Strategic Direction
Overview
Creating a winning strategy is not easy. It involves considering many different inputs before selecting the ones with the highest impact, the opposite of brainstorming. This work can be time-consuming, but ultimately, the better job you do setting your strategic direction, the less waste you will have.
This comprehensive framework takes many of the world’s most popular strategy techniques and weaves them into a single process. Having strategy tools on their own is useful, but knowing how to integrate them will give you much better results.
Ultimately, if your competitor is better than you at strategy, they will achieve better results.
For incremental improvements to the product, you will create Strategic Areas. For major innovation, including new products and chargeable features, you will use the New Product Generator Canvas.
Overall strategy
The product vision and mission statements, defined in the product positioning stage, anchor your long-term strategy. You may wish to update these if:
There are significant changes to your market, customer needs, or technology landscape.
A change to organisational strategy that impacts your product direction. For example, the organisation wishes to move from targeting small businesses to enterprises.
User Experience vision
The UX vision is designed to bring strategic items to life. You should create this for your high-impact options. This helps you visualise complex solutions at a high level. It can help with understanding build feasibility, and assist with a strategy decision. Business and technical teams should validate the UX vision to ensure it is fit for purpose.
Strategy items
This is an example of a completed strategy item ready to be fed into your prioritisation. These are designed to be lightweight. This one is based on a loss of sales to a competitor due to their better support offering. Work purpose aligns with the five options in section 1 of the canvas. You may split the item creation between the person who conducts the problem analysis and the person who focuses on solutions. It is most important to have a strong problem statement (ideally quantified), hence it is first. You may have several solutions, and it is advisable to preselect the best option rather than add many items. Avoid creating too many strategy items by only recording those with the highest impact. For example, if you have created thirty and have three teams, you have wasted a lot of time! Further instructions on how to work with these are provided on the Strategy Item Guidance tab.
Strategic Threats and Opportunities Canvas
Feel free to recreate the canvas in a tool of your choice. Please attribute the author (Timothy Field), the source of the canvas (this webpage) and add the CreativeCommons BY-SA license
Canvas inputs and prioritisation
Strategy Item Guidance
This section will help you create Strategy Items. Please read this section carefully before attempting to populate the canvas. After this, move to the Process tab.
Types of product strategy
The process will help you decide on the most effective strategic direction from the options below. Strategy items can then be created that map to one of the following canvas categories. Descriptions of these are below:
Mandatory work
Keep the lights on - Essential change to ensure business continuity.
Legal and compliance - Adherence to regulatory requirements.
Reduce operational costs
Remain competitive - Prevent lower prices from competitors from impacting business viability.
Increase profitability - Increase profit margin from improved efficiencies.
Protect market position
Churn - Minimise the loss of existing customers due to dissatisfaction with a product or service.
Loss of these customers to competitors to no solution.
Loss of these customers to competitors.
Sales loss - Address factors that cause you to lose.
Increase market share
Increase your market share with your current product and Ideal Customer Persona (ICP):
Low-risk improvements - This includes aspects like experience innovation, where you improve the User Interface (UI) and User Experience (UX). For example, simplifying the number of process steps required to complete a task.
New differentiators - Developing features to stand out.
Remove barriers to expansion, such as capacity limitations with internal team processes.
New markets/products
There are three options here, market development, product development and diversification:
Market development - Reduce risk by finding new customers that are the same or very similar to existing ones. For example, being in a different country. This strategy can be significantly lower risk than expanding a product.
Product development:
Reduce risk by releasing similar products to those you know.
If you are responding to a radically disruptive product, you can utilise your existing customer relationships to gain a competitive advantage.
Diversification - This can be a high-risk strategy. Use the market development and product development risk reduction strategies together.
Granularity of strategy items
When creating strategic items, consider:
Investment period - How much time you expect to invest to achieve your expected benefits. 3 or 6 months is a typical starting point.
Impact - Impact represents the size of the problem you are solving.
We have a strategy to make a large, measurable impact on the organisation. Making many small changes and assessing their individual impact makes this difficult to see. Also, with too many small items, we don’t get enough feedback on whether the overall strategy is working.
Below are examples to guide this:
Example 1 - Too granular
I have a signup screen that is poorly designed. Fields don’t adhere to visual standards, and error-handling messages are unclear.
Investment period = 1 week.
Impact = Low.
This doesn’t mean you can’t just get on with fixes like these, but it is far too low level to prioritise.
Example 2 - Too broad
I have UX inconsistency across my whole product, leading to low customer satisfaction.
Investment period = More than 1 year.
Impact = High.
You should typically split up items like this. Look for key areas to target that give you the most impact. The issue and investment period indicate there is a problem with the size of this. Now, you could decide to proceed, but be aware of the cost. Most importantly, you would want to release incrementally, avoid waiting a year for a release! You may still require significant investment for new complex features.
Example 3 - About right
An idea for a better way of querying data using AI.
Investment period = Potentially a large change. Three months of initial investment is recommended.
Impact = High.
This high-impact strategy item carries significant risk and requires testing and development time. An initial investment of 3 months is provided. However, this work can be stopped if the technology doesn’t work well.
Pre-filtering strategy items
This step is very important to avoid flooding your prioritisation discussions.
Initial assessment
You shouldn’t filter out high-risk items with potentially great rewards. We don’t want to remove all our innovation opportunities. When deciding on whether or not to add a strategic item, consider the following questions:
Desirability considerations - Evidence customers want this:
Do we have evidence that this solves a big enough problem for customers? (Ideally, quantified).
Is the type of solution or level of differentiation very new in the market?
Do we have evidence customers want the solution and will switch from current solutions?
Feasibility considerations - Evidence we can build and run this:
Do we understand the technical design, including the ability to build it and ensure it will scale to customer demand?
Do we understand the service design, including the ability to run it and ensure it will scale to customer demand?
Do we have any major risks that could lead this to fail or greatly increase in cost?
Viability considerations - Evidence this will generate a profit:
Do we know which pricing model we will use and that its target price point is competitive?
Do we have evidence customers will pay?
Do we understand the costs, including build, customer acquisition and running the service?
Do we know the break-even point for investment and how long to achieve a good Return on Investment (ROI)?
Filter based on team capacity
Consider the number of strategy items being discussed based on:
Aiming for each team to have one strategy to work on.
The number of teams you have. For example, having 3 teams and evaluating 30 potential strategies will be a waste of time and effort.
Amount of investment period left on their current strategies.
Likelihood of their current strategy being continued (see below).
Current strategies
Options for teams with a strategy in progress:
Continue to invest in the strategy - Option to set a new timeframe for them.
Pivot their current strategy - Keep the same strategy but change the solution.
Stop their current strategy - Ensure there is time to release / tidy up current work.
You don’t have to create a new strategy for every team each time you prioritise.
Trend Analysis
This section covers the different types of trends that can you help identify strategy options for all the canvas sections. You may find multiple solution options. For example, a technology trend that could be used for cost reduction and new features. Outside of mandatory work, the trends must result in solutions that:
Solve a big enough problem.
Meet basic desirability, feasibility and viability criteria (see important guidance).
Trend analysis process
The following process is recommended.
Identify trend - Use PESTEL analysis (provided below) to identify trends that are relevant to your organisation.
Identify opportunities / mandatory work - Consider the types of impact you can make with the trend:
Mandatory work - You must take these forward, they should be automatically prioritised.
Reduce operational costs.
Protect market position - where losing sales to a competitor or seeing high churn (competitor analysis tab).
Increase market share (gain additional customers).
New markets/products.
Consider prioritised strategic direction - For example, if your priority is to reduce operational costs then focus on these items. This does not mean you filter everything else out.
Research and filter
Do some basic research based on the “pre-filtering strategy items” advice in the Strategy Item Guidance tab.
Filter based on this and your prioritised strategic direction (process tab).
Create strategy items ready for prioritisation (example below the grids).
Capture trends and solutions
The grid below can be used to capture trends and associated solutions. An Excel spreadsheet containing the full grid can downloaded here.
| Trend type | Trend details | Solution and expected results |
Impact: - Mandatory work - Reduce operational costs - Protect market position - Increase market share - New markets/products |
|---|---|---|---|
You may not know the expected results. In this case, doing some basic research to determine them is advisable. For example, if you are implementing the machine learning trend (MLOps) on to your Google cloud, what is the typical cost saving that Google claims?
Examples
Here are some examples that contain the different types of strategy (impact column). A trend may lead to several solutions. This grid is best viewed in a browser.
| Trend type | Trend details | Solution and expected results |
Impact: - Mandatory work - Reduce operational costs - Protect market position - Increase market share - New markets/products |
|---|---|---|---|
| Legal | New refund regulation must be adhered to | This work must be completed by 2025 | Mandatory work |
| Technological | Machine learning to reduce cloud storage costs | Implement MLOps on our Google Cloud to reduce costs by 20% | Reduce operational costs |
| Political | Competitors in the USA are about to pay less tax, lowering their costs and increasing their ability to lower prices | Offer a 24/7 service level free for this country to convince customers we are still good value | Protect market position |
| Social | Customers switching to environmentally friendly organisations | Obtain Carbon Neutral Certification and market this to potential customers | Increase market share |
| Technological | AI chatbot that can interrogate data and provide insights | Create a new reporting engine using AI that we can sell | New product |
Strategy Item example
Here, you can see a completed strategy item where a grid row was prioritised.
The risks of ignoring trends
Some trends can significantly impact or destroy your market position. For example, a new technology that could replace your current solution.
PESTEL analysis
PESTEL analysis gives you a starting point for the types of trends to study. This was initially developed in 1967 by Francis Aguilar. Questions have been provided for each trend that will help you maximise its value.
Political
These are changes driven by government, e.g. tax policy, funding and grants, elections, bureaucracy.
What future government policy could impact you?
How could future instability in government impact you?
Economic
For example, interest rates, exchange rates, economic health, availability of finance.
What economic conditions could impact you?
Social
Consider social trends, e.g. a move away from using cash and demographic changes, e.g. an ageing population or more people moving to the countryside.
What changing customer attitudes could impact you?
What demographic changes could impact you?
Technological
Technology innovation can reduce operational costs, improve customer experience, create new differentiators and be the basis for new products.
Start with benefits
The big anti-pattern for technology trends is jumping onto them regardless of Return on Investment (ROI). To counter this, we start with the benefit the technology is supposed to bring rather than focus on the technology itself. For example, you look at a cloud solution to reduce hosting costs and discover it is not cost-efficient:
What are the expected benefits of a new technology trend that could help you?
Which gives you sufficient benefit versus the cost?
Be careful of drawbacks. Introducing new tools can have additional support requirements, make development more complex and slow down your time to market.
Architectural Innovation
Opportunities to reconfigure technologies to create value. Here are some examples:
Cloud microservices
Improved scaling.
Allows for pay-as-you-go models after the isolation of specific services.
Embedding your tool into other products
Allow other parties to use your back-end processing
Marketplace for third parties - Allow other organisations to build on top of your product (plug-ins, extensions and apps).
Environmental
Aspects like global warming, ethical sourcing, and pollution.
Legal
Aspects like consumer law, international trade legislation, and employment law.
What laws could impact you?
Customer Experience (CX) and Service Design
The picture below shows how a service works from a customer/user and organisational perspective. It is worth noting that there are no industry standard definitions for these terms. What is important is differentiating between the customer’s view and the operational efficiency of a service:
Customer Experience Overview
This is defined as the customer’s view of your organisation. It is about how they interact with and feel about you. They typically go through a Customer Journey steps. For example, consider a university:
The frontstage may include many touchpoints such as marketing, sales and application processing teams. By operating in silos, these teams can present a fragmented experience. For example:
The applications team ask for a passport for identification. The student uploads this digitally.
Later on, in the enrolment process, the student housing team asks for a picture of their passport to be emailed to them.
At its worst, both teams could implement process improvements without considering each other. For example, the applications team move the work to an external organisation, and the student housing team creates new scanning software. With a holistic view of the service, we would be able to see that the information is not required twice. We can now make changes to create a seamless service to the customer.
Service Design Overview
This is the operation view of a service:
Frontstage - This is your organisation’s visible touchpoints that the customer interacts with. These may be technology, such as a website or a team of people.
Backstage teams - Actions performed by internal teams to support the service.
Supporting systems - These are IT systems that support the delivery of the service.
User Experience
The customer journey map and user experience canvas provides a structured process for identifying issues and opportunities. Customer Journey Mapping is a technique for evaluating a customer’s touchpoints with the software and organisation. Journey Mapping is one of the most effective methods for understanding a customer’s overall experience. The canvas is designed for software-based products and services.
Example strategic item
Here is an example of a strategic item developed by analysing the customer’s experience:
Service Design
An end-to-end service view considers not only the customer’s touchpoints but behind the scenes processes. The granularity of a process can be from a high-level overview to more detailed flows. Service Design is more focused on operational efficiency than how a customer feels. Focus on this when you want to:
Reduce Operational Costs - Identify and fix high-cost technology or manual processes. Where customer-facing, couple this with improvements to the service.
Increase Market Share - Where customer support or service infrastructure is a limiting factor to market expansion.
High-level Service Blueprint
The high-level view is useful for strategic analysis. It provides a shared view for all stakeholders to align on. This is particularly useful if you have different departments managing each process stage. Major pain points and opportunities can be identified. These should always start with a problem statement. For example, rather than saying, “Use AI for eligibility checks” we consider the size of the problem first. Problems should be quantified to determine to determine this. Without this you end up with a solution orientated blueprint where you prioritise strategy that has little impact.
Low level Service Blueprint
Below is an example of a more detailed flow. This are particularly useful for identifying issues and inefficiencies. Where a process is very poor consider it for complete replacement. In some cases a single individual in an organisation may not know how a process works end-to-end. Focus on processes you don’t understand or where you aren’t clear on its problems. The frontstage the user sees in this example is the OurBank.com website.
Future state Service Blueprints
The same techniques can be used to show future state blueprints. For example, you create a new low-level diagram with the removal of the manual Fraud check and replace it with an automated one.
Example strategic item
Below is an example strategic item that can be input into prioritisation.
Business Model
Improving your business model, for example looking at new ways to distribute to customers to increase market share. The Business Model Canvas is a useful tool for this:
Internal Capabilities & Resources
Talent & skill sets
Processes & efficiencies
Financial health
Partnership Ecosystem
These can give strategic advantage:
Strategic alliances
Supplier & distributor networks
Financial Performance & Projections
Current financial health (P&L, cash flow, balance sheet)
Cost structures, margins
ROI expectations
Investment capacity
Financial risks & scenarios
Risk Assessment
Strategic, operational, financial, reputational risks
Scenario planning (best-case, worst-case)
External shocks (supply chain disruptions, regulatory changes, geopolitical risks)
Resource Based View (RBV)
This focuses on the internal aspects of an organisation that can give it a competitive advantage. These are determined using the VRIN criteria:
Valuable - Resource that helps efficiency, effectiveness or customer satisfaction.
Rare - Resource must be rare within the industry.
Inimitable - Competitors cannot easily replicate.
Non-substitutable - Cannot be replaced by other solutions that provide similar benefits.
Process
Identify resources that make the organisation unique.
Evaluate these against the VRIN criteria. They must meet all of them.
Develop a strategy to leverage these.
Invest in these aspects to maintain competitive advantage.
An example - Ferrari:
Despite competitors being able to match the performance of their cars, it isn’t possible for new companies to challenge its heritage and prestige.
Competitor Analysis
The Market Positioning Canvas helps you identify your competitors. If you don’t wish to complete the whole canvas, you can use this section of it to guide you.
Regardless of your selected strategic direction you may wish to continually monitor your competitors. The following process is recommended based on your direction:
Protect Market Position / Increase Market Share - Use the competitor process detailed below.
Mandatory work - Where you only have capacity for this, competitor analysis is not required.
Reduce operational costs - Consider where you have much longer process times compared to your competition. They may be using more efficient methods. Industry benchmarks can give you a view to where you are inefficient. You do not need to use the competitor analysis process below.
New Markets/Products - You do not need to use the competitor process detailed below.
Competitor Analysis Process
Competitor profiling is especially important for gaining competitive advantage and assessing future threats. A common mistake is to take every feature a competitor has, compare them with your own and build out your weak ones. Instead, you should focus on features in a competitor’s product that customers care about.
The Competitor Threat Analyser Canvas provides structure to this activity:
Summary of competitors
The deals considered in the overall win rate should be where the customer meets your Ideal Customer Profile definition. If you are attempting to sell to a customer who has different needs and include them in your figures:
Your results will look worse, leading you to react when it is not necessary.
You may change your product and impact the clarity of your value proposition.
You may find it helpful to create a summary grid like the one below. This is populated from the completed competitor canvases. After this, the section below helps you evaluate each competitor and create a recommended action.
An Excel spreadsheet containing the full grid can downloaded here.
| Competitor | Our Win Rate % | Key strengths leading to competitor winning | Key weaknesses leading to competitor losing | Future threat level (1 – Low 5- very high) |
Key future threats |
|---|---|---|---|---|---|
Recommended actions
Use the Field’s competitor analyser (copyright Timothy Field 2024) to classify your competitor and decide how to act. If you are using tiered subscription-based pricing, apply this to the competitor overall. You don’t have to respond to every competitor, especially if you have very limited development capacity. Competitor win rate (y-axis) and future threat (x-axis) analysis are provided on the competitor canvas.
Types of action
Protect market position - You are losing too much market share to a competitor and need to respond. Even if you have your own differentiators, these are not as strong as your competitors. According to this HBR report, the cost of acquiring customers is five to twenty times higher. If this is the case for you, prioritise this above pressing advantage against weaker competitors.
Press advantage (increase market share section of the canvas)- Your competitor is losing ground to you, and you want to increase your competitive advantage further and win more market share. You may even be able to take them down.
Monitor competitor - You will take no action. You want to monitor what they do for emerging threats.
You have higher priorities:
You have limited capacity and need to respond to other competitors first.
You have limited capacity and need to focus on cost reduction.
You are acquiring customers at a rate that is limited by your onboarding speed and need to increase it.
The competitor is a low threat:
You are a brand leader, and competitors cannot currently catch you. This can change over time as competitor products grow.
The competitor is losing significant business.
The competitor isn’t well known and is not rapidly growing.
You have a new type of solution that is much superior to the competition. You should take the market from your competitors with sufficient advertising and marketing. For example, moving from physical DVDs to video streaming. You do not need to respond to their product strategies.
Add your recommended actions and priority (order numerically) to your summary table:
| Competitor | Our Win Rate % | Key strengths leading to competitor winning | Key weaknesses leading to competitor losing | Future threat level (1 – Low 5- very high) |
Key future threats | Recommended action:
- Protect market position - Press advantage (growth canvas section) - Monitor only |
Priority |
|---|---|---|---|---|---|---|---|
Creating a strategy
Once you have decided to act, use the Competitor Differentiator Analyser (copyright Timothy Field 2024) to decide what to do. Start with the competitors with the highest priority. Map out each of your competitors’ key differentiators (the reasons they are winning). These don’t have to be features. For example, they may have better customer support. The tool will provide you with recommended actions based on cost/benefit. Where the differentiator is a minor reason for sales loss, and you know it will take effort to create it, don’t map it on the graph. STOP when you find you have a few more strategy items than teams to deliver them. There is no point in creating many options that won’t go forward.
Action options
The graph provides these options:
Act now (red section) - When a differentiator is a major reason for you losing sales.
Consider action (amber section) - When a differentiator contributes to you losing sales.
Ignore (green section) - When a differentiator barely contributes to you losing sales.
How to act
Copy differentiators - Where the cost of replicating is low, look to replicate the differentiator. This is a low-risk strategy, as you know it works for your competitor.
New advantage:
Create a new differentiator:
Create one that is working well for a different competitor. This is a medium-risk strategy, as you know it works for some customers.
Create a new differentiator in the market. This is a high-risk strategy as it is unproven. However, it may impact all your competitors. You can lower the risk if the differentiator is low cost. Be aware that if it is easy to copy, it may not last long. Consider your trend analysis inputs for this work (trend analysis tab on this page).
Improve your differentiators - Use the customer views canvas section to identify the main reasons you win and increase the value of this differentiator. This is a medium-risk strategy as the competitor’s differentiator may still override this.
Reduce price - This is a high-risk strategy. It will make you better value but will affect your profitability. The competitor may respond, lowering the overall market profitability, and you may lose all benefits.
Improve usage allowance (subscriptions) - This is a high-risk strategy. It will make you better value but will affect your profitability. The competitor may respond, lowering the overall market profitability, and you may lose all benefits.
Improve marketing and sales messaging - This is a low-risk strategy. If you believe the competitor doesn’t have a big advantage or you aren’t pushing your own hard enough, focus on these.
You are now ready to create strategy items for inputting into prioritisation. Below is an example of copying a differentiator:
UX Vision
Before creating a UX vision, you should have some strategic items generated. The UX vision shows potential high-level system flows. It allows us to provide a good product experience by considering the customer experience as a whole. For example, you may change how customers navigate and interact with your product and would like to visualise this journey. It needs sufficient functional depth for people to understand the strategic options. You are very unlikely to build everything that the vision has within it.
This output is used when prioritising your Strategic Items. It will allow the leadership team to synchronise around what their options really mean, and is a great starting point for discussion.
The UX concept output in the Minimum Valuable Increment stage is a more detailed visual output created to guide development. The UX vision can guide the UX concept as a starting point.
Process
This process will help you create and prioritise your strategy. The Strategy Item Guidance tab advises on the appropriate size of strategic items to take into prioritisation and how to prefilter them.
STAGE 1 - Research
In this stage, you will:
Evaluate your strategic direction to understand where to focus research.
Conduct research to create potential strategic items.
Evaluate strategic direction
To determine your strategic direction, use the Field’s Strategic Priority Analyser (Copyright Timothy Field 2024). This maps to the five areas on the strategy canvas. It will help you set a high-level direction that can reduce research and focus your solutions. If you are in an organisational with multiple products, you may find this strategy impacts your product’s direction.
At this stage, you should have some idea of the data, such as the churn rate, but this does not need to be exact. Porter’s Five Forces model is integrated into the analyser to help you consider your competitive environment.
Protect market position
The following metrics and considerations may lead you to prioritise this defensive strategy:
Metrics:
Churn rate - High rate of customers that don’t return ( available on the User experience canvas ).
Switching to a competitor.
No longer buying.
Competitor win/loss rate - The loss rate against a competitor is high ( available on the Competitor threat analyser ). If you have followed the instructions in the competitors tab, you will have this information. In that tab, you will find a grid that structures how to react to these threats.
Indicators of poor satisfaction that may lead to churn ( available on the User experience canvas ).
Customer Satisfaction Score (CSAT)
Net Promoter Score (NPS)
Customer Health Score (CHS)
Porter’s Five Forces to consider:
Competitive rivalry is high - Many alternative offerings exist, you are in a mature market, and buyers can easily switch.
Threat of new entrants is high - Low barriers to entry, including structural and strategic barriers.
Threat of substitutes is high - Where a different type of product can fulfil the same need. For example, when travelling, trains compete with cars and aeroplanes.
Exit the market
In some scenarios you may decide to remove the product entirely:
Declining market - No signs of recovery.
Competitive pressure - Continual losses despite changes to strategy.
Alternative strategies - Better growth and ROI elsewhere or no longer aligns with your strategy.
Reduce operational costs
The following considerations may lead you to prioritise this strategy:
You want to use low prices as your primary differentiator. Select when you have a standard product with little differentiation, and brand is of low importance.
An unhealthy Operating Expense Ratio (OER). OER = Operating Expenses ÷ Total Revenue × 100.
Porter’s Five Forces to consider:
Competitive rivalry is high - Your competitors are aggressively pricing, and your costs are too high to make a decent profit if you match them.
Buyer power is high - Buyers will churn if you set your pricing too high and can even drive down prices.
Bargaining power of suppliers is high - There are few suppliers or high switching costs, leading to them demanding more money.
Exit the market
In some scenarios you may decide to remove the product entirely:
Low profitability - High level of investment with a continued low likelihood of low profitability.
Major costs - Major operational costs that can't be reduced. For example, supply chain, labour and infrastructure.
Regulations - New regulations such as legal and compliance, that stop you from being profitable.
Growth strategy
The following considerations may lead you to prioritise this offensive strategy:
Overall:
Your competition is a low threat, and your operational costs are low.
You have spare capacity to invest.
Increase market share when:
You have a weak competitor(s) and can take significant market share from them.
Customer acquisition costs are low.
You have a significant cost or differentiator advantage.
Create new markets/products when:
Your current market is becoming saturated or is in decline.
You have unique capabilities you can use to expand.
An emerging trend will disrupt your current business model or is one you can take advantage of.
You see a significant opportunity for increased profit.
When deciding your direction, consider your market positioning and your mission statement. If you are known as having the best service or the lowest price, will your growth still align with this, or are you changing focus?
Conduct research
Having management of research is highly recommended. Going into a prioritisation process without suitable preparation will lead to failure. Consider assigning a person to lead this. You should then assign specific people in the organisation to do the different activities. For example, you may have a CTO looking at technology trends. Creating strategic inputs can take some time. This should be an ongoing activity with a regular cadence. For example, you may choose to update your competitor analysis every 3 months.
STAGE 2 - Mandatory
Identify any work you need to do to keep functioning as a business. It includes aspects like:
Legal and regulatory requirements.
Updating software versions to remain secure or remove old software that is going out of support.
Tackling strategic risks. For example, not having good enough security in your software.
At this stage, if free, you may be able to assign teams Strategic Areas immediately.
STAGE 3 - Direction
In this stage, you will confirm your strategic direction before prioritising individual strategies. You should return to the Field’s Strategic Priority Analyser. You should now have a good grasp of your competitors, customer satisfaction rates and operational costs. For example, if you are losing a great deal of sales to a competitor, you may not even want to consider operational improvements.
STAGE 4 - Prioritise
Prioritisation is the final stage when deciding which Strategy items to take forward. Below is a simple prioritisation system you can use. The strategy evidence analyser provides guidance for the “Evidence this will work”. You don’t need to gather all the evidence at this stage. For example, modelling the Return on Investment (ROI) in full. The analyser helps you evaluate the strategic risk at this point in time. You can still go ahead with risky items that have a high impact.
Use the following guide to evaluate “Evidence this will work” on the grid. If evidence is low in one area, then score the item lower.
Desirability considerations - Evidence customers want this:
Evidence it solves a big enough problem for customers.
Newness or level of differentiation of the solution in the market.
Evidence customers want your solution and will switch from current solutions.
Feasibility considerations - Evidence we can build and run this:
Understanding of technical design, including the ability to build it and ensure it will scale to customer demand.
Understanding of service design, including the ability to run it and ensure it will scale to customer demand.
Understanding of any major risks that could lead this to fail or greatly increase in cost.
Viability considerations - Evidence this will generate a profit:
Understanding of the pricing model and that the target price point is competitive.
Evidence customers will pay.
Understanding of costs including build, customer acquisition and running the service.
How long it will take to reach the break even point and then achieve a good Return on Investment (ROI).
Linking teams to strategy
Each team should be linked to a strategy. Avoid linking a team to more than one strategy, especially if it creates resource bottlenecks. You can also have multiple teams linked to a strategy. In this case, it is advisable to be clear about who owns it.
Teams may be working on a strategy already. Therefore, these should be reviewed, as you may not wish to interrupt them. Use OKR key results to measure their progress. If they are ready for something new, use the appropriate canvas for the team(s) to build out:
Strategic Area - Where the product is being incrementally improved. For example, improving the visual design of a feature.
New Product Generator Canvas - Provides an in-depth innovation process for new products and high-risk features. For example, adding a reporting engine onto a data product.
Supporting changes required
You are now ready to create the second part of the canvas. This is used to broadly capture change. You can add a lot more detail as you progress your strategy.
Pricing
At this stage, you should capture the pricing that may change. You may not be able to work out the actual prices yet:
Core product price:
Based on increased value.
Based on current churn/loss analysis.
Feature add-on pricing:
If creating a new one, consider the current solutions used and their price.
If one is being improved, it may represent increased value.
Pricing add-on features
These are features that must be paid for separately. These are the highest risk as their value is judged standalone. Consider:
The run costs should be below the price set. Factor in the build cost to ensure you pay off your investment.
The cost of the average customer doing this now. For example, if you create a reports engine and they already have one, what is it costing them?
Increasing value
As you add more features that customers want, you will increase the value of your offering. You can then consider increasing your price. A good way of assessing value is how much additional money/effort you are saving the customer. This is very effective when explained in money terms. For example, your new £100 price increase includes a feature that will save, on average, 30 hours per month.
Reducing price
If you are losing because customers view you as poor value, you can improve your product or reduce your pricing. Customers will not have the same expectations of a high-cost product as a low-cost one. Reduced price will not work well if customers want the best regardless of cost. This is common in high-value sales where price is less of a deciding factor. Not only will reducing the price not work, but any sales you do make will also become less profitable.
Product value analyser
The Product value analyser is a simple tool to assess your offering versus the competition. Most importantly, you need to understand which differentiators a customer sees as value. Consider value overall rather than trying to evaluate each differentiator.
Competitor value - The competitor threat analyser can be used to determine the differentiators that affect win/loss/churn rates.
Your value - Use your own win/loss/churn analysis alongside the market positioning canvas to confirm valuable differentiators.
Testing prices
Price modelling - Model price changes based on previous events. For example:
What impact did the last 10% rise have?
What impact did a competitor’s rise have on them?
New price - Monitor the new sales trend and revenue when you change your price. The increased sales revenue may make up for the reduced profitability.
Lowering prices - Consider a limited-time offer. This will give you feedback on the impact of a lower price without needing to permanently lower it. It can even buy you enough time to release new functionality.
Increasing prices - You can raise prices based on inflation but also where you offer more value.
Tracking prices
Regularly track prices so that you can react proactively. For example, if your competitor slashes prices by 20%, you should be ready to respond.
Organisational structure
Consider these points:
Reduce dependencies by creating teams that can deliver changes independently.
Keep teams together when they become high-performing.
Avoid calling teams by their strategy, e.g. "The data cleanse team”. They should aim to be multi-functional rather than fixed to one area of business functionality.
People’s skills
If you are introducing new technologies or business changes, ensure you plan this upskilling.