In a recent post ‘For Business At Warp Speed, Is Customer Strategy The Only Strategy?’, (Link) we touched upon how in the world of relentless market volatility, customer strategy takes center stage.
Traditional strategic models and planning exercises have limited impact and the essence of strategy today is about continuously finding ways to provide value to customers. The traditionally inside-out approach to business strategy needs to be replaced by an outside-in approach, and long-term strategic planning and execution needs to be redefined with a focus on agile planning and execution.
There were two key queries in response to the post:
- One, does a customer-led approach apply to all business models under all circumstances? For example, is it equally important for a fast follower or a lower cost brand to start with the customer?
- And two, what is a framework that could be used to define customer-led strategy.
This post addresses these two questions at a very high-level.
Is Customer-led Strategy Always Recommended?
In short – yes.
It is critical for a brand to understand who their customers are, define the value the business delivers to them, and design the business to deliver that value in a sustainable and profitable manner.
Irrespective of the business model adopted, a customer led approach is critical to success.
For example, whether a luxury business model or a no-frills business model, such as BMW and Kia, it is important for the respective car manufacturers to design their products around their target customers. While BMW might be best served by research into key differentiators that make it a luxury brand, Kia might be best served to focus on researching the optimal set of features that would make the car appealing to their target customer base.
Success depends on their ability to execute a strategy consistently offering value to customers in a unique, differentiated, and profitable manner.
Is There A Framework For Defining Customer-led Strategy?
There are six dimensions of Customer Strategy. Each dimension forms a critical structure of the framework and has been outlined here in the form of questions.
- Customer Insights: Who are your current and ideal customers and what is the ‘Job To Be Done’?
- Market Insights: What are the market forces impacting your core value offering to your customers? What are you doing to monitor and anticipate market and competitive forces that might disrupt your business?
- Innovation: What are you doing to offer customer value in new and differentiated ways? Are you constantly looking for ways to anticipate market and competitive forces and innovate?
- Capabilities: What are the capabilities needed to deliver customer value in line with customer expectations?
- Alignment: Is the organization structured to align these capabilities for delivering customer value in the most efficient and cost effective manner?
- Culture: Does your organization have a customer centric culture?
I realize that, in this blog, I answered two key questions with six. Hopefully you will not mind me asking one last one – how have you applied these six dimensions of strategy to your organization?