By Tony Monisse
How Can I Be Strategic In Deciding Which New Business Opportunity To Go After?
Clarity on who a business’s target customers are, its value proposition and its unique key capabilities are the foundations for business success. This is especially crucial when facing the current capacity and capability constraints.
A challenge facing many businesses this year is that current market conditions are presenting many more opportunities than there is the capability and capacity to take advantage of these opportunities. Constraints such as finding and retaining staff, and sourcing equipment and supplies are commonplace for many businesses.
What becomes important in the current environment is the business’ ability to focus on their strategic ‘sweet spot’ and to pursue the right opportunities in this context.
It is important business owners and managers consider:
- Where will you play i.e. who is your target customer?
- How will you win in the market where you will play i.e. what is your value proposition?
- What are the unique capabilities required to win and which will drive your sustainable competitive advantage i.e. what key processes, resources and alliance partners are required to win?
Where To Play
In our recent Business Growth Network breakfast, we discussed the Boston Consulting matrix which can help to focus where to play.
The matrix categorises groups of customers based on;
- The attractiveness of the customer’s market and
- The business’ capability and strength to compete in that market
This categorization will result in customers being categorized as follows.
The objective of the business is to convert customers that are wild cats into stars and customers that are stars into cash cows and then reviewing how to deal with customers that are dogs i.e. either exit or look at a different service delivery and pricing model.
The other benefit of this analysis is to help the business focus its energies on where profitable growth will come from in the future.
How To Win
A tool that we have found helpful for the business clients to get clarity on how to win is to engage in a competitor analysis to help decide the factors on which the business wants to compete.
Below is a well cited example for Southwest Airlines, a budget airline in the US which to win chose to focus on friendly service, speed and frequent point to point departures. It did not focus on other factors which other airlines normally focus on. The outcome for Southwest has been consistently profitability over an extended period unlike other airlines during this same period.
Businesses that are not clear on the answers to these questions can focus on activities outside of their strategic ‘sweet spot’ which inevitably leads to waste. So instead of focusing on high payoff activities that support their value proposition, they engage in wasteful undertakings that can be costly to the business. And in an environment of constraint, this could lead to businesses pursuing opportunities which will yield low profits, including bidding for and winning work which they do not have the capability and capacity.
These important strategic questions are what business owners and managers should continue to ask every month, quarter, and year in the current environment, especially if they want to grow a sustainable profitable business.