All the Right Keys

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The New Strategic Management
All The Right Keys
How to go to Market Ahead of your Competitors
with Superior Business Strategies
by
Andrew Pearson MBA
Coaching Business
www.coaching-business.co.uk

CONTENTS
The Purpose of this Book 5
Positioning is neither vague nor academic, it’s about delivering what the 7
customer values, to get the results you want
Make productivity part of your business strategy 13
How to withstand external disorder and maintain momentum! 18
Bringing it all together 25
Further Support and about the author 26
The New Strategic Management
All The Right Keys
A Guide to Going to Market Better
Equipped Than Your Competitors

All The Right Keys
© Copyright 2009 Andrew M. Pearson
ALL RIGHTS RESERVED. No part of this report may be reproduced or transmitted in
any form whatsoever, electronic, or mechanical, including photocopying, recording, or by
any informational storage or retrieval system without express written, dated and signed
permission from the author.
DISCLAIMER AND/OR LEGAL NOTICES: The information presented herein
represents the view of the author as of the date of publication. Because of the rate with which
conditions change, the author reserves the right to alter and update his opinion based on the
new conditions. The report is for informational purposes only. Whilst every attempt has been
made to verify the information provided in this report, neither the author nor his
affiliates/partners assume any responsibility for errors, inaccuracies or omissions.

THE PURPOSE OF THIS BOOK
The right actions to release cash into the business - How to immunise your company
against future such crisis – How to build a stronger business
Many of my friends from industry have asked for my opinion on the economic crisis and its
impact on business. My answer to them is that the real problem is that companies simply do
not internalise the proper actions to take in order to respond to such a situation.
Managers over the years have invested so much time and money to improve their operations
to create a solid platform for business. Now, in the midst of a dramatic change in market
conditions we see that many have become afraid of the future.
This means that these same managers, with all their investments and all their efforts to build
up the strengths of their businesses, have not really succeeded in improving their companies
such that any external change will not have a devastating effect on them.
And yes, I see actions all around me like cutting expenses, freezing investments, releasing
people and so forth because they are afraid that sales will fall.
My opinion is that if a company wants to, it can move through this time, without suffering
awful consequences, simply by turning the opportunity of having to something into prudent
action. If they take the right steps then I think companies can come out of the crisis much
stronger than when they entered it.
The impression that cost cutting in an organisation is the single means of releasing cash for
continued operations negates more creative alternatives and only imposes pressure, creates
tension, and jeopardizes human relationships in organisations.
Moreover, we have deluded ourselves about the process of improvement and the time it takes
before we see real results. If you take the right actions the time it takes to release a lot of cash
is not years, nor months. This is simply not the case. In most situations its weeks and, what’s
more, these actions will not compromise the future of the business. They will build the
future.
But even if you adopt these measures, it has to be understood that the real message of this
crisis is how it has impacted companies that seemingly appeared impregnable.
What I want to show you is that if you take the right actions you will immunise your
company against future such crisis and build a stronger business.
Moving from Survival to Greater Strength
At a time of extreme and exaggerated gloom about the British and global economy, when
current news flows overlook strenuous and aggressive efforts on a global scale are being

taken to counter the severity of recession this book shows how, even in the most
unpromising circumstances, good management can turn a struggling business into a
MARKET LEADER
Above all the message in this book is an OPTIMISTIC one. The survival and prosperity of
companies is in the hands of their managers. Instead of urging the government to ‘do
something’, managers would do well to act on the strategies contained in this book.
It is designed to be an easy read and a concise overview of a subject of considerable
importance to managers responsible for the survival and development of their businesses in
TODAY’S tough times and TOMORROW’S NEW DOMAINES.
The responses and insights revealed in each of the FOUR PRINCIPLE ELEMENTS of this
book contain the ACTION POINTS to enable you to take the right steps to come out of this
current crisis much stronger than when your company went into it.
The comments and questions that appear at the end of the book provide the basis for
assessing your responses to each action point and means to act on them.
The basic premise is that superior business is about exploiting four mutually reinforcing
strategies very effectively. They are:
1. Maintain a window on the future
2. Position to offer customers superior value
3. Make productivity part of your business strategy
4. Preserve business momentum
What I want to show you is how, when taken together, these four strategies, when
implemented effectively, will immunise your business against external pressures and enable
it to take advantage of an improving financial climate and evolving opportunities.

POSITIONING IS NEITHER VAGUE NOR ACADEMIC, IT’S
ABOUT DELIVERING WHAT THE CUSTOMER VALUES,
TO GET THE RESULTS YOU WANT
The wise old words of an advertising man
The word positioning always prompts me to think of David Ogilvy, one of the great
advertising men of all time. He said that positioning is about “what you do for whom you
want to do it!” Get this right and you have the basis of a proposition - the driver of a mutually
beneficial relationship with your customers.
A proposition is simply the sum of a company’s answers to three questions: WHO should I
target as customers? WHAT products or services should I offer them to meet their
requirements? And HOW should I do this? This is as equally as important as the first two
questions because it is this that’ll gives your proposition sustainability. But more on this later
Suffice to say at this point that positioning is all about making tough choices in these three
dimensions, and a business will be successful if it chooses a sustainable and distinctive
position – that is, a position which combines superior value for customers and is different
from each of its competitors
Let’s concentrate on the first two elements of positioning; the proposition.
Managing customer spend
If a proposition has a good blend of quality, value and service, then this will benefit
consumers emotionally through the delight they experience from their purchase, and in turn
your business will benefit financially from greater customer loyalty.
Finding the right blend of quality, value and service is key to attracting customer spend. In
current times many businesses are introducing rapid promotional price-cutting as a means
of encouraging greater consumer spend, but ultimately if all businesses start to follow this
path then their propositions will become too similar and differentiation will be lost.
Moreover, it seems pretty clear that the more discounts customers are exposed to, the more
their spending behaviours follow this path and the less likely they become to purchasing
products at full price.
It’s also worth pointing out that a business will struggle to change its proposition to combat
tough times. For example it will be mighty difficult for an electrical retailer to diversify into
grocery overnight purely to combat tough times. While Tesco’s diversification into clothing,

home entertainment and insurance proves that it can be done, this sort of decision requires
planning and careful implementation.
Yes business leaders should always be looking to increase market penetration and identify
and meet new needs (or indeed create new ones), but the core proposition will nearly always
remain the same. And I’ll put it to you that changes in WHO and WHAT are much in
evidence.
NETTO and Lidl’s attempt to capture price sensitive consumers with a basic product offering
is a case in point. Tesco’s ‘Britain’s Biggest Discounter’ strategy was a magnificent attempt to
counter the discounters’ inroads into their turnover.
As the maker of Harpic, Dettol and Finnish dishwasher products Reckitt and Benckiser has a
reputation for cleaning up in the household goods market. In the year to February 2009 it
achieved a revenue increase of 22% to £6.5 billion against a 26% fall in the FTSE!
Holding the No 1 and No 2 positions in most of its product categories, Benckiser has
continued to attract shoppers that prefer the reliability of premium branded goods during
hard times rather than cheaper private labels to its premium brands despite a worsening
economy.
Positioning is about choosing between cost or value - not both
Notice the difference between the two propositions? The one concentrates on cost and the
other on value - or differentiation.
You can choose one or the other, but not both, to operate with depending on the breadth of
competition. Let’s look at this a little further.
There are three sources of positioning:
1. Product positioning is based on what is economically right to produce in a given set of
circumstances. For example, Xojet specialises in short-haul, ‘high value’, premium priced
service for corporate business travellers, in the USA. Thus customers go to Xojet for
private jet travel, customised on board services, on-time departure, and multiple aircraft
for clients on a single day.
2. Needs positioning is based on all or most of the needs of a group of customers. IKEA
manufactures to fulfil all the home-furnishing needs of its customers, not just a single
niche
3. Access-based positioning is based on proximity to customers. Tesco now operates
small town stores as well as large stores. Thus, both rural and urban customers can be

served by smaller, standardised formats, rather than large stores, but still benefit from
Tesco’s purchasing power, lower rental costs and pay.
Consequently, positioning is not purely about creating superior value; it’s also about
operating in either a single segment or a number of segments with least cost or
differentiation strategies.
As we have seen, Xojet serves a single highly priced segment and by contrast easyJet found
opportunities to serve underpriced segments that are broadly served by larger competitors.
Waitrose as well as Marks and Spencer exploit high priced food segments and conversely, a
larger, more broadly focused competitor, such as Tesco, serves a larger array of customer
groups with a wider range of products.
Sustainable - and competitive - positioning
Whichever, positioning strategy you choose, you’ll need to find a way of achieving a
sustainable proposition of value!
And this takes us to the issue of HOW! Remember I said that a proposition - positioning is
concerned with WHO and WHAT. It is also concerned with HOW for it is this that gives
your proposition longevity and - or sustainable differentiation or least cost. Superficial
differentiation of products or services that are effectively identical is not sustainable.
Consider Direct Line and pioneers like them, and you’ll see what I mean.
Direct Line achieved incredible success when it led the way in telephone-based insurance
selling. It transformed the way insurance was sold, drastically reducing policy prices. For a
moment, competitors were stunned and lost market share, but they soon recovered as they,
too, introduced telephone selling systems.
But notice how Direct Line skilfully position their policies consumer needs; cars, trucks,
household and health insurance.
The issue, then, is not only to seek positions in which superior value can be offered to
customers but also to find defensible and, therefore, sustainable means to remain ahead of
competitors. This can be achieved by performing activities differently or by
performing different activities to those of our competitors.
So what can be done to exploit positions in which to offer superior value to customers and
obtain real and sustainable differences which matter to customers? The answer lies in a
company’s operations. In other words if business strategy is about being different, then the

essence of positioning is to select and perform activities differently, or to perform
different activities to those of competitors.
Approaching sustainable competitive differentiation in this way is also dependent on two
further conditions. First, competitors cannot imitate or equal a company’s positioning with
their current operations. Second, the activities needed to support the position should
actually fit to each other and to the company’s capabilities
This means that for a strategy to be superior, it needs to reflect what the business does best –
not what its competitors can do just as well.
This means that, in attempting to imitate a company’s strategic position, any rival will be
forced to replicate not only the company’s key activities, but also the way it carries them out.
In other words, the activity system itself!
This is not easy because it is much harder for a rival to replicate an array of interlocking and
reinforcing systems than it is to copy a product and match a process technology. For
example, easyJet’s strategic positioning, as a short-haul, ‘no-frills’, low-cost service for
business travellers, tourists and students in Europe, rests on an interlocking system of the
activities it performs to support its low-cost convenience positioning. These include fast gate
turnarounds, frequent departures with few aircraft, automated ticketing, self seat selection,
meals at cost price, and low maintenance and fuel costs.
In contrast, a full-service airline, such as BA or Quantas, performs activities to support a
high-cost, full-service programme. It will provide customers with services to reach any
number of destinations with a larger range of aircraft, as well as providing comfort, offering
in-flight meals, arranging connecting flights, and checking and transferring baggage.
Both types of airline operate viable and valuable strategic positions that are built on entirely
different systems of interlocking activities.
A differentiating STRENGTH or distinctive competence
A great or unique strategic position is also grounded in a sizeable and significant strength, in
fact what your company is really good at doing. This forte is referred to as a company’s
main strength or – strategic asset.
A strategic asset may be described as a process or capability that will allow a business to
create and exploit a breakthrough strategy, because it is rare, difficult for competitors to
emulate, provides outstanding benefits to customers and can be leveraged into other markets
– faster than its rivals.

What are these companies good at doing?
Ask yourself who is it that is really good at making long life batteries (Duracell), assembling
computers (Dell), marketing sports shoes (Nike) small electric motors (Black and Decker),
fast affordable fashion (Zara), an exclusive and popular drink (Coca Cola) and innovation
(Apple). At the end of the day it’s these core skills or processes – or strategic assets - that give
rise to the reasons why people buy from their chosen suppliers.
Don’t get me wrong you could achieve success in the absence of a core skill or process but it
will be a lot harder to attain. At best you would be profitable but you wouldn’t be taking full
advantage of something others are unable to emulate.
The importance of the question: ‘what are we good at doing?’ can’t be overestimated. For
what your business does well is what creates the value your customers really appreciate and
differentiates your business.
With this in mind it follows that if you concentrate on activities and capabilities that leverage
your strategic asset – or key strength - you will acquire serious advantages particularly if you
continually develop and build on your distinctive competence.
Do we have a value proposition?
If you have a good idea about your companies competitive positioning the question remains:
“Do we have something that articulates the value we can offer our customers?” In other
words do you have a proposition for your customers?
You might answer the question with an emphatic “YES!”, and if this is so, try jotting it down.
If you don’t know what makes your offer more attractive to your selected customer groups
than other offers, then you don’t have a unique strategic position.
For example, the written value propositions of the following three businesses describe the
positions they aim to take in their customers’ minds.
• ‘The Internet in your back pocket’ – Apple iPhone
• ‘Still red hot’ – after 25 years in business, Virgin Atlantic Airways
• ‘Fast and affordable fashion – Zara
• ‘Every little helps’ - Tesco.
The issue is to take such propositions to targeted customers and find out whether or not
those customers believe them and whether they stand out from those of the competition.

Some last thoughts on the subject
At the end of the day a good product is one that a customer really wants and that your
company has an advantage in offering. Actually it’s the combination of these two factors that
allows you to earn an attractive profit
Different companies have different competencies. Your task is to identify products that will
allow you to maximise the impact or your unique capabilities and competencies relative to
your competitors.

MAKE PRODUCTIVITY PART OF YOUR BUSINESS
STRATEGY
The pivotal role of productivity in strategy
Productivity is popular currency now alright. People are talking about it as an alternative
methodology to underpin success in changing times. Few though have grasped its pivotal
role in business strategy.
Only the other day I read of Reckitt and Benickiser’s intense focus on productivity through a
programme called ‘Extrim’.
Productivity is ongoing. It is about getting the most from your human resources. It’s about
not under-spending or over-spending, but having just the right amount of people, working
hard, to achieve, and even surpass, sales targets.
Productivity methodology protects and helps grow ‘revenue’, due to focus on continual
service improvement and customer delight. Price is currently an important factor for buyers
but is it the only important factor? Absolutely not! It’s now what customers expect so it isn’t
a very persuasive tool, is it?
Customers expect better service and gratitude in return for spend and you must not lose
sight of this. However, in some cases an INCREASE in labour spend might make all the
difference. So for ‘big ticket’ items, more service should lead to better conversion and this is
a way of protecting share when orders are down and conversion needs to increase.
Irrespective of the domain you trade in and the micro-macro environmental storms that you
weather - you need a continual productivity focus. WHY you ask? Simply to protect
revenue… and even possibly increase it when conditions are favourable and they suit your
core proposition.
This productivity focus includes regular gap analysis and review, and then generation of
multiple labour models that enable a firm to quickly adapt to varying ‘storms’ that deluge the
domain you operate in, helping to ensure staffing levels will always be just right and are
firmly focused on maximising sales opportunities.
In some cases it’s possible to increase sales whilst reducing labour costs, and
this is a very compelling reason for adopting a productivity methodology
regardless of the economic cycle stage.
So if productivity is about getting the most from the right amount of people, working hard to
achieve and even surpass sales targets what can you do to do this? Well take a look at this

little list and let me know if you’ve thought of any of these possibilities – let alone apply them
in your business.
Reducing sales cycles and increasing conversion
Let’s start with sales. You’d be surprised when I say that one major mobile network operator
discovered that its customer facing staff was actually spending just 26% of its time with
customers!
That wasn’t too bad when you consider that the average is around 20%!!! Just think what an
understanding of how much time your sales people actually spend on sales work - and how
much isn’t! Combine this with an appreciation of your competitors’ sales cycle times and
think what you might achieve - potentially triple the amount (and quality) of customer
contact work and conversion!
The imperative for productivity methodology is therefore crucial.
Establishing labour standards to budget better
A key step in productivity methodology is to review each process in the business so you can
fine-tune it and take out unnecessary spend. You can do this by mapping and costing each
element of a task so that you can produce labour models, showing the workload and budget
necessary to give better service.
Ramp this up to cover every major process and you get a ‘whole business perspective’. What
you achieve is the knowledge and therefore the satisfaction that everyone will do exactly
what they are supposed to be do without adding time and cost to the simplest of tasks.
Tesco is an obvious champion of a productivity methodology; their models enable them to
get service right at the checkouts and this has been actively promoted as a differentiator, via
their (“one in front”) ad campaigns.
A large Co-op is an example of a convenience store retailer that didn’t have labour models in
place, and then when productivity measurement was performed and models introduced it
was able to increase sales and reduce costs at the same time.
There is another reason why this sort of productivity data is important. Let’s say that you
have a labour model, complete with workload data, together with other criteria such as
capacity, budget and so forth, to achieve a given level of sales, you’ll have a clear picture of
labour needs whatever’s happening to demand in your market. In other words you’ll have a
system that will help you adapt to changes in demand brought about for whatever reason and
eliminate labour budget.

Exploit solutions in customer engagement
Now let’s turn to customer service. It seems that in tough times customers’ intolerance to
poor customer service sharpens. Buyers with hard pressed budgets - and even those with
more - expect to be treated well. Both categories expect an experience that matches their
demands for value, diligence, gratitude and appreciation during the transaction.
In contrast to other initiatives, i.e. short term discounts that offer short-lived business
advantages, customer engagement-high service quality is a much more long-lasting asset to
operate with.
But you ask “What constitutes effective customer engagement?” And “How do you identify
what potential improvements should be made and how can you achieve?” And these are all
good questions.
Many things combine to create good customer engagement. It depends on individual and
procedure issues that raise pose points concerning improvements, namely:
• Are customers being satisfied? Are queries satisfied knowledgeably and quickly?
• How is time being spent? Are people productive and efficient in terms of task times and
in areas that add value to the customer experience?
• What percentage of the labour budget do non-value adding tasks absorb? A very
important aspect as this, as I’ve shown you, can free-up labour to concentrate on more
productive customer-facing tasks
• How long do activities take, by process? For example sales cycle times for a product
type? Where process efficiencies can be made?
• How does the business compare with its competitors? A business could be performing
very well against its own customer engagement performance metrics and yet failing in
comparison with its competitors.
What capacity does the business have to act on our service initiatives?
Identifying and exploiting ‘quick wins’
Finally, knowledge on how time is spent in the business, will give you opportunities to
achieve some really compelling short-term ‘wins’. For example, if 20% of time is actually
spent not working, typically between 7 to 9% of this can be taken out (if staff contracts allow)
for cost savings, or you can reallocate it to more value-adding tasks to increase sales from
better conversion, stock replenishment and so forth.
Gains from effective outside advice and support!
While productivity methodology is really advantageous, such improvements come from a
methodical and systematic approach. This is something that could be done by specialist

performance improvement companies. What you would expect would be a thorough review
of current performance and help to roll out new more productive ways of working.
One large food and drinks operation seeking operational improvements and savings used an
external productivity consultancy identified a productivity improvement of some 27%. All
the delivery processes and customer interface activities were measured; working practices
examined and revised new methods implemented. The results of this assignment were
achieved within three months and impacted directly on the Company’s performance and
their ability to win new business.
If you decide to recruit outside, make sure your chosen partner has the necessary experience.
This is vital as you need trained eyes to view issues and recommend improvements to
processes. Also make sure your prospective experts have a track record in delivering
solutions that show a return on investment on each productivity initiative.
The character of productivity methodology
Typically such productivity methodology provides a combination of:
1. Streamlined processes and accurate standard minute values
2. Effective software to quickly model workloads and shift plans considering the process
and measurement data obtained from (1).
3. Specialist productivity knowledge and practical operations experience (experience is
essential as you need trained eyes to view issues and recommend improvements to
processes)
4. Retailer’s unique guidance to reflect their environment, proposition, and culture
Typically this ‘productivity model’ translates £GBP budgets into a labour hours currency,
that gets spent through a store-specific model to optimise service, maximise revenue, drive
down costs, and retain customers.
Results from the productivity methodology – the impact of a productivity methodology in
place is huge for all the business stakeholders, in particular the Financial and Operations
Directors – can you imagine how helpful it is to achieve the results below in changing times;
• Less labour spend for the same productivity
• Less labour spend for more productivity
• More labour spend for more productivity
• Same labour spend for more productivity

The stage for productivity offers a platform for ingenuity far removed from the accountant’s
scalpel. Those retailers that envision the strategic and tactical merits of output and yield will
always ensure that they are THE BEST THAT THEY CAN BE regardless of any dance of
external disorder!
Using the baton of productivity and a fair measure of agility, a retailer will always achieve a
balance between its business and customer service objectives. Anyone can get into the
budget and cut labour, but this only leads to a carnival of future troubles and a maze of lost
service and sales opportunities.

HOW TO WITHSTAND EXTERNAL DISORDER AND
MAINTAIN MOMENTUM!
It is a fact that managers and business owners over the years have invested heavily in effort,
time and money to improve operations create a solid platform for business. Now, in the
midst of a dramatic change in market conditions many have become afraid of the future.
This means that these same managers, with all their investments and all their efforts to build
up the strengths of their businesses, have not really succeeded in developing their companies
such that any external change will not have a devastating effect on them.
Surviving unforeseen market ‘shocks’
It is apparent therefore that very few saw the downturn coming and more to the point fend
off trouble before it arrived and get on with the task of adjusting to change. The issue is that
anybody responsible for strategy formulation needs to adopt a questioning attitude, an
approach that continually challenges the status quo – no matter how successful the business
is.
However, as most managers see and follow only an upward trend line to achieve growth it
follows that they are entitled to ask, “Why would we want to change? Change is a dangerous
business!”
The difference between most people responsible for strategy formulation and a handful of
strategic innovators seems to be that this latter group have a window on the future. Strategic
innovators seem to know a few years before a crisis impacts that they must circumvent it
and, indeed, set out plans to do just that!
Successful companies question the status quo, even when they are financially successful.
They monitor indicators of financial - as well as strategic - health, such as those shown over
the page.

While this is not an exhaustive list of indicators, the important thing to appreciate is that
they exist and that you should identify and track those most relevant to your company.
The great benefit of doing all this is that you are endowed with:
• an early warning system that allows you to question things before a crisis occurs
• a means of remaining flexible enough to respond to an ever-changing environment and
to consistently pull off a dynamic fit with that environment
• a means of identifying new positions to sustain growth.
The challenge facing managers
If you can watch your market and still be creative in seeking fresh opportunities to add value
to your customers you can protect your company against external pressures.
The challenge facing managers is how to do this. In other words; how to reinvent business,
design new ways of doing business, ac hive greater productivity, lead the way in creating
value for customers and stakeholders, and cope with major change in the knowledge that this
is the only real way to survive and move forward.
Increasingly, the really devastating competition for a company or a product does not come
from expected and anticipated sources – the traditional ‘me too’ same technology competitor
– it comes from someone you’ve never even heard of, let alone expect to take your business
away from you. For example;
Financial Health
• Profits
• Cash flow
• Shareholder value
• Growth rates
• Trends in financial health
Strategic Health
• Customer satisfaction
• Customer loyalty
• Market share
• Employee morale
• Staff turnover
• Employee communications
• Financial health relative to competitors
• Innovation and new products
• Relative manufacturing costs
• Product quality
• Manufacturing flexibility
• Quality of management team
• Distributor and supplier feedback
• Strength of company culture
• Fit with the industry environment
• Fit with the macro environment
+

• Did we really think easyJet could change the face of air travel in Europe?
• Did we really think traditional retailers actually expect the internet to happen and work?
Not in the least!
Strategic innovators such as; Tesco’s, Xojet, Starbucks, Apple and countless others have all
‘broken the rules of the game’ and achieved unique strategic positions.
Most strategic innovators are invariably new entrants in their respective markets – an
achievement in itself. Most go on to dramatically increase their market shares. The question
is how did they do it?
First of all, they avoid a head-on collision. Instead of ‘attacking’ established competitors in
their existing well-protected positions, these innovators found ‘space’ to compete with new
rules.
Second, in each case, these businesses all created a superior strategy based on:
1. a clear purpose and vision
2. a targeted customer need and profile
3. an offer of superior customer value and loyalty
4. a productive and reinforcing system of activities and strategic assets to support their
chosen positioning.
The fragility of success!
A prevailing view amongst many business leaders is that success is fragile. Many would claim
that as a company becomes more successful, the process of maintaining momentum becomes
harder not easier. A quotation from Alice in ‘Through the Looking Glass’; “We have to run
faster just to stand still,” conjures up this sense of fragility really well
Size is no guarantee of profitability, and value creation can be weakened if competitors are
innovating more exciting and better quality products or services.
I have argued, with examples, that a business can create a breakthrough strategy and
challenge the market leaders with limited resources. I have also presented the logic for
effective positioning and more productivity and proffered frameworks to do this.
But it follows that any business must face up to threats from other strategic innovators, new
entrants and strong competitors.
You can only stay ahead by being better and more creative. Like the hare being chased by the
hounds, it is necessary for the strategic innovator to run a constant race against a pack of

aspiring competitors. Thus staying ahead is a never ending battle that has to be won many
times over with will and skill.
How to stay ahead
In order to maintain momentum there are three key priorities, they are; vitality, stretch
and leverage. And I want to introduce you to these three worthy friends. First vitality;
Vitality
The most common cause of slippage from success is when a company loses a sense of vitality
and excitement, becoming complacent, jaded or exhausted. In such situations, the efforts at
maintaining the other two priorities; stretch and leverage are lost and fall out of balance.
Many companies come perilously close to falling into this trap. Marks and Spencer in 2000
is a case in point.
Innovate or evaporate – is an important watchword. Without innovation or continuous
improvement, there is a serious danger that you could take your foot off the pedal. Typically,
what tends to happen is that when people achieve their goals they relax and stop trying.
Further challenge is of no interest.
When tangible rewards for those that have given up sustained time and effort over a long
period are not captured or distributed people will be disillusioned. Monetary reward is not
everything. Many companies have found that well publicized recognition within the “family”
can have as much effect on motivation and commitment as money – perhaps more so.
A further indicator of complacency is the loss of urgency. It is quite easy to be lulled into the
view that there is plenty of time to take steps because rivals are far behind and jeopardize the
success that has been achieved.
Being better than your rivals, overlooks the existence of indirect competition. For example;
against the bench mark of the best service companies, you may not be first. There is always
plenty of competition out there that you need to beat.
Clearly initiatives are required to maintain vitality to avoid such dangers. Most of these do
not demand large financial resources but rather top management time and effort.
When strategic innovators achieve success, benchmarking assumes a fresh importance.
These people are keen to understand the progress businesses in their sector and other
sectors at home and overseas have made in resolving a wide range of key issues.

I heard of one CEO who had learned how a smaller company had adapted its product designs
to achieve significant reductions in manufacturing costs and introduced changes in its own
processes.
But benchmarking is not the only means of sustaining vitality. Some companies prefer to set
goals against a continuous rate of improvement within the context of benchmarks. The target
is set in the light of known and possible rates of improvement. The great thing about this is
that it builds on what benchmarking has identified as ‘having taken place’ among
competitors and deals with ‘possible future rates of progress.’
Some companies – notably 3M – set goals and offer a prize to the winner, including funds
and time off, to develop an innovation. Such thoroughness helps ensure the spirit of vitality
and entrepreneurship in a business. Such systems are also used in both consumer facing and
business to business organisations.
Stretch
Strategic innovators look for growth as a fundamental means of leveraging the benefits of
what they have achieved, but they guard against a dash for growth in a blind belief that big is
best. They invest in enhancing capabilities to provide strategic innovations that complement
and build on those already achieved as well as exploring blue sky possibilities.
To stay ahead, you have to deepen your appreciation of your existing capabilities, ensuring
that they do not crumble, possibly creating new steps on the strategic staircase. And you can
do this in a number of ways.
One is an incremental approach, requires only a modest investment in resources yet is
vital to ensuring the best practice is everywhere identified and attained.
Many of today’s retailers buy their way into the knowledge bases of their stakeholders. When
they find a supplier or distributor that has worked out a problem in a creative way it
incorporates this know-how into its knowledge base and ensures that all their suppliers
benefit from the solution. These acquiesces because they know that each in turn will benefit
from the innovations of others
Then there is a systems approach to building new advantage. This will help you exploit
existing capabilities and build more sustainable positions by degrees. Such investments are
potentially large in size, long in gestation, and greatest in risk.
Typically a systems approach infuses the entire company. The record of Zara illustrates how
an organisation wide systems approach can work.

Although there are many stores on the high street that offer affordable fashion, Zara is
unique. It follows its own production pattern, rather than the model used by the clothing
industry as a whole. The result is that Zara only needs a turnaround of 2 to 3 weeks to get
new products in store, compared with the seasonal approach adopted by most rivals.
Relying on small and frequent shipments keeps inventories fresh and scarce – and compels
customers to frequent stores to buy what is new now… because it will be gone tomorrow.
What Zara has done is to fine-tune the sequence and focus of activities in the supply chain, in
order to obtain quicker speeds and ensure higher levels of customer service and satisfaction.
Strategic entrepreneurs rewrite the rules of their industries, not just once but sometimes
several times. Xojet provides a kind of private jet time sharing service and on-demand travel
solutions built especially for frequent corporate business jet fliers.
Xojet and Zara are example of how innovative thinking can reengineer an entire industry.
The company’s strategy is to combine the service, access and exclusivity of owning a jet with
the efficiencies and operational rigour of successful commercial airlines
Leverage
Reaping – leveraging – benefits of profitable growth from existing capabilities that have
been carefully built up also makes demands on companies. For example; failure to leverage
can result in loss of effort, disaffection, or even the loss of skilled staff and the threat of
takeover by others.
It’s worth pointing out here that by profitable growth I mean that which adds value not the
pursuit of size. It’s important to distinguish between the two. For some the goal is size.
But size can be downright destructive; it does not necessarily bring advantages, especially if
it is not building on existing capabilities and competencies. Moreover, building scale in a
business should be considered as a means to achieve specific ends, not an end in itself
Leverage requires many different forms of activities, including organic expansion,
acquisition and all forms of alliances. Each has a different risk profile. Leverage also requires
constant attention to the proper choice of strategic domain. A company must be continually
alert to changes taking place in the environment, harnessing and controlling them.
The experience of many successful strategic innovators suggests that each route to growth
has its merits, the choice depending on particular circumstances.

Zara combined organic growth with some partnerships with suppliers to achieve leadership
in fast fashion. The acquired resources has given it access to world markets, new products
that complemented its existing activities, leveraging its previously hared won capabilities
Maintaining entrepreneurship in the top team
Balancing these forces requires that new skills – even changes in leadership - be built-into
the top team.
The first of these is to stay alert! Group think can be disastrous. It is important therefore to
work with those that challenge accepted wisdom such that ‘refreezing’ is avoided.
The second is high aspiration coupled with dissatisfaction. This is the force that seems to
cause companies to continue to reach out to seek out fresh domains, respond to competitors
and stretch capabilities.
When all is said and done, it is up to managers to create their own futures. The best will
strive for continual improvement of their companies and commit themselves to building
their future. They will be adaptable people who are best suited to gain success and to survive
unforeseen market ‘shocks’. These managers are the winners, the ones for whom this book is
for; they exist in all industries and provide the hope for all our futures.

BRINGING IT ALL TOGETHER
So, there you have it – All the Right Keys: A Guide to Going to Market Better than Your
Competitors
You've just gone through a crash course on how to build and exploit a superior strategy by
tackling the most important questions of the day!
If you concentrate on raining productivity aligning your positioning to achieve greater value
for customers you could reinvent your business to meet to-day’s tough time’s conditions. If
you do - this is what you can expect to achieve:
1. Save your customers more money than your competitors
2. Focus on what value you could offer your customers
3. Do things differently, or do things that are different to your competitors to create a really
sustainable point of difference
4. Break free from sameness and do something new that’s even better
5. Find new routes to market that your competitors have overlooked
6. Concentrate your company’s skills where they can achieve the greatest effect
7. Maintain momentum and withstand harsh economic conditions in your business better
than your competitors
It's been my pleasure to share my insights with you and I trust that they will provide you
with a roadmap of discovery as you explore your industry’s evolving terrain searching for
new and unexploited strategic positions.
If you want to talk to Andrew about how to create a superior strategy for your business
please call 01280 844966 for a chat without any obligation to you.

For further support
Call Andrew Pearson on 01280 844966 or
email andrew@coaching-business.co.uk
Andrew M Pearson
Andrew M Pearson NDA, Dip M, MBA is considered to be a prominent expert in the fields of
strategy, marketing and operations management. He tutors at Oxford Business School and is
also a visiting lecturer at Warwick University.
In addition to UK business school experience he has led and presented seminars and
workshops at business forums throughout the world. He has extensive experience as a
business coach, consultant and management speaker and has worked with managers and
management students in the UK, Europe, China and Libya. He focuses on issues of strategy
development, planning and implementation.
Andrew set up his first business aged 25 and steered it to market leadership and a turnover
of £11m in 6 years. Since then, he’s held senior management and professorial posts at a
number of UK firms, including four years with Cargill, during which he founded pioneering
strategies for business development in Eastern Europe.
Clients include:
• A P Moller Terminals
• Andersons Consulting
• BALI (SE)
• Centaur Grain Ltd
• Channel Express Ltd
• Dart Plc
• Edexcel
• Everglade Windows Ltd
• Fowler Welch Ltd
• Hartley’s Nurseries Ltd
• LEAF
• Mack International Ltd
• Palmstead Nurseries Ltd
Further E-books and coaching support:
• Transforming the Process of Going to Market
• Rejuvenating the Mature Business
• Challenging the rules of the game
• How to build a business that runs without you
• Customer Driven Market Change
• Creating Time to Think and Plan
• So You Think You Know Your Customers
For more information:
Please contact Andrew for a chat on 01280 844966
and for more information visit www.coaching-
business.co.uk

All the Right Keys

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All the Right Keys