Why strategy is important in understanding your environment

Why a company’s stated strategy is so important to ultimately understanding its External Situation and Environment.

In order for the Internal Assessment process to be relevant to a marketing executive and the marketing planning process, we view the assessment as taking place both at the macro-company level as well as at the marketing organization level (see previous blog post).

One key piece of the macro-company level assessment for a marketing executive has to do with understanding the company’s strategic planning (i.e. Mission, Vision, Values, Goals, etc.) so that the marketing organization’s own planning and strategy can naturally follow suit and stay in-line.

A not-so-obvious, yet critically important, piece of macro-company planning is its expressed Strategy related to achieving its company vision and goals.  We particularly like the article entitled, “Can You Say What Your Strategy Is?” by David J. Collis and Michael G. Rukstad in the April, 2008, Harvard Business Review.  In this article, the authors purport the value of a succinct statement to summarize company strategy.  They further espouse that an effective strategy statement will have three key components including:  Objective (or “Ends”); Scope (or “Domain”); and Advantage (or “Means”).  We believe that, while the company’s strategic objective and its unique sustainable advantage are certainly critical for a marketing executive in the Internal Situation Assessment, the scope provided in its strategy (statement) is also highly critical as a key component of understanding the External Situation.

The authors break down elements of scope along three dimensions:  customer or offering; geographic location; and vertical integration.  This has the effect of establishing important boundaries for internal decision making, but also for external markets to be explored and served.  These are the boundaries needed to further explore the Industry-Market level of the company’s External Situation.  It sounds simple, but merely reinforcing that our company is in the residential plumbing supply and distribution business for retail stores in the Northwest U.S. region goes a long way in showing us what not to focus on.

And for our Industry-Market analysis, this scope now allows us to not only define our market in more detail (market size, growth, etc.), but also to place more definition and understanding around three of our “5Cs”- Customers; Competitors; and Collaborators.  Data-driven insights from market research and other analytical techniques within these boundaries will shed light on these factors and how these play into overall market attractiveness.