A sustainable strategy has to be one that wins - consistently, now and into the future. Companies usually do that through a primary emphasis on one of three ways to compete.
- Product superiority (think Apple or Bose) - and that brings some choices about what sort of people they hire, where they spend resources, where they invest and focus.
- Price (think WalMart) - and that also leads to choices about human resources, investment in systems, attention to their supply chain and logistics.
- Customer Intimacy (think very high-end retail, like Macy's or Nieman Marcus) - where they remember you, know what you want before you do, and go overboard with attention to the customer.
Companies can't ignore any of these, but success comes sustainably when the focus is on one, and the others are sufficient.
Sustainable strategy has to be reality-based, and more realistic assessments mean better strategy. A Strengths / Weaknesses / Opportunities / Threats (SWOT) analysis - one foundation of strategy - has to be realistic to be any use at all. A Political / Economic / Society / Technology (PEST) analysis is an environmental scan that has to be fact-based and current - and repeated at least a couple of times a year.
Sustainable strategy has be be flexible - a plan that doesn't take into account the most likely contingencies is brittle and fragile, not sustainable.
Sustainable strategy takes into account the human resources - how the organization's talent is engaged, retained, developed and rewarded. A strategy that doesn't consider this is extremely vulnerable to ugly surprises when top talent leaves. This year, as the economy improves, more companies run serious risk here than recognize it.
Sustainable strategy also builds in continuous process improvement. Operational excellence isn't a strategy by itself, but without examining and optimizing processes, organizations make the execution of strategy harder and costlier than it needs to be.
More to come on this, and I may be repeating the talk (with its take-away tools) in another venue soon.
