What industry does your company operate in? You can most easily identify it by answering the question,"If customers were to purchase elsewhere, what are all the potential options that exist."

Classify the different types of companies you identify with the small groups until you identify with the small groups until you have a big enough circle to define the entire set. For the most part, identifying your industry is intuitive, but sometimes the nets aren’t cast wide enough. For example, a charter sailing company isn’t int he cruise industry. Instead, the company is swimming in a bigger pond called the travel and tourism industry.

In an effort to understand he dynamic nature of an industry, you can break any industry into five components or forces: new competitors, substitute  products, power of suppliers, power of buyers, and competitive rivalry. These five forces impact every industry in some form pr fashion and determine your industry’s attractiveness and long-run profitability. Each force is discussed in the next sections.

• Direct access to supply and demand: Eliminating the middleman in both directions is forward and backward integration. Getting direct access to your vendors and customers can be a huge benefit for many businesses.
  For example, many of the auto manufacturers moved forward by investing in the big car rental firms. Many companies seek backward integration because there is no source for a component they need. For example, when refrigerated warehouses were needed by meat packers, they built them.
• Better control over the quality or availability of the product or service. Many times, manufacturers need specialized raw material that is a key component in the end product. To gain better quality control and eliminate the risk of not being able to acquire the product, the company buys the vendor. This is backward integration.
  So Sony could guarantee content for its products, the company purchased Columbia Pictures, Tri-Star Pictures, and CBS Records.
• Entry into a potentially attractive business area. Manufacturers continually fight margin pressures. The best way to get control is to go directly to customers instead of through retailers, also known as forward integration.

Companies like Nike have been successful in this area, whereas a company such as Universal Pictures hasn’t.

Do you recognize the intensity of the competition and are positioning yourself accordingly? Or are you feeling the pressures, but don’t know where they’re coming from? The following aspects have an effect on whether you feel the pressure of your industry more or less:

• The structure of the competition: Rivalry is greater when there are many small companies and less when there’s a clear market leader.
• Growth objectives: Rivalry is greater when everyone is focused on growth (like biotech) and less when the industry is mature (like publishing).
• Exit barriers: If leave an industry is expensive or difficult, rivalries tend to be higher.
• Degree of differentiation: This factor is present in industries where products are commodities. Commodities are product and services that have no obvious differences and companies compete on price (like computers, steel, and so on). Rivalry is higher than when competitors can differentiate their products.
• The structure of the industry costs: In industries that have high fixed costs (like manufacturing), competitors tend to cut prices to fill unused manufacturing capacity, which leads to higher rivalry.

Clearly in the strategic planning process, you seek out options and choices. But such decisions occur regularly outside of strategic planning. By establishing a set of rules, you can quickly evaluate whether an opportunity is really an opportunity or a distraction. Develop a set of rules and use it as a litmus test. If the opportunity doesn’t pass the test, it’s out.

Here are some categories of rules:

• Priority rule: With this rule, you prioritize some opportunities over others based on their connection to reaching your vision. Set a rule to require that all opportunities must help you reach your vision.
• Timing rule: This financial rule helps you prioritize opportunities based on how much money you want to see returned within what time period. Pull in your finance or accounting people to help you establish this one.
• Boundary rule: This rule says that every opportunity is evaluated based on whether it’s within your mission. Set a rule to require that the opportunity aligns with the organization’s core mission and values.
• How-to rule: Develop a rule that requires you to sketch out how to implement the opportunity if you took advantage of it before jumping in. If you can’t clearly define an action plan for the opportunity, you know that trying to execute it will go poorly.

Years later, America Online is now the biggest ISP. Prodigy and CompuServe are virtually unheard of anymore. How did America Online win the war? The folks at AOL understood two key things customers valued at that time:

• Personalization of accounts: A person could get an e-mail address like joesmith@aol.com from AOL whereas Prodigy assigned him the e-mail address JS12345@prodigy.com, and CompuServe assigned 56789@compuserve.com. As a customer, I want my name if I can get it, or something else that is personally meaningful to me, like a personalized license plate from the DMV at no extra charge, would you do it? Most people would.
• Fewer rules: AOL has fewer rules governing the virtual community of chat rooms and bulletin boards. People could pretty much talk about whatever they wanted to in cyberspace within AOL, whereas CompuServe and Prodigy had more restrictions on that kind of activity. Naturally the virtual community growth was viral, multiplying their user base tenfold.

Over time, most people picked AOL over the competition. AOL went for customization and personalization against the bigger, more well-funded competition. That’s using competitive advantage to dominate your space, to grow, and to become successful!

BizStats: Visit www.bizstats.com for instant access to useful financial ratios, business statistics, and benchmarks. Biz Stats has effective and understandable analysis of businesses and industries. You can benchmark a business in five seconds for free.

Solution Sage: An online tool for assessing middle market business strategic and succession readiness. The Family Business Assessment is a simple and inexpensive strategic and succession assessment tool available to family business owners and their professional advisors. Visit www.solutionsage.com for more information.

DigitalHatch, Inc.: This company looks at the key areas successful organizations need in order to grow. The activity areas are specifically correlated to profitability so business owners can see the direct link between action and ROI. Industry specific assessments are available. Point your Web browser to www.growthassessment.com.

The Business Report Card: This assessment helps companies pinpoint strengths and weaknesses, capitalize on an existing client base, develop invaluable networks and alliances, and increase profitability. To see if you’re making the grade, go to The Business Report Card at www.mybusinessreportcard.com.

B2B Benchmarking Association: This association brings together a variety of companies for the purpose of process improvement and identification of "Best Practice" companies through benchmarking. Check them out online at http://b2bbenchmarking.com

Do you remember how I stressed consensus earlier? It also bears repeating here because having goals, objectives and strategies is great, but knowing how they all work together and if you need them all is another story. Remember, “The one concept that most business owners, executives, and managers forget is that the lack of a decision results in more derailments of the mission than any other cause.” You’ll need to agree on a combination of long-term and short-term markers to keep your organization moving in the right direction.

A strategy is a general statement that guides and covers a set of activities – the method you intend to use to reach your vision. While strategies are embedded in all elements of your strategic plans, I suggest you consider listing the top one or two strategies or long-term activities your company needs to pursue in order to achieve its vision. For example, Starbuck’s strategy is to build the brand one cup at a time, based on three key ingredients: the quality of the coffee, their retail stores, and selective brand extensions. Keep in mind that with your strategic objectives, your company is moving from motive to action. The strategic objectives define what your organization is intending to accomplish both programmatically and organizationally. Think about answering the following questions as you write your strategic objectives:

1. What areas do you need to be involved in to accomplish your mission?
2. In what areas will you continue being actively involved in for the next five years?

Your short-term markers are your goals, and realistic goals should serve as a tool for stretching your company to reach its full potential. With goals, your company converts the mission, vision, and long-term strategic objectives into performance targets. Think about achieving them in one-year time frames; they are immediate mileposts on your way to your vision. For maximum effectiveness, goals must state how much of what kind of performance and by when it is to be accomplished. You should think SMART when creating goals:

Specific – Try to answer the questions of How much and What Kind with each goal you write

Measureable – Goals must be stated in quantifiable terms.

Attainable – Goals must be achievable, or they become a set-up for failure.

Responsible -Goals should be assigned to a person or department.

Time – Your goals must include a timeline of when your goals should be accomplished.

Next time, I’ll discuss putting all of the elements of your strategic plan we’ve discussed so far into action and rolling out your strategic plan.

I meet you at a local networking event and you introduce yourself.

"Hi, I’m Bob Jones with ABC Company."

"Hi Bob. Nice to meet you. Tell me a little about your company. What is your company best at?"

… 29, 30. Time’s up!

Could you answer my question in less than 30 seconds, succinctly and with clarity? If not, don’t worry, you’re in good company. Honestly this question is hard to answer; a majority of businesses are also trying to figure out what they do best. Try to narrow your focus more than you’re comfortable with. After properly defining your competitive advantage you should be able to shout it from the rooftops.

Click here to learn more about competitive advantage.

http://sixdisciplines.blogspot.com/2006/10/leading-successful-sustainable-change.html

Many change efforts within organizations are declared failures and abandoned before they are given a chance to succeed.

Most
major change initiatives fall far short of the goals and expectations
set for them. Here are seven steps that make the critical difference to
make change succeed and last.

1. Create a sense of urgency.
For an organization to change, it needs to have something like a heart
attack-a wide-spread sense that if we don’t change our ways, and soon,
we may die. This pain and fear is behind almost every major change
initiative. You don’t go through the expense and hassle for the fun of
it. You do it because you believe you have to.

2. Build a strong guiding coalition.
Most change initiatives flounder or fail because of problems in the
management team, even when there is no evidence of discord. Everyone
sits around the conference table nodding their heads in agreement when
the change initiative is proposed and discussed.

3. Develop a clear vision.
What will success look like? What’s the plan for getting there? How
will this plan overcome the pain of not changing? Articulate the vision
in a few forceful and memorable words.

4. Ask different questions.
If you want a different response-a different set of behaviors-then you
should ask different questions that are aligned with the new strategy.
If you create a sense of urgency around your plan, anticipate and fix
problems in the leadership team, develop a clear vision of the end
state you want, and encourage behavior change by asking different
questions, you will have a strong foundation for change.

5. Work the plan.
Get the leadership group into strong alignment, develop and communicate
the vision, and stress the need for urgent action first. When people
know why the change, they can figure out what needs to change and how
to change it.

6. Design in a short-term win.
Major change initiatives take time. The disruption, the learning curve,
the initial clumsiness-all of these take a human toll. Look for the
things that are going right, publicize and celebrate them. Early wins
are critical to creating a climate where people will keep motivated.

7. Embed the change in the culture.
New behaviors take time to become habitual. Spaced repetition is the
best way to embed new ways, and means, and attitudes. If you skip this
simple follow-up, all the expensive, painful, disruptive process of
changing is wasted. Over time, people revert back to the old, familiar
ways, and one more change initiative fails and is forgotten. Spaced
repetition is a highly effective way to make change last and to make the idea of change a permanent characteristic of the culture.

"In the regulated days, Bell system employees—myself included—genuinely believed they were doing the best they could and acting in the best interests of customers,” he says. “But when we got out there [in a competitive environment], we began to discover that our skills weren’t necessarily honed to respond precisely to customer demand, our technologies weren’t all they should be, and our manufacturing wasn’t as efficient as we’d thought.”

In his book of career reflections, Put the Moose on the Table, Tobias attributes such shortcomings to a prevailing “sense of entitlement” that’s fostered in part by the absence of competitors.

"You could make a good case that the very promise of job security is the first step in destroying it,” he writes. Better, ultimately, for companies and their employees is “a competitive world, in which you come to work every day just a little bit scared.”

I’m sure every one of us has an example of a monopoly we have to deal with. And it’s normally not pleasant. Down with the monopolies!