The keys to strategic differentiation

Aug 18 2014 by James M. Kerr Print This Article

Whether executive management teams recognize it or not, every enterprise shares the same three goals. These are to become a Company of Choice, an Employer of Choice, and an Investment of Choice within their particular industry niche.

To become "of Choice" is to possess those characteristics that serve to strategically differentiate a firm from its competition. And these three goals are universal truths. After all, why would any commercial enterprise wish to be anything less than an "of Choice" concern?

Sure, it's true that some management teams may not specifically state these three pillars of strategic differentiation as plainly as we have above. However, there is no denying that every strategy aimed at outwitting the competition, all tactics employed to gain market share; indeed, any effort of any strategic intent finds its motivation in the achievement of one or more of these three universal goals.

With that said, let's explore each one of these "of Choice" classes.

Company of Choice

To be the Company of Choice means that your firm is preferred over all others within its chosen markets. To be preferred implies that the company does plenty of things right - such as offering the right products, at the right price, using the right" distribution channels while providing the right customer service models.

Notice that the word is "right". We are not necessarily saying the lowest price, or the best product makes a company the one "of choice". Rather, the implication is that the company offers the pre-eminent combination of elements to make it the preferred choice within the industry. That's why efforts aimed at simply becoming the least expensive provider or forging the most sophisticated product portfolio may be misguided.

A more appropriate tack may be to make the goal the provision of products and services on the customer's terms. Efforts aimed at virtualization of the business, the delivery of on-demand products and service and mass customization are more likely to yield the right products, price and distribution outcomes that will help the enterprise become the "of choice" provider.

Employer of Choice

To be the Employer of Choice means that your firm is the preferred place to work within its geographical location(s). Here too, companies that are Employers of Choice do plenty of things "right", providing the right work setting, with the right culture and employing the right compensation models.

The implications of being an Employer of Choice company are obvious. These companies have a clearly and cleanly articulated vision story; one that people can easily understand and, most importantly, see themselves successful within. The right setting includes well defined expectations and an intuitive operating model.

Fairness is the preeminent characteristic of the Employer of Choice enterprise. That means fairness in culture and fairness in compensation / reward systems. These firms are void of favoritism. They simply reward performance and ferret out sub-performers. These types of firms exude trust and enable staff members to exceed expectations.

Efforts intended to provide workers a voice in how work is done can unleash a potential not seen in most businesses. Programs providing for regular employee surveying, vision-based on-boarding, seasoned staff re-orientation, performance tie-in and culture committees can render exceptional Employer of Choice results.

Investment of Choice

An Investment of Choice company outperforms its competitors by delivering value to shareholders. All results achieved are built on a platform of sector-leading financial performance.

To achieve this, Investment of Choice firms uplift the performance of their asset bases through cost and productivity improvements; integrate a stronger performance culture across the organization and streamline its management model; and prioritize capital expenditure towards those businesses and initiatives that are expected to perform most strongly in the near, medium and long term.

For instance, asset optimization programs involve a thorough review of all key operations and include the benchmarking of assets and processes relative to best in class performance along key performance drivers. Performance culture work involves driving cultural change throughout the organization and building a management team driven by value maximization.

Capital expenditure portfolios must position for growth across all time dimensions through both organic growth and targeted acquisitions across a number of physical geographies.

Simply stated, senior leaders who want to create Investment of Choice companies must actively run their businesses looking for assets that are in the most attractive market segments, have scale, long lives and future growth options; are cost competitive; and offer significant value creation potential. If they can do that they will build firms that stakeholders will invest in.

Integrating the Views

Now that we have come to understand what is meant to be a Company of Choice, an Employer of Choice and an Investment of Choice, it is important to note that being any one of these is not enough to guarantee unbridled success. It is the combination of all three that delivers sustainable achievement over the long haul. But while many firms achieve one or two of these goals. Few achieve all three.

How is that done? Any great change starts with a decision. Firms must decide to formally recognize and make these three pillars of strategic differentiation the goals. Once the decision is made, a senior management team will then commit to establishing the necessary strategic programs across all three "Of Choice" dimensions. Success comes with an effort to do your best in executing each program.

Clearly, work must be done to deliberately plot out a comprehensive plan complete with interdependencies, prioritization and timelines for execution. With an overarching plan aimed at intentionally achieving the three universal goals, an enterprise can be well on its way to incomparable performance.

Most firms won't be the one that rises up above all of the rest. But seeking to become that one is a journey worth taking. Every enterprise will benefit by doing the work that comes from the honest pursuit of the realization of these goals. In fact, the quest itself will lead to improvements in virtually all areas of a business.

And by simply recognizing that all strategic differentiation is driven out of these three universal drivers, companies will begin to impel important and positive changes in the way work is performed and in the way the business is run.

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About The Author

James M. Kerr
James M. Kerr

James M. Kerr is a long-time author, management consultant, vision maker and coach to some of today's best leaders. His latest book, Indispensable: Build and Lead A Company Customers Canít Live Without was published in February 2021.