If you’re looking to develop or refine your business strategy, there are a number of frameworks and tools that can help. Here are four of the most popular:
- The business model canvas is a tool that can be used to visualize and track all the key elements of your business strategy.
- There is now new approach to SWOT analysis, in short, SWOT analysis is a framework that helps you identify your business’s strengths, weaknesses, opportunities, and threats.
- Value chain analysis is a tool that can be used to understand how value is created within your business and where there may be opportunities to add more value.
- Porter’s five forces is a framework that helps you understand the competitive forces at play in your industry and how they may impact your business strategy.
Each of these frameworks and tools can be helpful in different ways, so it’s worth taking the time to experiment with each one to see which works best for you and your business.
1. Jobs to Be Done Framework
The Jobs to Be Done (JTBD) framework, developed by Harvard Business School Professor Clayton Christensen, is a way to validate a consumer’s need for a product.
The basis of Christensen’s theory is that, when people purchase products, they “hire” them to do a “job.”
By asking yourself what job your company’s offering can do for consumers, you can hone brand messaging, differentiate your product from competitors’, and improve it to more effectively complete the job to be done.
Blue Ocean Strategy
In business, the expression “red ocean” is used to describe a crowded marketplace where many companies compete for the same customers.
To succeed in a red ocean market, businesses need to offer lower prices than their competitors or come up with a unique selling proposition (USP) that sets them apart.
However, blue ocean strategy is all about creating uncontested market space, or a “blue ocean,” where there’s little or no competition.
The idea behind blue ocean strategy is that you can create more value for your customers and capture more value for your business by appealing to unserved or underserved markets.
The Lean Startup Methodology
The lean startup is a business model that favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big bang” product launches.
The lean startup methodology was popularized by Eric Ries in his 2011 book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses.
Ries’s lean startup approach has been adopted by startups and large companies alike as a way to increase the likelihood of success when launching new products or services.
Design Thinking
Design thinking is a problem-solving method that puts the needs of people first.
It relies on empathy, creativity, and collaboration to come up with innovative solutions that meet the user’s needs.
Design thinking has its roots in the design world, but it’s been adopted by businesses of all types as a way to create better products, services, and experiences for customers.
These are just a few of the most popular business strategy frameworks and tools that you can use to develop or refine your own business strategy. By experiment with each one, you can find the right approach for your business.
2. Value Stick Framework
The value stick framework is a visual representation of a product’s value based on customers’ willingness to pay for it. This framework is helpful when formulating a product’s pricing strategy, and it can also be an important part of an organization’s broader strategic plan.
The value stick has four components: willingness to pay, price, cost, and willingness to sell. Each of these components fall somewhere along the stick, and their locations determine the value of the product to the customer, supplier, and business.
3. Job Design Optimization Tool
The Job Design Optimization Tool, or JDOT, was created by HBS Professor Robert Simons and is a free, online tool that anyone can use.
In the online course Strategy Execution, Simons explains that jobs are optimized for high performance when they’re designed in service of the company’s strategy. The JDOT enables you to assess the degree to which each role at your organization is optimized for strategic success.
Each job is evaluated based on four factors, or “spans,” which are presented on a sliding bar: control, accountability, influence, and support. By adjusting the bars, you can determine the amount of each span that a specific role in your organization holds.
If the bars you’ve adjusted form an “X” in the tool, this indicates that the job is “balanced”—its supply of resources is equal to its demand for resources.” The JDOT then provides recommendations to improve the role, depending on which spans are out of balance. For instance, if you’re looking to increase the span of influence, the JDOT suggests implementing cross-unit task forces and providing stretch goals.
“If you get the settings right, you can design a job in which a talented individual can successfully execute your company’s strategy,” Simons writes in the Harvard Business Review. “But if you get the settings wrong, it will be difficult for any employee to be effective.”
Keep your organization’s strategy in mind when using the JDOT to assess its roles. If any role is revealed to be unbalanced, consider raising the tool’s suggestions to your team so that everyone has the resources necessary to support the company’s strategy.
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BCG Matrix
The Boston Consulting Group (BCG) matrix is a business tool that helps organizations determine which of their products or services are “cash cows,” “stars,” “question marks,” or “dogs.”
This classification system is based on two factors: market share and market growth. Cash cows have high market share in a low-growth market, while stars have high market share in a high-growth market. Question marks have low market share in a high-growth market, and dogs have low market share in a low-growth market.
Organizations can use the BCG matrix to make decisions about where to allocate their resources. For instance, they may choose to invest more in products that are classified as stars because they have the potential to generate a lot of revenue.
The BCG matrix is just one tool that organizations can use to make business decisions, but it can be helpful in thinking about how to allocate resources and grow different products or services.
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SWOT Analysis
A SWOT analysis is a business tool that helps organizations identify their strengths, weaknesses, opportunities, and threats. This information can then be used to make decisions about where to allocate resources and how to best pursue business goals.
A SWOT analysis typically includes four quadrants: strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors, while opportunities and threats.
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