External Business Strategy Fundamentals: Part 1.
The best way to become a billionaire, is to help a billion people.
– Peter Diamandis
Developing an external business strategy is often the easiest part of business planning. However, this does not take away from the importance of approaching it correctly. External strategy relates to where we want to take the business and the goals we are working to achieve.
Executive teams can often develop a clear picture of their external business strategy with the help of key employees, stakeholders and some outside consulting.
External business strategies should answer questions like:
1. In which markets will our business operate? How much of the market are we looking to own?
2. How will we position our business in the competitive landscape, relative to the competition?
3. Which products and services are going to help us maximize our share within the marketplace? And how do the products/services need to function and be presented to align with our positioning strategy?
The answers to these questions will typically rise to the surface after some consideration and probing, with the right people involved.
EXTERNAL BUSINESS STRATEGY FUNDAMENTALS: CHOOSING THE MARKET
Establishing a market strategy within the context of an overall business strategy is important, it will determine the competition and will affect the internal strategy that will be addressed in a later article.
For some businesses, they are looking to gain more control over a local market or expand their business to new geographical regions. This is usually the most basic form of growth as it focuses energy and resources on expanding existing product lines and services.
Other businesses will reach a glass ceiling in their respective market, and look to expand in different ways. For instance, Google has all but cornered the search engine market dominating roughly 90% of the search marketplace. As you see their business expand into different markets such as the cell phone industry, computer hardware, social media and too many others to include in this article (you can view a full list here).
This external business strategy is inherently more difficult as it requires many other pieces of the business development process to be in place in order to be successful.
EXTERNAL BUSINESS STRATEGY FUNDAMENTALS: TAKE A POSITION
Positioning is another core component of a business’s external strategy. To achieve market goals, positioning must be aligned correctly in order to drive new customers and create value in the minds of existing customers.
A company like Apple has done such a great job of positioning over the years as a result of Steve Jobs thinking. The idea was to create a brand that lives by the philosophy of “Think Differently” and built entire eco-systems for computers to operate in was the cornerstone of their positioning strategy.
Companies like Tesla have taken a position of pushing the frontier of performance in clean energy vehicles, to appeal to consumers that want the benefits of sophistication and power with eco-friendly design. Forcing competitors to take a similar stance and invest in the new technology.
EXTERNAL BUSINESS STRATEGY FUNDAMENTALS: DEVELOPING PRODUCTS & SERVICES
Product design impacts positioning and market potential. Peter Diamandis, Founder of The X-Prize famously stated: “The best way to become a billionaire, is to help a billion people.”
In order to align with this from a product standpoint, it is imperative for anyone wishing to achieve this goal to develop a product and or service that can be utilized by a billion people.
Addressing concerns such as cost, quality, and usability are going to be large factors for such lofty goals.
Although not every business is focused on creating a company of this scale. However, the premise remains the same. Does your product design, manufacturing and distribution model support the goals you are working to achieve in your external business strategy? Whether it is making your first 100k, 100M or 100B.