Strategic frameworks in business provide the following benefits:
- Help you determine which products warrant the biggest investments of resources and time
- Help you determine the optimal courses of action in the short and long term
- Help you attract groups of customers that you wouldn’t attract using traditional strategies in your industry
- Help you satisfy customer needs more effectively than your competition
- Help you develop competitive advantages that are hard for competitors to imitate
- Help you to evaluate the external and internal environments of your business
- Help you structure your organization so that you can serve your customers’ needs faster and more efficiently
The following strategic frameworks are renown for their ability to help you develop optimal business strategies.
The Strategic Sweet Spot
The Strategic Sweet Spot involves using your company’s capabilities to satisfy customer needs in ways that competitors would have the most difficulty emulating.
To use this framework, you’ll want to ask yourself these questions:
- What core competencies does your company have that your competitors do not? Which of those core competencies are hardest to emulate and develop from the position of your competitors?
- What are some customer needs that your company is in a better position to serve than your competitors?
Jobs To Be Done
The Jobs To Be Done framework involves measuring how effective your products and services can help your customers reach their goals and solve their problems.
The framework includes these steps:
- Determine how satisfied customers are with products and services in an industry
- Determine how important the products and services are to customers in an industry
- Using this information regarding satisfaction and importance levels, segment your customers into three categories: under-served, over-served, and served right
- Determine which strategies you should use to target each of those customer segments
Here are further explanations of customers segments:
- Under-Served – customers who have unmet needs and are willing to pay more to get a job done better; you should offer a better-performing, more expensive product
- Over-Served – customers who perceive existing products in an industry as cost-prohibitive and inaccessible; you should offer a simpler, more accessible, and less expensive product than current offerings
- Served Right – customers whose needs are sufficiently satisfied by products and services in an industry; you should focus on related “jobs to be done”
- Non-Consumers – people whose current solutions don’t involve the market at all, or who are not even attempting to get the job done as they cannot afford any of the existing solutions.; you should offer a simpler, more accessible, and less expensive product than current offerings
The TOWS Matrix is a more advanced version of the SWOT matrix, and it allows you to combine internal and external factors with each other to develop new strategies.
TOWS Matrix Strategies:
- Strength-Opportunity Strategies – Use internal strengths to capitalize on external opportunities
- Strength-Threat Strategies – Use internal strengths to avoid and minimize external threats
- Weakness-Opportunity Strategies – improve internal weaknesses by using external opportunities
- Weakness-Threat Strategies – avoid threats and minimize weaknesses; this is purely a defensive position, and it is most often used when an organization is in a bad position
Sometimes called the Product/Market Expansion Grid, the Ansoff Matrix shows you four strategies you can use to grow your business. The matrix helps you to devise the most suitable plan for your situation.
Four strategies are detailed:
- Diversification – introducing a new, unproven product into an entirely new market that you may not fully understand; riskiest of the four options
- Market Development – introducing an existing product into an entirely new market
- Product Development – introducing a new product into your existing market
- Market Penetration – expanding sales of your existing product in your existing market: you know the product works, and the market holds few surprises for you
The BCG Growth-Share Matrix
The Boston Consulting group’s product portfolio matrix (BCG Matrix) is designed to help a business consider growth opportunities by reviewing its portfolio of products to decide what products in which to invest, what products to discontinue, and what markets in which to develop products.
The quadrants in the BCG Matrix include the following:
- Stars – Products in high growth markets with high market share
- Cash Cows – Products in low growth markets with high market share
- Question Marks – Products in high growth markets with low market share
- Dogs – Products in low growth markets with low market share.
If information about market share percentage is lacking, you could create a matrix comparing the growth rates of your products to the proceeding 12 months of sales.
The strategy canvas captures the current strategic landscape and future prospects for a company. It allows users to clearly see the factors that the industry competes on and the factors that are being ignored. By reorienting a company towards the factors being ignored, it can capture uncontested market space.
Six Paths Framework
The Six Paths framework allows managers to look beyond the common restraints of their industries for new opportunities.
The framework redirects your attention towards the following six tenets under the Blue Ocean Strategy methodology:
- Looks across alternative industries
- Looks across strategic groups within industry
- Redefines the industry buyer group
- Looks across to complementary product and service offerings
- Rethinks the functional-emotional orientation of its industry
- Participates in shaping external trends over time
Buyer Utility Map
The Buyer Utility Map identifies a full range of utilities that a product or service can potentially adopt in a buyer’s experience cycle. It helps you to offer value in areas typically not seen in your industry. The framework also helps to remove roadblocks that stand in the way of converting noncustomers into customers.
Game theory is the study of mathematical models of conflict and cooperation between intelligent and rational decision-makers. Game theory is often used in economics, political science, and psychology.
In simplistic terms, the Game Thoery is based on the following principles:
- Dominant Strategy – leads to the best possible outcome available. Players will choose the dominant strategy regardless of what the other player does because it’s within reach and it offers the biggest available payoff.
- Nash Equilibrium – a stable state of a system involving the interaction of various participants, in which a participant will experience negative results if they change their current strategy while other players continue their current strategies. Simply put, in a Nash Equilibrium, players benefit more by continuing what they’re doing as long as other players also continue what they’re doing.
Under the Gap Analysis framework, performance gaps are identified by these scenarios:
- The point between where you are now and where you want to be
- The point between where you are headed if you continue with your usual actions and where you want to be
The challenge is to develop a strategy and action plan to alter your current and predetermined trajectory. The starting point of this process often involves determining the root causes of a performance gap.
Three Tiers of Non-Customers
According to Three Tiers of Noncustomers framework, companies can fall into the trap of targeting markets that are too small and niched. It can be more beneficial to look outside one’s typical target market and aim to attract noncustomers.
There are three tiers of noncustomers that differ in their distance from a current market:
- First Tier of Noncustomers – they are closest to the target market and they’re on the verge of abandoning the industry altogether.
- Second Tier of Noncustomers – people who refuse to use an industry’s offering after evaluating the products
- Third Tier of Noncustomers – they are farthest from the target market and they are people who have never considered a market’s offering as an option
All of these noncustomers will not convert until there is a considerable leap in value in factors that are important to them; traditionally, those factors are ignored by incumbents in an industry. Companies should seek to understand the key commonalities across these noncustomers and existing customers. After identifying the commonalities, companies should develop strategies to attract those noncustomers into their market.
Business Model Canvas
The Business Model Canvas helps you develop and analyze the possibilities of new startup ideas and growth opportunities of existing businesses.
The Business Model Canvas consists of nine business model building blocks:
- Key Activities: The most important activities in executing a company’s value proposition.
- Key Resources: The resources that are necessary to create value for the customer.
- Partner Network: Buyer-supplier relationships the organization cultivates so it can focus on its core activity.
- Value Propositions: The collection of products and services a business offers to meet the needs of its customers.
- Customer Segments: The customers the company is trying to serve.
- Channels: How the company delivers its value proposition to its targeted customers.
- Customer Relationships: The type of relationships a business wants to create with its customer segments.
- Cost Structure: The most important monetary consequences while operating under different business models.
- Revenue Streams: The way a company makes income from each customer segment.
Competitive Analysis Matrix
The Competitive Profile Matrix is an analytical tool that helps you establish your company’s competitive advantage in an easy to use and read format. At one glance, you will be able to see your company’s competitive landscape, your position in a given market, and possible opportunities to differentiate your company’s products and services from the competition.
GE-McKinsey Nine-Box Matrix
GE-McKinsey Nine-Box Matrix is a strategy tool that offers a systematic approach for the multi-business corporation to prioritize its investments among its business units.
This nine-box matrix plots the business units on its nine cells that indicate whether the company should:
- Invest in a product
- Harvest or divest a product
The business units are evaluated on two axes:
- Industry attractiveness
- Business unit strength
Various factors under industry attractiveness and business unit strength determine to what degree a company should invest or divest a business unit.
PESTLE Analysis is a simple and widely used tool that helps you analyze the following trends in your business’s external environment:
This framework helps you understand the “big picture” forces of change that are most pertinent to your business. Additionally, it helps you take advantage of the opportunities that these forces of change present.
19 Traction Channels
The 19 Traction Channels is a collection of marketing channels that can help you reach potential customers and grow your business.
The 19 Traction Channels include:
- Targeting Blogs
- Unconventional PR
- Search Engine Marketing
- Social and Display Ads
- Offline Ads
- Search Engine Optimization
- Content Marketing
- Email Marketing
- Viral Marketing
- Engineering as Marketing
- Business Development
- Affiliate Programs
- Existing Platforms
- Trade Shows
- Offline Events
- Speaking Engagements
- Community Building
The framework recommends that you narrow down most of your efforts to three traction channels that are most likely to generate results. Sometimes centering on one traction channel at a time can give you the focus you need to optimize your results.
Innovation Project Charter
The Innovation Project Charter helps team members and stakeholders comprehensively define a project. Furthermore, it helps you manage the risks associated with a project. Because of the unique factors it considers, it is, in many ways, more advantageous than a standard project charter.
The issues that the Innovation Project Charter considers include:
- Business Case
- Job Statement
- Unmet Outcome Expectations
- Competing Solutions
- Key Assumptions to be Tested
- Expected Financial Impact
- Project Investments
S-Curves Pattern of Innovation
The S-Curve Pattern of Innovation highlights the fact that as an industry, product, or business model evolves over time, the profits generated by it gradually rise until the decline stage. As a product approaches its decline stage, a business should ensure that it has new offerings in place to capture future profit opportunities. These new products are often upgraded or related versions of products approaching the decline stages of their S-Curves.
Price Corridor of the Mass
According to the Price Corridor of the Mass framework, the key to determining the strategic price of a product or service is to understand the price sensitivities of buyers who will be comparing your new offering with a host of products and services offered outside your group of traditional competitors.
You should consider offerings that are beyond your industry’s traditional boundaries when identifying the strategic price of an offering. Notably, you should be aware of competing products and services that take different forms but perform the same function. For example, if your product entertains, be aware of competing offerings that also entertain to which your target market would be attracted. Other examples of functions that competing offerings could perform include causing a physical effect, helping one lose weight, educating on a particular subject, providing inspiration, providing monetary results, etc.
You should also determine how high or low the strategic price should be without inviting imitation from competition. A company must consider two sets of factors:
- The level of legal and resource protection the new offering has to block imitation (Examples: patents, trademarks, etc.)
- The degree to which the company owns some exclusive asset or core capability that can also block imitation. (Example: hard-to-imitate service capabilities)
The higher the level of protection against imitation, the higher the strategic price can be within the price range that attracts the mass of target buyers.
A decision tree is a schematic, tree-shaped diagram used to determine a course of action or show a statistical probability of an outcome. Each branch of the decision tree represents a possible decision, occurrence, or reaction. The tree is structured to show how and why one choice may lead to the next, with the use of the branches indicating that each option is mutually exclusive.
The McKinsey 7-S Framework
McKinsey 7s model is a tool that analyzes a firm’s organizational design by looking at seven key internal elements to identify if they are effectively aligned and allow an organization to achieve its objectives.
The elements include:
- Shared Values
The key is to find out which elements need to be changed to achieve your objectives.