Friday, November 02, 2007

Describe your strategy in a simple picture

Remember Venn diagrams? Those intersecting circles we learned about in elementary-school mathematics? (It was interesting that I didn't see those again until advanced college math--what a surprise that was!)

In the November Harvard Business Review ("Strategic Insight In Three Circles" - free link), Joel Urbany and James Davis of the University of Notre Dame use three intersecting circles (illustrated below) to simply describe a company's strategy. One circle identifies what value your company provides through its products and services. The second is what customers perceive about your company's value, and the third represents what customers perceive about your competitors' value.

The strategic goal, of course, would be to increase competitive advantage, decrease disadvantage, eliminate non-value and capture much of the white space. (Easier said than done!) Identifying and scrutinizing the attributes in each of those areas is a very useful exercise.

But be careful. It's important to be brutally candid with yourself when doing this type of evaluation. And you must truly look at things through the eyes of the customer, instead of how you'd wish them to see you and your competitor.

It's very easy to self-delude. In many cases, companies will come up with a self-congratulatory diagram like this:

When perhaps their true strategic situation is this (write Urbany and Davis, "The biggest surprise is often that [the advantage area], envisioned to be huge by the company, turns out to be minuscule in the eyes of the customer"):

So, it's important that this tool be used for genuine inquiry and candid appraisal, not to justify the current thinking or to make people feel good about themselves. If your company can use it properly, the three circles can clearly and vibrantly tell you where you are and where you should head.

(Illustrations adapted from Urbany and Davis, "Strategic Insight In Three Circles.")

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