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Your Financial Statements Tell What Your Real Strategy Is

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Integrity means delivering what you promise. It requires competence and character. An organization’s strategy specifies what customers are to be served, what promises are to be made to those customers, and how those promises are going to be fulfilled. The brand of the organization is the public expression of those promises. In the short term, a company’s brand can make promises that aren’t delivered, but over time the brand comes to stand for what was delivered not what was promised.

During the strategy formation process the Six Disciplines methodology asks leadership many tough questions. Two of them are: 1)what business are you in and 2)what makes you different than your competitors.

Here are one client’s answers to these questions:

Q: What business are you in?
A: We are a full service ad agency.

Q: What makes your agency different than the other agencies in this market?
A: We are premier services firm. We offer higher quality services than our competitors

As strategy execution coaches we frequently hear the answer that what makes us different is that we are “better” than our competitors. We are trained to press clients to figure out whether what they are saying is true or is it something they wish were true. So the following were the next questions:

Q: In what ways are your services better or do you deliver higher quality than your competitors?
A: Our people are more skilled.

Q: Do you have a copy of a financial statement? Let’s walk through it. I have some more questions.
A: Sure, let me get it.

Q: Let’s start at the top with the revenue line. Are your fees higher than your competitors?
A: No.

Q: Why not? You are offering premier services why can’t you charge more?
A: The market won’t pay higher prices. We have to be competitive price wise.

Q: Let’s look at your personnel expenses. Do you pay more than your competitors for your professional staff?
A: No, we are in the same range in this region.

Q: If your people are better how can you get away with paying them the same as everyone else?
A: We can’t pay more because we can’t charge more.

Q: Let’s look at you recruiting and training budget. What is it that makes your people better than your competitors? Do you have some special recruiting process to find the best people?
A: No special recruiting process. We recruit locally through word of mouth and advertising.

Q: When people join your staff do you have some unique training program that trains them on your methodology? Do you have some special methodology?
A: No special approach. We just hire better people.

You get the picture. The questions go on for a while. As a coach, I eventually stop the questions and point out the obvious. This CEO thinks he has a strategy that will produce a sustainable competitive advantage but in reality it is just a pipe dream. There was not one bit of evidence in the way he invested funds that supported the idea that his organization could or would deliver superior services compared to competitors. Not one of his pricing, hiring, compensation, training or service methodologies was unique.

The essence of strategy is to say no to less important things so you can over-invest in a few things that will make you different. If you cannot demonstrate with your spending how it is that your investment strategy is different and more strategically focused than your competitor, then you strategy is really a slogan or pipe dream. It is not real.

The adventure continues !

Gary Harpst Imagesignature 

Gary Harpst is the CEO and founder of Six Disciplines. He is also the author of two books Six Disciplines for Excellence and Execution Revolution. Six Disciplines is an excellence program for the mid-market that focuses on building organizations that execute their strategy. Our complete program combines a strategy execution methodology supported by coaching, performance management software, and leadership development. The result is agile, engaged teamwork that gets the important things done.

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With all of the pressures successful business leaders have today, none is more urgent or challenging than learning the ability to execute strategy. The thought-leading vision described by Gary Harpst in Six Disciplines® Execution Revolution sets a new course for how small and midsized businesses can finally confront the never-ending challenge of executing strategy.

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