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In most strategic thinking sessions I facilitate with clients, it is discerned that there isn’t just one business that the management team is leading but several business units. Each unit has a need for a unique strategy, unique set of objectives and a unique “driving force.” This is obvious with conglomerates like GE, but it isn’t as obvious for service companies and manufacturers. Even farm owners usually have a set of three to six business units.
My mentor’s mentor was Ben Tregoe, a Harvard Ph.D., former Rand Corporation think tank member and business thought leader who crafted the concept in strategy referred to as the “Driving Force.”
Defining Each Business Unit’s Driving Force for Competitive Advantage
The Driving Force provides focus, the basis for competitive advantage, guidance on the scope of products and markets, indication of “must-have” key capabilities, a communications vehicle, a means of unifying an organization, a source of decision-making criteria and a means of evaluating competitors’ strategies. The Driving Force also acts as a filter for new growth opportunities that appear and guide the phasing out of products and markets.
You will find that every one of your business units has at its strategic core one of the following Driving Forces.
1. Products or Services Offered
Cars/Ford, jets/Boeing, training firms, Microsoft, public services or police, hospitals and the like are organizations whose future markets it serves and the ways in which it will meet the needs of those markets are determined by the product or service offered. Competitive advantage is based on the benefits built into their products/services and the resulting branding.
2. Markets Served
Disney, Playboy, J&J, financial services and other organizations’ markets determine what products or services will be offered. This unit will look for alternative ways of filling the needs it is currently filling and searching for new needs of its market, and will develop or acquire new and different products for its market focus.
3. Technology
Apple, 3M, pharmaceutical developers, Velcro and other firms are ones that may just have one or more technologies that they can license out to others to market and sell. This unit has a focus on managing the development of new technology and/or leveraging existing technology into new distributive channels. It may look for a variety of applications of its technology like DuPont did with nylon and license out those applications.
4. Production Capability
Contract manufacturers, printers, consumer goods makers with little differentiation including milk, sugar and chemicals are units that focus on improving production efficiencies, managing toward more uptime and minimizing the cost of stopping or slowing of production.
5. Method of Sale
Amazon, Avon, eBay, iTunes or iPhone stores, or method of distribution—cable or utility companies, courier services, telecoms, Tim Hortons, McDonald’s, Walgreens are ones that determine their geographic scope, markets, products or services on the basis of their capabilities and limitations of their primary method of sale or distribution. You will usually be adapting to them rather than they adapting to you.
There are other driving forces like 6. Natural Resources (Mead/forestry products, oil companies) and 7. Return/Profit (M&A, venture capital firms, GE, Berkshire Hathaway.)
I’ve worked with dozens of seed companies and on more than one occasion to discern that they had a market-served driving force vs. product. This opened their minds to selling crop insurance, ag services, etc., getting them onto new farms, building new revenues with existing customers and even doubling profits within two years! First, discern each of your unique units, then their respective Driving Forces and unique objectives, and you will soon find new areas of growth and profits.
About Mark Faust
Each Tuesday, turnaround consultant Mark Faust will be sharing his expertise on how to turn around your small business. His blogs will be filled with practical insights and basic turnaround strategies designed to guide you through crisis leadership and change management. You'll be able to tap into tips on everything from profitability issues, business continuity plans and pandemic pivots to operational processes, marketing and customers additional value.
As one of the companies he helped grow, we know first hand how inspiring his leadership is and just how well it works! Mark has also agreed to make his best-selling book ‘Growth or Bust’ available, free of charge, to any small business to help them create their own effective turnaround plan. We’ll be sharing that with you soon.
You can learn more about Mark and his company, Echelon Management, by clicking here.
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At InspireHUB, we’ve been blessed with a network that includes some of the foremost leaders in the world. A few years ago, we had the pleasure of meeting Mark Faust. Mark has over thirty years of experience in helping companies turn around through his company Echelon Management International. The brands he’s helped include John Deere, Apple, Bayer, IBM and P&G. He also helped me personally and professionally with InspireHUB as we morphed to become the company we are today.
His insight and expertise are invaluable, but realistically, the majority of small businesses would never get access to a “Mark” due to the size of their budget. Having someone like Mark literally can be a life-saving exercise for any size business. What impressed me the most about the work Mark and I did together was the bulk of it was not business tactics and strategy; it was about myself as a leader. Understanding what motivated me, where I found my hope, what would INSPIRE me to wake up every day and work on this business.
Here's how Mark helped transform InspireHUB and how he's going to do the same for YOUR small business ...
One goal of effective strategic planning is to identify an area or areas in which your company can identify and leverage to give you a competitive advantage looking into markets.
As a result, you can deliver incremental value to your ideal customers and extract incremental profits to fuel future innovations and additional or new competitive advantage.
As you consider the following questions around your offerings and markets, you will want to have assessed the competitive forces you face.
Click through to learn how ...