Start your lean plan with practical strategy. It’s harder to write about strategy than just to do it. The best strategies seem obvious as soon as you understand them (and in the real world, if they don’t seem obvious after the fact, they aren’t going to work). Strategy is like driving and sex — we all think we’re pretty good at it. Strategy is what you’re not doing. Think of the sculptor with a block of marble — the art is what he chips off the block, not what he leaves in.
Strategy is focus.
I’ve dealt with dozens of strategy frameworks, and every one I’ve known works pretty well if it’s applied correctly. Still, my favorite is the one I developed: IMO. Identity, market, and offering (product or service).
Think of it as the heart of the business, like the heart of the artichoke: it’s a group of three core concepts that can’t be separated: identity, market, and business offering. Don’t pull them apart. It’s the interrelationship between them that drives your business. Each affects the other two.
Every business has its core identity. How are you different from others? What are your strengths and weaknesses? What is your core competence? What are your goals? What makes you different?
As an example, imagine the difference between a bicycle retail store owned and operated by a former professional bike racer, and another one owned and operated by a couple with children who like bicycles as a family activity. The first one will probably stock and sell expensive, sophisticated bicycles for the racing enthusiast and extreme long-distance or mountain biking hobbyist. The second will probably emphasize bicycles for children, bike trailers, carriers, and accessories for families.
Notice please how the owners’ identity affects strategy in strengths and weaknesses, knowledge and focus, and choice of product and target market.
Part of your identity is what you want from your business. Some businesses are about your lifestyle, or pursuing your passion. Some people want their businesses to grow as big and as fast as they can and are happy to work with investors as owners. Others want to own their own business, even if it has to grow more slowly for lack of working capital. What’s your case? If you’re committed to a second income in a home office, incorporate that into your identity. Don’t look for generalized formulae; let your business be unique. That’s differentiation, and it’s important.
Your identity influences your choice of target market. The bike racer focuses on attracting enthusiasts, offering expensive high-end bicycles and equipment. The couple focuses on attracting parents with kids, concentrating on medium-level bikes, trailers, and family-friendly accessories.
Keep your business focused on specific target markets. That bike racer shop owner has to know his products are too expensive for the families, and the families bother the high-end enthusiasts. The family bike shop can’t scare away its target market with very expensive racing bikes.
Your business offering is your product or service. You can already see with the bike shop example how one shop needs one kind of inventory and the other needs a different kind. That’s strategy at work. Your identity influences your choice of market, which influences your choice of product. Your choice of product influences your choice of market. They have to work together.
Understand that you can’t do everything. The bike shop that caters to families and racers is likely to fail. You can’t credibly offer high-end bicycles at bargain prices in a family-friendly atmosphere. If you say you do, nobody believes you anyhow. So you have to focus. Make this focus mesh with your choice of key target customer and your own business identity. All three concepts have to work together.
Seth Godin’s book The Dip is about being the best at one thing. That’s the point of your focus. Since you can’t do everything and even if you could, your customers wouldn’t believe you, then you need to focus on something that you do well, that people want. Be the cheap and practical bars of soap that sell in volume in the big chain stores, or be a finelypackaged, expensive and sweet-smelling soap that sells in boutiques. Don’t try to be both.
Roll Them Up Together
These three things are your business strategy. Don’t pull them apart. Don’t take them one at a time. Don’t ever stop thinking about them. Remember, in planning as well as in all of business, things change. Keep watching for change.