic positions. New combinations of answers to whom, what, and how are emerging all the time, and market leaders have to keep changing to stay on top.

Unfortunately, it is not uncommon for established companies, which become entrenched in a strategic position, to shift all their energies to protecting their position, paying scant attention to the strategic innovation and marketing of their competitors.

Most established companies try to do the same things better than before, through reengineering, restructuring, or quality control. If you follow that path, it will lead to stagnation and failure. Designing a winning and ever changing strategy is critical for continued success.

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