Updated on: 31 March 2022
Watch the recorded version of this session
The term strategy is the most misused term in business.
“Joe Ghantous Talks Strategy” was the title of an online digital marketing discussion that was live on May 26, 2021 between Bothaina Hassan and Joe Ghantous, CEO at Right Service.
You can read this blog to know all what was discussed during that session.
Q: WHAT IS NOT STRATEGY?
A: The first point I’d like to highlight is that operational effectiveness is not a strategy.
By operational effectiveness, I mean the group of activities that go into creating, producing, selling, and delivering a product or service along with achieving growth and providing value.
But that doesn’t mean that operational effectiveness is not important, but it needs to be fortified with a strategy.
A great example of this point is Japanese companies that rarely have strategies. These companies reap enormous advantages from operational effectiveness, between the 1970s and 1980s and after that time their success started to fade due to their focus only on operational effectiveness, of course with some exceptions as Sony and Nissan.
The problem with operational effectiveness is that best practices are easily emulated and companies start to look alike with competing only on adding value, increasing productivity, quality, and speed. These actions have spawned a remarkable number of management tools and techniques similar to total quality management, benchmarking, time-based competition, outsourcing, partnering, reengineering, and many others.
Businesses usually think that operational effectiveness and its managerial tools are strategies, whereas they are not.
To make it more clear, I’d like to share with you a story about a painting thief who was caught after stealing some paintings from the Louvre-Paris in 1950.
He once was asked by a reporter how he forgot to fill his van with fuel since this is a vital part of his escape plan.
“Simple,” said the thief, I had no money for the gas to make the van go.
In conclusion, this thief had operational effectiveness but not a strategy.
Q: WHAT IS A STRATEGY?
A: Strategy is an old term that was initiated from war strategies and from the need for people to defeat their enemies.
The first treatises that discussed strategy are from the Chinese during the period of 400 – 200 B.C by a Chinese colonel called Sun Tzu who collected all his was strategy techniques and results in a book called The Art of War.
The strategies from this book are being used until today by several armies and sports teams similar to Saddam Hussein, former president of Iraq, and by the Brazilian football team.
One of the best lines that caught my attention from this book is that the best war strategy is not to do war. Simply in business, it’s about positioning your brand differently from its competitors through a complete and well-defined strategy.
To emphasis the importance of the strategy, I’d like to share with you a shocking study by Harvard University that shows that around 80% of businesses that fail today in our digital age either don’t have a strategy or they don’t effectively implement their strategy.
Coming back to the main question, what is a strategy?
Strategy is all about how you are going to be better by being different and unique, by creating a valuable position for your business. Business positioning is descended from 3 distinct sources:
1. Variety-based: brands determine some products or services and offer them to a wide array of customers, similar to what we at Right Service do when we chose to prepare and implement strategies for individuals, small, medium, and big companies.
2. Needs-based: brands choose to serve all the needs of a particular group of customers. Usually, private banks are considered a great example of this segmentation, since they determine to serve wealthy people and work on fulfilling all their financial needs.
3. Access-based: brands determine to target customers based on their geographic location or scale. Carmike cinemas in England masters this type of segmentation since they operate only in the cities with a population under 200,000
These 3 positioning sources are the base of a successful strategy, but the strategy is not all about what you need to do, it’s also about choosing what not to do. This may cause brands to make trade-offs in competing similar to what Neutrogena does when they decided to position their products mainly soap more in medicinal products than as cleaning agents.
Also, strategy is about combining activities related to one another in a great fit. A great successful example of this point is “Ikea” the Swedish company founded in 1943.
Ikea is still one of the best companies worldwide in its industry with a strategy that is hard to be copied knowing that “Ikea’s” strategy is public and is taught for business university students.
But what makes their strategy hard to be imitated is that it consists of a group of interrelated activities that perfectly fits.
Let’s dissect the “Ikea” strategy. They work under the needs-based positioning in which they target young people who need to purchase furniture with style at low cost and fulfill their needs.
Supporting this positioning “Ikea” works on a set of activities similar to having their warehouses as their stores that are full of ready furniture that can be purchased at once, selecting specific opening hours that meets their target audience working schedule, and much more.
Q: WHAT ARE THE DIFFERENT STRATEGY LEVELS?
A: There are four levels of strategies.
The first is the “Corporate Level Strategy” that is only needed for big businesses having several brands under their umbrella and working in big markets with several branches.
The second level is “Business Level Strategy” which is the most important level and is required for all types and sizes of businesses. This strategy covers the future of the business, its competitive advantages, culture, mission, vision, values, and how to achieve its long-term goals
The third level is “Functional Level Strategy” which is set on department level but yet needs to be coordinated with the business strategy. One of the most famous types of functional strategies is the marketing strategy that can be summarized by the “4Ps of Marketing” (product, price, place & promotion) the brand’s target audience, and how to communicate with them.
The fourth level is “Operational Level Strategy” this strategy is formulated at the operating units of an organization. A company may develop an operating strategy, as an instance, for its factory and small sections within a department.
As a brief, for every business to succeed today despite its size it needs minimum the three levels of strategy: business, functional and operational strategies.
Q: HOW DID THE STRATEGY EVOLVED OVER TIME?
A: The strategies that we see today are the accumulation of several years of development and evolution of the term strategy.
I’ll be highlighting the main phases of strategy evolution.
Phase Zero: Exclusivity strategies: up to 1900
Business strategy through the 1800s mostly revolved around just creating exclusivity and monopolies. In the United States, the great railway companies had a strong grip on economic activity and were among the most important shares traded on stock exchanges.
Phase I: Budgetary Planning (1950-1960)
One of the first companies credited with developing and implementing strategy in the business landscape is General Motors.
In addition to General Motors, Peter Drucker was also the first to see that the purpose of business is external in creating and satisfying customer needs. While Drucker moved the day’s discussion closer to strategy, the period of the 1950’s is marked by budgetary planning and control. Financial control was created through operating budgets, which also took into account investment planning and project appraisal
Phase II: Corporate Planning (1960 – 1968)
The 1960’s represent the acknowledged entrance of strategy into the business community and the popularization of corporate planning. Alfred Chandler Jr. was the first academic researcher of business strategy and he published a landmark work entitled, Strategy and Structure, in 1962.
Chandler offers three basic business strategies:
1. Horizontal: Implies growth in markets that can be local, national, or multinational.
2. Vertical: Implies absorbing functions that are either backward toward suppliers or forwards toward ultimate consumers.
3. Diversification: Decision to enter into related or unrelated markets.
Phase III: Corporate Strategy (1968 – 1975)
Corporate strategy’s adoption in the 1970’s was largely influenced by portfolio planning and large companies need to establish synergy between the business units and corporate parent.
Phase IV: Industry and Competitive Analysis (1975 – 1985)
In this phase, experts believed that the structure of the industries in which the firm competes and the competitive position of the firm’s businesses within these industries are the key determinants of performance. It is when firms began taking a closer look at their choice of industries, their markets, segments, and positioning within those segments.
Phase V: Internal Sourcing of Competitive Advantage (1985 – 1995)
During this phase, the competition increased and businesses started focusing more and more on competitive advantage or what we call it at Right Service as golden eggs.
Phase VI: Strategic Innovation and Implementation (1995 – 2001)
Strategic innovation and implementation have dominated the period of the mid 1990’sthrough 2001. The importance of strategic innovation has been exacerbated by the application of technology to the business process. Companies that once aspired to secure sustainable competitive advantage have realized that it no longer exists. The goal now is to exploit dynamic sources of competitive advantage that can be leveraged to finance the next wave of innovation. The other facet of business strategy that has received significant attention recently is the implementation process
During this phase, a tool called the Balanced Scorecard was introduced as a tracking tool for strategy performance.
Phase VII: Strategic Thinking & Simplification (2003 and beyond)
This phase is still active today, as it focuses mainly on data, analytics, and common sense. So businesses need to think of the best way to use their limited resources to make a bigger impact.
In other words, strategic thinking is an intentional and rational thought process that focuses on the analysis of critical factors and variables that will influence the long-term success of a business, a team, or an individual.
Q: WHY DO COMPANIES FAIL IN PREPARING THEIR STRATEGIES?
A: I’ll be summarizing the reasons behind companies’ failure in preparing their digital marketing strategies into 2 reasons:
1. External Reason
2. Internal Reasons
Starting with the external reason that can be summarized by the changes in technology or the behavior of customers and competitors, this quick change is causing some businesses to fail in coping their strategies with the agile change thus causing them to fail.
At Right Service, we always recommend preparing a flexible strategy that can be easily changed and modified as well as we ask businesses to continuously revise and develop their strategies in the right way.
The second and most important reason is caused due to the internal desire to grow in short term. Kodak and Nokia are great examples of how big companies were disrupted completely since they focused on their operational effectiveness and how to grow within the same boundaries.
Also as an internal reason, the misunderstanding of the term “customer focus” by some companies that forces manager to provide and fulfill all their customers’ needs, whereas on the contrary, customer focus means providing your target customers all their needs in your expertise.
Following the trail of internal reasons, the pursuit of operational effectiveness is one since it is seductive, concrete and easy to be tracked so managers increase pressure and focus on how to deliver tangible & measurable performance.
Such actions are causing all brands to follow the herd behavior in which they imitate one another similar to what is happening today on social media platforms.
After focusing on the problem, I will mention briefly the solution and how businesses can growth preserve, and reinforce their strategy.
Well, the best solution is to look for extensions of the strategy that leverage the existing activity system by offering features or services that rivals would find impossible or costly to match.
But watch out, many companies add features, products, or services without screening them or adapting them to the strategy, which causes failure. Therefore, companies need to seek growth through broadening within their industry and contain the risks to strategy by creating stand-alone units, each with its brand name and tailored activities.
Q: IS IT BETTER TO INSOURCE OR OUTSOURCE THE STRATEGY PREPARATION?
A: Well, this is the most question we get asked. To be objective, I will be answering based on 6 aspects that interfere in having an effective strategy.
1. Depth of experience
To produce a high-quality & effective marketing strategy, you need a high level of expertise and super skills which is tough to find among in-house teams who are used to do the same range of work, thus gaining a narrow spectrum of skills, resources, and experiences. By having your strategy outsourced, you would not have to be concerned about vetting an experienced team of professionals who can start immediately or about buying the necessary platform and software for this project.
2. Honest Assessment
3rd party agencies call it as they see it. They openly discuss organizational and individual strengths and weaknesses with the executives, making it easier to focus on preserving the successful elements of the business and overcoming weaknesses to find real solutions.
3. Ease in communicating problems
Organizations put a lot of effort to facilitate upward communication of the strategy between team members, but some employees may be reluctant to share information that would make the organization or themselves look bad, even when employees did personally not make something bad happen. Outsourcing to a third-party agency or consultant will play a vital role in getting honest responses, both internally from employees and customers, and other external stakeholders.
4. Broader skillset
Digital marketing agencies always tend to hire the best minds in the industry and continuously invest in developing their skills. When hiring an agency to prepare the digital marketing strategy, the company will be getting access to all of these skills and have their input added to the strategy and future success.
5. Fresh perspective and inspiration
An in-house team may have grown so accustomed to the habits and philosophy of the company and this will limit their out-of-the-box thinking, which is considered a must to create an effective digital marketing strategy. On the contrary, professional 3rd party agencies work with other companies in the industry, so they have a good sense of what has “been done” and what is new and exciting, that’s why they can prepare for you a digital marketing strategy that stands out.
Outsourcing the preparation of your strategy will certainly cost you less than committing to the annual salaries and benefits packages of a full-time in-house professional team, particularly for short-term projects and for those first-time entrepreneurs on a budget.
Let’s wrap it!
The best of both worlds would be an outsourced team that feels in-house (insourcing). You just need to search for a professional hybrid digital marketing agency that can easily tailor its resources to fit your exact needs.
Q:WHAT IS THE ROLE THAT RIGHT SERVICE PLAYS TODAY IN PREPARING STRATEGIES FOR SMES?
A:I will start first with quoting “Will Rogers” who once said “If advertisers spent the same amount of money on improving their products as they do on advertising then they wouldn’t have to advertise them.”
A very profound observation, especially in the digital age, where it’s so much easier to talk about a product, while the priority is for preparing an innovative digital marketing strategy that can create and develop sustainable competitive advantages for your products and then keep to the technological tools and word of mouth to advertise the good job you did.
The emergence of technology in business had activated the democracy and accessibility of using digital marketing tools and launching advertising campaigns by all businesses despite their size or financial abilities.
But this action missed a vital factor toward success for these businesses represented by having a well-formulated strategy, which was by then monopolized on big enterprises only.
That was the trigger behind “Right Service” launching a supportive business democracy movement with a bold vision of “Creating Strategies to Achieve Any Goal”, giving SMEs the privilege of having an outstanding digital marketing strategy at a reasonable price, based on TACTICS® planning model the first pillar of the “4Ts of Digital Marketing Operations” concept that I came up in 2017 and is being implemented to several businesses and taught at universities.
TACTICS® planning model is mentioned as the first pillar of the 4Ts® marketing concept representing the basic part of your brand’s digital marketing transformation and development. It is the “how” of everything (who, what, where, when & why), simply it is your digital marketing strategy with a digital transformation. TACTICS consists of 7 ingredients merging between business, functional and operational strategies.
– T: Target Audience (Functional Strategy) Define the kind of people you’ll be talking to, how to speak to them, where to find them, and what they want from your brand.
– A: Approach (Business Strategy) Determine your main digital marketing operations’ goal with the date of its accomplishment, review your brand ideology and amplify your brand’s competitive advantage.
– C: Communication Strategy (Functional Strategy) Set up the methods of your online activities including what your organization wishes to share with the public based on your market sophistication level and your client’s sales journey.
– T: Trajectory (Functional Strategy) Assign your customers’ buying journey to understand their purchasing behavior (before, during & after)
– I: Innovation Strategy (Business Strategy) Plan to grow your market share & profits through product and service innovation to gain new competitive advantages.
– C: Coordination (Functional Strategy) Synchronize between online and offline marketing activities.
– S: Situation Analysis (Business Strategy) Review your brand’s current situation, capabilities & activities to discover its strengths and overcome the weaknesses online
In addition to these seven ingredients, we offer at the end of each strategy an action plan representing the operational strategy and which supports the strategy implementation phase.
A lot of marketers forget that a marketing strategy is a living document that should be updated and reviewed constantly. We like to think of strategy renewals like pruning trees!
Pruning will lead trees to grow faster and produce better fruit. The same happens when renewing your strategy, it clears your mind and redirects energy toward real priorities.
Therefore, we ask our clients to renew their digital marketing strategies at least once a year as an average.