How to play and win in the sweet and sour market environmentJulkaistu 07 syys 2023
Ever found yourself wondering how a company that has never turned a profit can have a valuation worth millions of euros? Or how you can grow a business in a mature, sometimes even stagnant, market? And how do you ensure relevance in the eyes of those you want? What hurdles do you need to clear out of the way for making all of this possible? We gathered with a bunch of top executives from major Finnish companies to discuss these topics. Here’s what we took out of those discussions.
The importance of a clearly understood strategy narrative.
In the world of business, we’ve traditionally been taught to evaluate a situation from a quantitative point of view. Indeed, numbers have a way of making things more tangible and comparable. But there’s a catch. Science knows a term called the precision bias, referring to the fact that people are biased to believe that if you use numbers, you’re being more precise than when you don’t. The more numbers you have, the more precise you are, and so precision and accuracy get confused. While numbers can be persuasive, a good story can go where no quantitative report can, our hearts. As humans, we’re naturally attracted to stories, so if you want people to get inspired and exited about your ambitions, tell them a story.
A strategy narrative is not really a story as such. Instead, it’s a description of your journey as a company; who you are, where your going, and how you believe that you will create value for your stakeholders. It explains how you are unique on the market. Therefore your narrative should create clarity over your ambitions as a business and justify the choices that have been made along the way.
Many agree that at best a strong strategy narrative can be a great tool for creating focus within the organisation by directing internal development efforts to work for the same mutually understood goal. The importance of a strong narrative is especially important during transformation efforts, where many different stakeholders need to be convinced about a chosen direction. In fact, a study from Harvard Business Review showed that 84% of business leaders believe an organization with a clear shared purpose will be more successful in its transformation efforts. So, to inspire action in your organization you need to rephrase your (perhaps numeric) aspirations in a story that is powerful enough to fuel our imaginations.
Defining where to play through the eyes of your customers.
Many would argue, that to truly create sustainable growth, one needs to cater to its customers’ needs – be customer-centric in other words. In fact, most companies likely think they are customer-centric. In our experience, however, there is often room for development, as product or service-centricity easily gets mistaken for customer-centricity.
Being customer-centric isn’t always easy though, as customers often have a hard time specifying the challenges or problems they are solving with your product. So, rather than meticulously optimizing your product or offering through new features your customers might appreciate, it can be helpful to step into the shoes of your customer and ask what it is that they really want. While there’s nothing wrong with the former method, your possible gains might be short-lived. (Sunil Gupta wrote a nice piece on the topic of customer centricity in HBR: Are You Really Innovating Around Your Customers Needs?)
Sustainable growth on the other hand is the result of innovation that is rooted in true needs and that efficiently solves challenges your customers experience. Truly understanding the needs of your different customers and aligning strategy, leadership and innovation processes to those, can bring forth significant growth opportunities that were previously not visible.
In many industries, agile newcomers are able to create customer value in unprecedented ways, often targeting previously underserved or ignored needs. How do you prepare for a change like this in your competitive landscape?
How to win in a sweet and sour market.
Execution is of course critical for any strategy to succeed. So what are some of the key aspects to consider when bringing your ambitions alive?
Ensure brand relevance
A company’s brand (or portfolio of brands) is one of the most valuable and powerful asset for any company. It is the most effective tool in strategy execution internally and externally and it embodies the reasons for why your customers chooses you over competitors.
If positioned and managed right, your brand can become your growth driver, helping your business become what it aims to become. In fact, in the best case your vision, narrative and brand are one and the same.
Gain efficiencies through operational excellence
Creating future proof business requires efficient and sustainable operations. For example, as interest rates have surged throughout the world, many businesses have a hard time financing all needed investments. The big question, for many, has now become, how to increase the efficiency of their operations. Could, for instance, working capital be freed from daily operations to finance development initiatives? Making clear improvements in this area requires scrutiny into entire operative end-to-end processes, all the way from sourcing to customer delivery.
By tackling even some of there issues, you might be well on your way to future-proofing your business, winning market shares and the hearts of your customers. Let us help you there.