Strategy Archives - Anthony Davidson

Business Models

Trends to watch

If you understand which trends to watch, you gain important insights into how to adapt and innovate your business model. Important trends to watch As a business owner, you have to make sense of what is happening nationally and globally, especially the potential impact on business. Mega trends persist over a longer period of time. Australia’s CSIRO has identified seven global mega trends. They include adapting to climate change, the push to net zero, the growing health imperative, digitisation, advanced autonomous systems, and the importance of diversity, equity, and transparency in business. Macro trends have a significant impact in the short to medium term. The Reserve Bank of Australia is focused on four trends in its economic outlook for Australia. Reduced global economic growth will impact the economy particularly in terms of demand for exports. The current high inflation and cost-of-living pressures are affecting price and wage expectations, which may create an inflation mindset. Household consumption will be impacted by rising interest rates and inflation. Energy and supply shocks could boost inflation and lower growth. Another social macro trend that is a hot topic for business owners is remote working. Currently 40% of employees working remotely in some form. This is expected to rise to 79% by 2025. But it will be heavily influenced by the state of the economy and the extent to which flexible working arrangement become the norm. Micro trends are also important to understand. These are trends that have been around for some time but are still at an early stage. For example, transition from glass bottles to cans in the wine industry in response to rising material costs and resource constraints. Trends and lessons from the pandemic The pandemic has also taught us how to adapt and be more resilient. One important lesson is the reminder that necessity is the mother of invention (originally attributed to Plato). The pandemic has shown us that online shopping and service is here to stay, that supply chain reinvention is critical for managing risk, and that technology can be easily adopted to be more competitive. Taking advantage of trends By understanding mega, macro and micro trends, you can identify opportunities to increase the value of your business. Business value is driven by financial health, growth potential, management and governance, process and systems, and sustainable competitive advantage. Identifying factors that will impact each value driver make opportunities, challenges and roadblocks more apparent. Then develop strategies to take advantage or overcome them, and update business goals and priorities for the year ahead. Updated goals and priorities can be translated into KPIs or OKRs that are monitored on a monthly or quarterly basis. This enables your people to better align their activities to what is required for success. Finally, see uncertainty as an opportunity to increase business value.

Anthony Davidson November 30, 2022

Engagement

Reset your business

A Business Reset is an opportunity to get clarity, focus and alignment within your business. But when should you reset your business, what is the best way to do it, and what is the best way to avoid it. When should you reset your business The pandemic forced many businesses to rethink their strategy and innovate their business model to deal with rapid change and uncertainty. However many scenarios exist where a business reset is required. Survival mode – when a business is just trying to keep its head above water. Doing more of the same makes no sense. It’s time to question why you are in business, whether you should be in business, and if the business can be turned around for the better. Unsustainable growth – when a business is experiencing rapid growth that is draining resources and profitability. Here the challenge is to find the economic sweet spot and focus resources on owning that market space and position. Turbulence – when a business becomes successful but very set in its ways. Success can often breed arrogance, leading to myopic vision, missed opportunities and even disruption by new entrants. A business reset challenges mindsets and assumptions and looks for better ways to do business. Key person absence – when an owner or leader loses interest, motivation or focus. Sometimes it can happen because of personal or family events. Other times it is the result of not having the skills or acumen to grow with the business. Either way, a business reset is required. The best way to do it A Business Reset is an opportunity to get clarity, focus and alignment within your business. It enables business owners and managers to: reflect on what is working well and what isn’t working well review performance, challenges, obstacles and roadblocks rethink strategies and business models for achieving goals recommit to the purpose and vision for the business reengage customers, employees and business partners The best way to reset your business is to take your leadership team offsite to explore, share and agree on the way forward. Last week, I facilitated a one day Business Reset with a business owner and his leadership team to review and clarify the vision for the next five years and refocus goals and priorities for the next 12 months to regain traction and momentum. This will enable each team within the business to set quarterly objectives and key results to achieve 12 month goals. The best way to avoid it While it is highly beneficial, you can avoid the need for a business reset with a clearly thought out engagement plan that reinforces your business purpose, goals and priorities. The engagement plan details that way that you will communicate and interact with key stakeholders. It often takes the form of a meeting structure to plan, enable or monitor business, team and individual performance. The challenge with meetings is that they often lack focus, direction and outcomes, or fail to effectively engage participants. Meetings must have a purpose, deliver beneficial outcomes, be time well spent, and logically link to other meetings that are conducted. To build clarity, focus and agility, I recommend a simple structure of meetings across the business: an annual retreat to set strategic direction, business priorities and KPI’s a quarterly plan to set team objectives and key results each quarter a monthly review to problem solve issues and plan the month ahead a weekly meetup to review progress and prioritise the week ahead a daily check-in to discuss the day ahead, any concerns or constraints Together with annual individual performance reviews and monthly one-on-one feedback sessions, this level of engagement can eliminate the need for a Business Reset.

Anthony Davidson October 11, 2022

Capability

What is your core competency?

To succeed in business, you must address a specific market need in a uniquely valuable way for customers that competitors are unable to easily copy. Most businesses struggle to achieve this because they lack the core competencies needed for competitive advantage. What is your core competency? What is a core competency? A core competency is the way that you deliberately organise, integrate and coordinate resources to differentiate what you offer customers. It provides the perceived value that competitors find difficult to imitate. These skill sets reside in your people and processes and reflect the way you operate your business. Some of the best examples of core competencies are Apple, Netflix, and Singapore Airlines. What does Apple do best that customers value? Outstanding design and marketing. Netflix’s core competency is convenient content delivery. Singapore Airlines is stellar service. How to develop it Creating a core competency is a great achievement. But how do you do it. The starting point is to consider two questions: 1) Who are our ideal or preferred customers, and why? 2) Under what conditions would these customers choose us exclusively, without considering competitors? If you know why customers prefer you and how this could lead to “sticky” customers that become brand loyal, your value proposition becomes clearer. Then identify the foundations that underpin this value proposition: the specific skill sets, processes, systems and interactions to optimise what you offer. In particular, look at what your business does best and how this could be leveraged or improved to increase perceived customer value. A core competency is embedded knowledge A core competency is a valuable resource that you can turn into a sustainable competitive advantage if you know how to leverage explicit, implicit, and tacit knowledge and embed it across your business. Just remember that a core competency must be a resource that is valuable to customers, hard to find but in demand, difficult for competitors to copy or imitate, and something you can organise into your systems, processes, structure and culture. Many business fail to develop a core competency because they do not take the time to understand what customers really value. Those that do find new ways to offer customers unique value. But it takes time to develop a core competency. And many businesses will be lucky to have more than one. Choose partners who have one Why not consider partnering with companies who have core competencies in areas you don’t. Apple isn’t a manufacturer but needs to create high quality products at scale. So it partners with the world’s biggest electronics contract manufacturer Foxconn. Your value proposition and business model may be more attractive to customers if you find the right partners. Identifying like-minded businesses whose skills sets are complementary enables you to create a networked enterprise that can create network effects. Customers are drawn to ecosystems where their needs are better met. #strategy #corecompetency #capability

Anthony Davidson September 23, 2022

Capability

Knowledge without application is useless

The claim that knowledge without application is useless has been attributed to many people. But what does it mean in a business context? Knowledge is powerful if you can use it to change the way you think, act or operate your business. It can empower you and your people, especially if it is successfully applied. The challenge is overcoming the knowledge-action gap. Knowledge comes from different sources As individuals, we acquire knowledge from a range of sources. Family, friends, influencers and the media are important sources. Upbringing, education and life experiences also inform what we know and believe. In business, knowledge comes from your people, suppliers, partners, advisors, external consultants and customers. Knowledge with application is more valuable Knowledge is a valuable resource for individuals and businesses. It becomes even more valuable when we apply it to solve problems or make decisions. Storing knowledge until it is needed can be problematic. Individuals accumulate a lot of knowledge. Some of this knowledge is never used, lost, or difficult to remember. Business is the same. Knowledge is stored in our people, processes, systems and culture. Often when key people leave, the impact can be significant unless their knowledge has been properly transferred. In this way, knowledge without application is useless if it is not transferred or embedded. Overcoming the knowledge-action gap One of the challenges for business is knowledge overload, which causes a knowledge-action gap. We have access to lots of theories, frameworks, methods and tools for creating a successful business. Knowing how to leverage and manage different types of knowledge is essential for overcoming the knowledge-action gap. Let’s look at four types now. Explicit knowledge Explicit knowledge can be documented, transmitted, and learned by anyone because it is easy to share and understand. It can be stored in documents, books, video tutorials, whitepapers, and other forms of verbal or written communication. For example, when a new employee joins a business, the onboarding process and internal knowledge base is the way that explicit knowledge is transferred and shared. The greatest challenge is ensuring that people have access to what they need, that important knowledge is stored, and that the knowledge is reviewed, updated, or discarded. Implicit knowledge Implicit knowledge is obtained through experience and can be captured and transmitted. This form of knowledge is extremely important because business performance improves as people translate explicit knowledge into practice. For example, when onboarding new employees, it is not enough to just share explicit knowledge, you also want them to understand why it works and how it makes them more effective. Tacit knowledge Tacit knowledge is also gained through experience but cannot be recorded and stored like implicit knowledge. For example, great writing, pitching and leadership skills take time to develop and involve continuous training and coaching. Tacit knowledge is regarded as the most valuable source of knowledge because it can lead to to breakthroughs for businesses. But it is difficult to codify and store because it resides in the minds of people and their skills and expertise. Embedded knowledge Similarly, embedded knowledge is locked in processes, products, culture and practices. It can be embedded formally through management initiatives to formalise business practices, or informally through explicit or implicit knowledge. Both tacit and embedded knowledge provide the foundations for developing core competencies that lead to sources of competitive advantage. Next steps Start treating knowledge as valuable a resource that can improve business performance and lead to a sustainable competitive advantage. My Better Business Accelerator or Strategy Masterclass is designed to help businesses with this process.

Anthony Davidson September 14, 2022

Strategy

The right context for strategy

Sometimes you need the right context for strategy. Last week a quiet beachfront property was used to explore the goals and priorities for a market leader in retirement living. The outcomes were impressive. Over two days of discussion and reflection, a clear strategy emerged for doubling growth and the levers to achieving it. Often strategy is a deliberate process – following a series of steps and using specific tools to analyse and decide a course of action to achieve a set of goals. But strategy can also emerge – as a result of past experiences or actions that open up new ways of seeing opportunities for improvement, innovation and growth. The right context for strategy – deliberate or emergent? Deliberate strategy is typically used by established businesses with a long-term strategy and confidence in their ability to execute it. But unless everyone understands the strategy and their role in implementing it, success will be limited. This why deliberate strategy is so complicated and difficult to execute. Emergent strategy is often used by businesses whose future is uncertain and when the right long-term strategy is not clear. It is a more flexible approach to achieving goals because it allows for opportunities and priorities to emerge. This enables your people to look for opportunities to improve and grow rather than “being told what to do.” https://online.hbs.edu/blog/post/emergent-vs-deliberate-strategy A combination of both is best In my experience, a combination of both approaches works best. First, create a clear direction, set of goals, and strategic priorities with your teams for the next five years. From there, build a roadmap that provides the focus for the next twelve months and the starting point for the journey. Then empower each team to develop objectives and key results each quarter to achieve these 12 month goals. This agile approach enables each team to execute better, and to quickly adapt and respond to opportunities and challenges. But don’t forget context and location for strategy are critical. https://anthonydavidson.com.au/programs/

Anthony Davidson September 7, 2022

Business

Better Business Accelerator

The Better Business Accelerator program is designed to help you build a more valuable business, identify opportunities for growth and innovation, and develop a roadmap and engagement plan to achieve it. What are the benefits for business owners? First, you get clarity about why you are in business, what you are trying to achieve, and how you can make your business more valuable. Second, you get the opportunity to learn from experts about how to improve your business and innovate your business model. Finally, you get to hear the experiences of other business owners who become your support network going forward. This program is a great way to get clarity, confidence and connections. Just two days every month for three months – to take your business to the next level. Better Business Accelerator program structure The first two-day retreat focuses on how to create a more valuable business: Learn how to increase business value Assess current state of your business Clarify your purpose, vision and goals The second retreat help you identify opportunities to improve, innovate and grow. Identify immediate improvement areas Generate and assess new opportunities Prioritise future business investments In the final retreat, you develop a business roadmap and engagement plan to make it happen. Finalise objectives and key result areas Develop initiatives to achieve objectives Engage stakeholders to deliver the plan Between each retreat, you undertake six practical tasks to analyse and improve business performance, and give feedback on your success. As part of the Accelerator, you get to meet other business owners and managers, learn from their experiences, and provide advice and support to each other. Once the program is over, you continue to support each other through a dedicated online forum. You also have access to monthly mentoring, quarterly reviews, and further Accelerator Extension programs. To find out more, simply click this link #business #accelerator #businessowner #anthonydavidson #betterbusiness #businessgrowth #businesscourse #businessprogram #businessbuilding

Anthony Davidson August 22, 2022

Marketing & Sales

Strategy versus marketing

What’s the difference between strategy and marketing? Often it seems like we’re addressing the same questions or decisions – where to play, how to win, and what is required to succeed – but there’s a bit more to it. UQ MBA Alum Chris Gaffee posed the question as he discussed his journey from learning marketing in his MBA, applying this knowledge to his first startup, and then becoming a strategist at Monitor Deloitte. Marketing provided Chris with the ability to understand opportunities from a customer perspective and then develop go-to-market strategies for his product innovation. Through this startup, he learned first hand the challenges early stage businesses face when market conditions rapidly change as a result of a pandemic. And the strategic choices that need to be considered when deciding whether it is viable to continue. Ultimately, this experience influenced Chris to embark on a career in strategy consulting and to help clients solve complex problems around business growth. So what is the difference between strategy and marketing? Strategy is primarily concerned with the direction, goals and priorities for a business – decisions about why we are in business, what we are trying to achieve, and how we can do it. Marketing is primarily concerned with the way that value is created with customers, employees, partners and other key stakeholders – decisions about who we serve, what we offer, and how we engage. Thanks for sharing your journey and experience Chris. #strategy #marketing #valuecreation

Anthony Davidson August 16, 2022

Governance

Your role in the business

What happens when your skills and abilities to set up and grow a business are not sufficient to take it to the next level? A key challenge facing many business owners is determining their future role in the business and how they can best contribute to its success. Today’s Owner Manager Program explored the different stages of the business lifecycle and changing leadership roles that business owners play to build a sustainable business. As a startup, owners are the doers and decision-makers. But as the business grows, their role changes to delegator and direction-setter. With rapid growth, the role again changes to that team builder, coach, planner and communicator. As the business enters a new phase of sustainable growth, this role shifts to that of strategic innovator, change catalyst, organization builder and culture leader. For many owners, this can be daunting especially if they lack the knowledge and skills to take on these new roles. Enter the management team. Successful business owners understand their strengths and limitations, and build a management team with the capabilities to take the business to the next level. Picking the right team members makes it easier for owners to let go and take on new roles because it instills confidence and trust. But learning from “bad picks” is equally important because it make owners more committed to finding the right people for each stage of the business. What are potential new roles for owners who lack the leadership or management skills to take the business further? Often owners will step back from leading the business and take on an operational role. But this can be counterproductive and undermine the new leader. Another solution is to take on “strategic projects” that leverage your existing skills and experience and make a valuable contribution to the business. Depending on your motivation and willingness to develop new skills, taking on a proper director/Board role in the business may be the best solution to protect ownership interests and contribute to the future direction of the business. The final solution is to consider your exit from the business and the timing of it. Ultimately, these decisions are up to you as an owner. Being clear about what you want and how you can best contribute makes the decision easier. #strategy #leadership #businessowner

Anthony Davidson July 13, 2022

Growth

Growth and innovation

How do you identify growth opportunities for your business? Sometimes it serendipitous – you are presented with it. Other times, it emerges from conversations, reflections and insights. Is there a systematic way to explore growth opportunities? Believe it or not, one of the best tools to use is still Ansoff’s Growth Matrix… but with a twist – combining it with deep dive analyses, decision criteria and the horizon planning. In the 1960’s Igor Ansoff identified four growth strategies that businesses can pursue: market penetration to increase your share of the available market with existing products/services; market development to open up new markets for your products/services; product development to introduce new products/services to existing customers; and diversification to enter new markets with new products/services. Although different variations of the Growth Matrix have been created, the power of the matrix lies in how you use it to deep dive into potential growth opportunity areas. For example, if you look at how to increase market share with existing products, how do you determine the potential increased market share. This can be done by analysing customer demand and preferences, competitor behaviour, and switching costs. Then you can assess the relative attractiveness of this growth strategy compared to other growth strategies. But which criteria should you use to evaluate growth opportunities. Is it just return on investment? Or are there other considerations, such as alignment with your purpose, vision, capabilities and culture. Developing a set of criteria that you can use to objectively assess opportunities is critical. Ironically, the criteria also become the basis for how other business decisions are made. Once you’ve identified the most attractive opportunities for growth, then you need to prioritise the level of investment and resources needed, and timeframe required to realize it. That’s where horizon planning kicks in – ensuring resources are properly allocated to improving your existing business while investing enough time and effort into realizing new opportunities that could innovate your business. #strategy #growth #innovation

Anthony Davidson June 9, 2022

Strategy

Make a difference

Sustainability is back on the agenda at a political and corporate level. But how serious is the commitment from leaders this time round? Will a potential recession impact their resolve as we experienced with the GFC? Or will consumer pressure remain strong. Much has been written about sustainability and the role of business over the last 50 years. And while progress has been made by some businesses to adopt or fully embrace sustainable practices, “greenwash” and “carbonwash” is more commonplace. It is now widely acknowledged that to make meaningful progress toward sustainability, radical solutions are needed that promote and encourage sustainable business practices. Sustainable business model innovation is exciting and disruptive. Like any opportunity, the potential rewards carry risk and it requires the right mind-set, resources, technologies and methods to be successful. It also requires reshaping of customer behaviour through better awareness, education and engagement. Many examples of sustainable business models exist, including circular business models that close resource loops, social enterprises that focus on social impact, bottom of the pyramid solutions for the most disadvantaged, and product-service systems that transform customer outcomes. The challenge for businesses is to take the first step and build a new business case for sustainability. #strategy #sustainability #businessmodel #innovation

Anthony Davidson June 2, 2022

Weekly insights to help you run your business.