Thinking Strategically About Your Company

Chapter 6: Describe Your Company - Page 6.3

Thinking Strategically About Your Company

One of the most valuable benefits of developing a business plan is thinking in depth about your company. You started that as part of Fundamentals: Initial Assessment, as you entered drafts of your objectives, mission statement, and keys to success. A standard plan also includes sections in the strategy chapter that provide deep background for strategy. This is a good point for developing those texts.

Value Proposition

Value-based marketing is a useful conceptual framework. The value proposition is benefit offered less price charged, in relative terms. For example, the auto manufacturer, Volvo, has for years offered a value proposition based on the value of safety, at a price premium. A more detailed discussion of this framework can be found in Strategy and Tactics: Strategy Is Focus.

Competitive Edge

So what is your competitive edge? How is your company different from all others? In what way does it stand out? Is there a sustainable value there, something that you can maintain and develop over time? The classic competitive edges are based on proprietary technology protected by patents. Sometimes market share and brand acceptance are just as important, and know-how doesn't have to be protected by patent to be a competitive edge.

For example, Apple Computer for years used its proprietary operating system as a competitive edge, while Microsoft used its market share and market dominance to overcome Apple's earlier advantage. Several manufacturers used proprietary compression to enhance video and photographic software, looking for a competitive edge.

The competitive edge might be different for any given company, even between one company and another in the same industry. You do not have to have a competitive edge to run a successful business — hard work, integrity, and customer satisfaction can substitute for it, to name just a few examples — but an edge will certainly give you a head start if you need to bring in new investment. Maybe it's just your customer base, as is the case with Hewlett-Packard's traditional relationship with engineers and technicians. Maybe it is the quality control and consistency of IBM.

The most understandable competitive edges are those based on proprietary technology. A patent, an algorithm, even deeply entrenched know-how, can be solid competitive edges. In services, however, the edge can be as simple as having the phone number 1 (800) SOFTWARE, which is an actual case. A successful company was built around that phone number.

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