Category Archives: Real-World Business Strategy

Real-World Business Strategy

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”

– Michael Porter

The above quote combines beautifully with the other Michael Porter quote at the beginning of Chapter 4, Set Your Strategy.

“The essence of strategy is choosing what not to do.”

That’s how I see strategy in the real world. Like sculpture, strategy is what’s left over after you take things away. Michelangelo started with a big block of marble and chipped away until he ended up with the statue of David.Strategy is Like Sculpture

Strategy is focus. As you match your business offering to what the target market wants, you exclude things. The high-end restaurant doesn’t have drive-through or discount lunches. The social media consultant doesn’t do logos and graphics. The mobile app doesn’t include every possible feature that the most extreme power user wants, but just what makes it intuitive for most users. Most of us who own businesses instinctively want to do everything for everybody, but we can’t. We have to work with the principle of displacement:

Everything you do in your business rules out something else that you can’t do because you’re doing that first thing.

As you read this chapter, please keep in mind my simplified Identity-Market-Offering (IMO) strategy framework, which I included in Chapter 4 on the strategy summary of your lean plan. If this chapter were a stand-alone summary of business strategy, it would start with that one. And then continue with the others that are included here:


business stories

Stories as Strategy

Stories are the oldest and probably the best way to communicate ideas, truth, and beliefs. Stories are powerful. Think of the key stories that are foundational in the great religions. Or think about the stories behind the phrases “sour grapes,” “the fox in the henhouse,” and “the emperor’s new clothes.” They all have power because they communicate. They resonate. We recognize their truths.

“All human beings have an innate need to hear and tell stories and to have a story to live by.”

– Harvey Cox

business stories

business stories

Stories are a great way to define and communicate business strategy. A strategy that can’t be told as a story is doomed. And a strategy could be laid out as a story that includes the IMO factors, for example. And  it could be as simple as a story defining the problem your customers have, the solution your business offers, and the factors that make your business especially suited to offer the solution. In this method the problem is also called need, or want, or, if you like jargon, the so-called “why to buy.” That’s slightly different from IMO, but that difference is not important. Strategy should be flexible. And a lot of successful presentations start with the problem and its solution.

Your Essential Business Story

Strategy starts with an essential business story. Imagine a moment of purchase. Somebody is buying what you sell. It happens with every business. For example:

  • A group walks into your restaurant.
  • A web browser subscribes to your membership site.
  • A customer in your store picks up one or more products, puts them into a basket, and walks to the checkout counter.
  • A potential client decides to take on your management consulting or social media marketing.

In every case, there is a story. Think it through. Who is this person? How did he or she find you, your store, your restaurant, or your website? Was it by answering an email, looking at an ad, talking to a friend, or maybe searching in a Yelp app on a mobile device?

Every transaction is a solution to somebody’s problem. Understand what problem – need, want, or why-to-buy – you’re solving. Consider this famous quote:

“People don’t want to buy a quarter-inch drill, they want a quarter-inch hole.”

– Theodore Levitt

So you don’t invite somebody to a sushi restaurant just because you’re both hungry. You want an interesting meal; you want to sit down together for a while and talk. It’s an event, an activity, with hunger satisfaction far from the top of the list.

You also need to understand what business you’re in. The restaurant business is often about occasions, not meals. The drive-through fast food business is about convenience. Starbucks is about affordable luxury, not just coffee; and in some cases, a place to meet, or a place to work.

So the solution has to match the problem, but it should demonstrate what’s different about one company when compared to all its competitors. For example, to make a restaurant story based on fine food credible, you need to add in how this restaurant’s owners and team can credibly deliver fine food. And in the software company example, there must be a sense of this company being qualified to deliver useful content in this topic area. That takes us back to the Identity component of the IMO framework; but it could also be called simply the secret sauce, or why we’re different, and presumably better.

A Real Example

Let’s return to the social media consulting company I mentioned in the previous IMO discussion: Here’s its essential business story:

Terry loves her business, puts her heart and soul into it, and is successful. Her sales are growing, her customers are happy, and her employees are happy and productive.

She’s worried about social media. She knows it’s important for her business’ future. She knows her business should be on Twitter, Facebook, and the other major platforms. Experts seem to agree that business owners should engage. However, she’s already busy running a business, and she doesn’t have time to do meaningful social media as well. When she’s not running the business, she wants to be with her family, not on the computer.

Terry tried having an employee handle the social media, but it was still taking too much time. She made inquiries with some consultants, but they are expensive.

Finally, on the web, Terry finds Have Presence, a small business like her own, run by three co-owners who love social media, understand small business, and do only thoughtful, strategic social media updates for clients they know and represent well. They aren’t selling expensive consulting, telling Terry what and how to do it. Instead, they do the work, manage the social media, and give Terry’s business social media presence, for a monthly fee that’s considerably less than a half-time employee, without the long-term commitment.

That story defines all three of the IMO factors in Chapter 2, Set Your Strategy. Identity is there in the phrase that begins “the three co-owners love social media and understand small business.” Target market is there in Terry, the business owner, and her problem with social media. And offering is there in the sentence that begins with “They aren’t selling expensive consulting.”

That story also fits the problem-solution mode in Chapter 11, Lead with Stories, along with the additional input I recommend: how your company has a unique solution offering, and why it is especially qualified.

Stories can describe some important visions of truth better than, say, statistics. The real market isn’t a number on a chart or in a table; it’s that collection of people. Sure, the number is nice, once you know the people, but first you have to feel like these people actually exist, and the reason to buy exists, and that the people and the reason match up.

The Story Your Customer Tells

Imagine how your customer found you. What did he think was good or interesting or remarkable about you or your business? Why does she go back for repeat business? What do you want that story to be, and how can you influence that story? This is where the story leads to better business planning as alignment of all the elements of the business with your ideal story.

Your most powerful branding, like it or not, is the story that the customer tells her friends. Imagine your customer explaining your business to a friend. How would she describe your business? What can you do to influence that story?

Even before social media, there was viral marketing, and before that, referral marketing, guerilla marketing, and going back even further, word of mouth. John Jantsch, author of Duct Tape Marketing, calls it getting people to know, like and trust you. Seth Godin, author of All Marketers are Liars, calls it being remarkable.

And now, with social media, Jim Blasingame, author of Age of the Customer, says your customers control your brand. Your business depends on collective opinions published in tweets and Facebook updates, Google+, Pinterest, and LinkedIn. It’s amplified word of mouth, and it’s in the hands of the world at large, independent of your advertising budget, signage, and tag lines.

Know the story. Create the story. Plan in useful steps how to make it true.

Some Other Useful Stories

So maybe thinking of the story can help with your business planning – and I mean your running planning process, that happens at regular intervals, that helps you manage and steer your company, rather than just a use-once-and-throw-away document – because much of good business planning is story-driven.

The Pot of Gold

Dream. Imagine your business future. Where is it, what is it, how big, and what’s it doing? This is the story of success for you as a business owner. Are you in the office every day working? Do you have assistants working for you? Are you the boss of all you see or are you focusing on your favorite parts of it, like speaking, or product development, or finance? Are you free to take vacations and coach your kids’ soccer teams? Are you a famous success story?

This one, by the way, is a version of the mission statement, a common component of a formal business plan.

The Stairway

The steps: Tell yourself the story of how you got from where you are today, in your business, to where you are in that dream. Imagine the key steps along the way. What had to go right? Can you set out some important milestones, like the launch or the opening or the big campaign, the new product, the new store? Try to break the story down into specific events you can use to set dates, and milestones you can track. Take notes and keep track.

Management, Done Well, is a Collection of Stories

Your business revolves around the story of your history and your values and your team as it grows.

With business planning, you don’t just tell the stories of the past, you also create and develop the stories of your future. Look ahead with your plan, control your destiny, and drive it in the right direction. Go from vision to imagination to focus and step-by-step concrete measurable activities.

Do a SWOT Analysis

I really like SWOT for strategy. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It’s about brainstorming and making lists of bullet points. Take a piece of paper or a white board for a group, and build the four lists.


SWOT is a good idea even as quiet thought for an individual, but it’s much better if you can do it in a group setting. The group improves the brainstorming value. Even if yours is just a one-person business, invite your spouse or significant other, or a few trusted friends who know your business (maybe you buy the lunch), and–if you can afford the hourly fees–your accountant or attorney. If you’re in a small business with a team, invite the team.

SWOT is about brainstorming, which is generating a lot of ideas, not just a few good ones, and then boiling them down to a strategic list. With bullet points, more is better. Make sure that during the brainstorming period you aren’t negative or critical of any ideas.

The SWOT divides in the middle between the top two lists, strengths and weaknesses, which are about your business; and the bottom two, opportunities and threats, which are about the world outside.

Strengths and weaknesses are traits of your business. You can change them over a long term, but not easily. You can improve strengths and correct weaknesses, and planning helps; but it takes hiring new people, finding new resources, training, and making an effort.

Opportunities and threats are things external to your business, out in the world at large, which you can foresee. Strategy is clearly about taking advantage of opportunities and avoiding threats.

One of the great advantages of SWOT is how easily it brings people into the process. Companies differ, but in general, your planning will work better if the people who are supposed to implement the plan are involved in its development. SWOT involves people in the plan, helping them see the strategy and making them feel like part of it.

SWOT in a small business also offers a safe forum for generating new ideas and breaking through standing assumptions.

Strategic Positioning

Positioning is to me one of the most important concepts in business strategy and tactics. It’s a critical outcome of the IMO strategy I recommend in Set Your Strategy. It’s also vital to marketing strategy, your marketing plan, and related tactics.

The essence is in this simple diagram from the Kotler Marketing Management textbook, which served a generation of MBA students. Consider positioning of the various options for an American breakfast, as originally drawn by Kotler:


With proper positioning, the business that does any one of these options stays clear on the value of its business offering and how it’s different from all others. Instant breakfast is fast and cheap, so it doesn’t compete with bacon and eggs. Positioning is the key to the buzzword of differentiation – business survives by being a big frog in a small pond. Trying to please everybody is a recipe for disaster.

Strategy is focus. And positioning puts focus on a map.

Defining Strategy Statements

These defining strategy statements are optional written statements or phrases, common in business plans, useful in teams as statements of value and reminders. Do only the ones you want, and only if you are going to use them. They aren’t part of a lean business plan. When used correctly they can be valuable; but they are rarely used correctly. I see so many business plans containing essentially meaningless words collected together as mission or vision. 

A mission statement should define what the business wants to do for at least three sets of people: customers, employees, and owners. It should not be just meaningless hype words. A mission statement that works can be very useful as a reminder to all about the key values and overlying purpose of the business. A mission statement that sounds like any mission statement for any other company is a waste of time.

A mantra is a single phrase that defines a business. Guy Kawasaki, author of Art of the Start, recommends mantra instead of mission. As examples, he suggests that the mantra of  Wendy’s fast food chain should be “healthy fast food.” Nike, the athletic shoe and clothing manufacturer, should use “Authentic athletic performance.”  And Target, the retail chain, could call “Democratize design” its mantra.  Those are all his, however, not the various companies’. In Palo Alto Software, we reviewed our planning and focused on “helping people to succeed in business.”

A vision statement projects forward into time three or five years and presents a picture, like a dream, of how things should be. Usually a vision statement works best as a story about the future, with your business as the key element in the story. Where is it, what is it doing, how big is it, what’s special about it. This works for some businesses, but not all.

Business objectives should be hard-baked, concrete, specific, and, above all, measurable. Objectives may include sales growth rates, employee headcount, customers in the database, percentages of gross margin or profitability, units sold, and so on.

Develop a Mission Statement

I’ve had a 30-year love-hate relationship with mission statements. I’ve read thousands. I love it when a mission statement defines a business so well that it feels like strategy—and that does happen—and I hate it when a mission statement is generic, stale, and completely useless. Do a mission statement only if you are going to use it well.

Done right, your company’s mission statement defines the company’s goals, ethics, culture, and norms for decision-making. The best mission statements define these goals in at least three dimensions: what the company does for its customers, what it does for its employees, and what it does for its owners. Some of the best mission statements also include fourth and fifth dimensions: what the company does for its community, and for the world.

Here’s how to develop a useful mission statement for your business:

Keep Your Essential Story in Mind

Your essential business story should not be part of your mission statement—but do think it through: Imagine a real person deciding to buy what you sell. Imagine why she wants it, how she finds you, and what buying from you does for her. The more concrete the story, the better. (And keep that in mind for the actual mission statement wording as well: “The more concrete, the better.”)

What You Do For Your Customers

Start your mission statement with the good you do. Use your market-defining story to highlight whatever it is that makes your business special for your target customer.

Don’t undervalue your business: You don’t have to cure cancer or stop global climate change to be doing good. Offering trustworthy auto repair, for example, narrowed down to your specialty in your neighborhood with your unique policies, is doing something good. So is offering excellent slow food in your neighborhood, with emphasis on organic and local, at a price premium.

This is a part of your mission statement, and a pretty crucial part at that—write it down.

If your business is good for the world, incorporate that here too. But such claims need to be meaningful, and distinguishable from all the other businesses. Add the words “clean” or “green” if that’s really true and you keep to it rigorously. Don’t just say it, especially if it isn’t important or always true.

What You Do For Employees

These days, good businesses want to be good for their employees. If you’re “hard numbers”-oriented, keeping employees is better for the bottom line than turnover. And if you’re interested in culture and employee happiness, then defining what your business offers its employees is an obvious part of your strategy.

My recommendation is that you don’t assert how the business is good for employees—you define it here and then forever after make it true.

Qualities like fairness, diversity, respect for ideas and creativity, training, tools, empowerment, and the like, really matter. However, since every business in existence at least says it prioritizes those things, strive for a differentiator and a way to make the general goals more concrete and specific. While I consulted for Apple Computer, for example, that business differentiated its goals of training and empowering employees by bringing in high-quality educators and presenters to help improve employees’ business expertise. That’s the kind of specificity you should include in your mission statement.

With this part of the mission statement, there’s a built-in dilemma. On the one hand, it’s good for everybody involved to use the mission statement to establish what you want for your employees. On the other hand, it’s hard to do that without sounding like every other business. Stating that you value fair compensation, room to grow, training, a healthy, creative work environment, and respect for diversity is probably a good idea, even if that part of your mission statement isn’t unique. That’s because the mission statement can serve as a reminder—for owners, supervisors, and workers—and as a lever for self-enforcement.

If you have a special view on your relationship with employees, write it into the mission statement. If your business is friendly to families, or to remote virtual workplaces, put that into your mission.

Add what Your Business Does for its Owners

In business school we learned that the mission of management is to enhance the value of the stock. And shares of stock are ownership. Some would say that a business exists to enhance the financial position of its owners, and maybe it does. However, only a small subset of all businesses are about the buzzwords of “share value” and “return on investment.”

In the early years of my business I wanted peace of mind about cash flow more than growth, and I wanted growth more than profits. So I wrote that into my mission statement. And at one point I realized I was also establishing a place where I was happy to be working, with people I wanted to work with; so I wrote that into my mission statement, too.

Discuss, digest, cut, polish, review, revise

With every draft of a mission statement, before you settle, read it again and ask yourself this: Can anybody recognize your business from its mission statement? Does your mission statement distinguish your business from others like it? Would it be impossible to guess that it applies to your business instead of one of its competitors? If it isn’t clear that it’s your business, then it isn’t working.

Then read it again and edit it. Cut down the wordiness. Good mission statements serve multiple functions, define objectives, and live for a long time. So edit. This step is worth it.

As you edit, keep a sharp eye out for common buzzwords and hype. Cut whatever isn’t unique to your business, except for those special elements that—unique or not—can serve as long-term rules and reminders.

Read other companies’ mission statements, but write a statement that is about you and not some other company. Make sure you actually believe in what you’re writing—your customers and your employees will soon spot a lie.

Then listen. Show drafts to others, ask their opinions, and really listen. Don’t argue, don’t convince them, just listen. And then edit again.

And, for the rest of your business’s life, review and revise it as needed. As with everything in a business plan, your mission statement should never get written in stone, and, much less, stashed in a drawer. Use it or lose it. Review and revise as necessary, because change is constant.