Strategic Planning – 3rd in A Series

Ed BurghardThere is more than one path through the palms to the beach. -Hawaiian Proverb 

In the first two posts of this series on strategic planning, I introduced the five key strategic questions that need to be answered and offered guidance on thinking through the “Where to Play” question.

Strategic Planning – 1st in A Series

Strategic Planning – 2nd in A Series

“Where to Play” is only half of the equation in strategic planning for economic development of your community. This post focuses on the second half, the strategic question of “How to Win”.

Fundamentally, your community needs to provide business leaders a better value proposition than competitive communities do. And, your community must be capable of providing it on a sustained basis. The question of “How to Win” challenges you to identify that value proposition.

In general, there are only two options to consider – 1) cost leadership and 2) differentiation.

Cost Leadership

Cost leadership is about providing a lower cost structure for businesses operating in your community. In this option, your community is forever looking to better understand the cost drivers of those businesses and working to minimize the costs that it can impact. As examples, lowering the costs of distribution through a more effective and efficient transportation infrastructure, or lowering the cost of telecommunication, lowering the cost of capital, or lowering the tax burden a company must bear. Communities pursuing the cost leadership option will need deep pockets to create attractive incentive packages

To effectively pursue a cost leadership option, your community will need to:

  • Systematically understand the cost drivers of companies in the “Where to Play” industries selected.
  • Make it a priority to relentlessly reduce the costs through asset creation, infrastructure investment and public policy reforms.
  • Sacrifice servicing companies in industries where cost that a community can impact is not a primary concern.
  • Commit to creating standardized approaches to providing services so they are highly cost efficient and not burdened by high overhead costs for delivery.

Differentiation

In the differentiation option, your community offers something that will be perceived, by the business leaders in the “Where to Play” industries selected, as distinctively more valuable than competing communities are offering. This creates a unique value proposition for your community. It could be a desired asset, a competitive infrastructure advantage, or a coveted aspect of your business climate (e.g. close proximity to supply chain).

To effectively pursue a differentiation option, your community will need to:

  • Create a deep and holistic understanding of the “Where to Play” industries and the companies within those industries.
  • Make branding your community a high priority and resource it appropriately. You will need to create awareness of your community’s point of difference.
  • Design and deploy a strong retention strategy to service the companies already doing business in your community. Their success becomes a reason to believe your community’s claimed point of difference is meaningful.
  • Commit to delivering an on-going stream on new value added services to support the companies in your community and further strengthen the value proposition.

There is No Perfect Strategy

It is important to understand and accept that there is no strategy that will last for all time. As the Hawaiian proverb says, there are many ways to achieve your community’s winning aspiration of enabling residents to achieve the American Dream.

But, your community needs to make clear “How to Win” choices to ensure success. It is important to understand that when you try to do too many things at a time, or do things that are further away from your community’s core capabilities, you dilute the impact. A “How to Win” solution that looks like being everything for everybody is guaranteed to be a losing approach.

You need to identify the core capabilities of your community and then determine the best way to deliver those capabilities to companies in a meaningful way. Leverage your community’s strengths. If you determine your community has no core capability, then your community’s immediate next step is to either invest in creating one or revisit your “Where to Play” choice.

Your community’s core capabilities are those activities that enable bringing the “Where to Play” and “How to Win” choices to life. One way to help identify your community’s core capabilities is to understand its points of difference in delivering the American Dream for residents versus competition. Currently, you can look at the data on a state level and assume the defined differences are accrued to your community. In general, it will be a valid assumption. Work is underway to provide the data at an MSA level so in the future you can compare your community versus other communities in and out of state.

A strong “Where to Play” choice is only valuable if it is supported by a robust and actionable set of “How to Win” choices.

Discussion

Strategic planning is hard work. Initial discussions on “How to Win” may result in frustration and a belief that there is no unique solution your community can pursue. Generally speaking, there is always more than one way to win. Many times though, it is not obvious and requires creativity to discover. And, you may find that your community has to make an initial investment to create one. You will find that investment is worthwhile if the size of the prize is big enough.

But, if you conclude that you absolutely cannot identify a viable set of “How to Win” choices, then you will need to find a new playing field and revisit your community’s “Where to Play” choice. Always consider your “How to Win” choices in the context of your community’s “Where to Play” choice. And, don’t assume the dynamics of an industry are static. The reality is that the dynamics are ever changing and you may be able to take advantage of an emerging trend as a way to win.

Whatever you do, don’t let your community settle for a generic set of choices. Playing to compete is not sufficient. Your community needs to play to win. That requires you to be honest about your community’s core capabilities and to invest in strengthening them over time.

Once you believe your community has a good set of “Where to Play” and “how to Win” choices, it is critical you test those choices for feasibility, distinctiveness and defensibility. Remember, if you can’t adequately resource the choices made your community will not be successful.

From a branding perspective, your community’s “Where to Play” choice defines the WHO definition (strategic target) in the branding process. The “How to Win” choices inform the WHAT (brand promise) definition. Your community’s branding plan and strategic plan must be tightly linked in order to win.

I’d love to hear about your community’s current strategic planning process. What are you frustrated by? What seems to work well? How often is the plan created actually executed versus put on a shelf?

Caveat

This post deals with only one (Economic) of five ADCI subindices (Economic, Well-Being, Societal, Diversity, Environmental).  I chose to focus on the Economic subindex because most EDOs are directly involved in business attraction, retention and expansion efforts, and I believe illustrating the principles of strategic planning using this subindex will be of greatest interest to the majority of visitors to the www.strengtheningbrandamerica.com website.  However, it is important to note that in order to design an effective strategic plan for a community that will improve residents ability to achieve the American Dream, all five subindices need to be included in the exercise.  In a future post, I will provide a strategic planning blueprint that will give guidance on how to manage the process across all five subindices.

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5 Comments so far

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  2. Alan S. Michaels

    May 13, 2013

    Looks like a trick question to me, Ed.

    Cost Leadership and Differentiation are typically viewed as different paths to success (although businesses starting whole new industries might enjoy both) – and I think you need to know which specific industry is under debate to actually weigh the relative advantages.

    PS – I like what I wrote above… but after thinking more about your question…. maybe the advantage of cost leadership is you don’t have to be as creative – just execute really well, although it still helps to think creatively about eliminating features (activities/costs) not valued by customers.

    PPS – I also suggest “Differentiation” doesn’t imply one path, but rather, a unique path – so there are typically many paths to success (from broad-based differentiation to a more focused differentiation based on any combination of buyer criteria).

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  5. […] a brand is not a logo and tagline.  If you’ve read my past posts, you know I view branding as a strategic exercise.  I’ve provided my working definitions and a model to guide successful community branding that […]

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