The Venn diagram below is associated with an HBR article by David Collis and the late Michael G. Rukstad titled “Can You Say What Your Strategy Is?” As I saw it I was reminded that our strategies often “lose track” of where our customers are going.
According to the authors, “the strategic sweet spot of a company is where it meets customers’ needs in a way that rivals can’t, given the context in which it competes.” Essentially, the sweet spot is a place where a company has a market advantage with customer value. But it neglects to account for the future. Since customers’ businesses aren’t static companies have to consider the direction their customers are moving.
Let’s examine other areas within that diagram to consider it more fully. In my diagram, I’ll name the sweet spot the “opportunity zone.” Now focus on the other 2 areas of overlap.
- In the “danger zone”, competitors have a distinct advantage in ways valued by customers. To respond, a company could invest here to remain competitive.
- In the “wasted effort zone”, both the competitor and the company have capabilities not needed by customers. The goal is to re-direct investments away from the Wasted Effort Zone towards the Opportunity Zone (to gain competitive advantage) or to the Danger Zone (to achieve parity). If a company does this quickly, while the competition over-invests in undesirable capabilities, that company can speed forward.
What strategy should a company choose? Should they press their advantages by investing more in the opportunity zone? Should they protect a weakness through focus in the danger zone? Before choosing one, consider the dimension of time.
The Venn diagram represents a fixed point in time. But customer needs aren’t static. They change. Since the environment changes continually, company strategies must account for the customer’s business journey to remain relevant.
NOTE: Don’t confuse the customer business journey with the customer journey normally associated with “customer experience” professionals.
- Customer Journey = How a customer interacts with your company at various touchpoints
- Customer Business Journey = How a customer navigates their changing business environment
Instead, when creating strategy, think of how customers must adapt to meet their unique circumstances. Covid-19 offers a number of instructive use cases. For example, think of restaurant owners. Within weeks, their needs shifted from in-store experiences to drive-up touchless interactions. What was one day an opportunity zone suddenly became the danger zone – simply because customer needs changed.
We need to imagine that the customer needs circle is moving. It could be moving to better overlap with your competitors in which case your company may be trying (in vain) to leverage an obsolete or irrelevant strength. Or it could become a better fit with your capabilities providing market advantages. Or it could be moving away from both you and the competition. To choose the “right” place to invest, companies must consider future customer needs (next month, year, etc.).
In any case, two options exist. (1) The company must change itself to move to intercept the “customer need” path. Or, (2) the company must change the customers they serve. The former requires investments in new products and services while the latter requires new go-to-market strategies. (Basically a product-market fit challenge.)
The article’s authors advocated for a disciplined approach to crafting corporate strategy. When doing that, the pivot point is to ensure we account for shifting customer [business] journeys.