“I’ve seen too many people work too hard who are doomed for failure because they didn’t step back and determine the right part of the market in which to compete.”
This quote from William Putsis, Ph.D., marketing professor at UNC Kenan-Flagler, has resonance with me after some of my recent strategy work. In the health and human service field, executive teams are making strategic decisions about markets and services right now – both the short-term and the long-term – and finding the “right part of the market” is a critical component of that decision making.
In reading Dr. Putsis’ blog and his book, Compete Smarter, Not Harder: A Process for Developing the Right Priorities Through Strategic Thinking, one of the central tenets of his approach to making these strategic decisions intrigued me. It was the discussion around core competencies. His premise is – strategy decisions should not be based on core competencies but on market differentiation and positioning. It is typical in long-term planning exercises to focus on an organization’s “core competencies” – what organizations do well. He views this as a strategy misstep – because core competencies are what organizations “can control internally.” Instead, he forwards the concept of “salient differentiators” – determining what service features the customers of an organization want (in health and human services, both payers and consumers) and determining which of these service features an organization can deliver better than its competitors. His advice to accomplish this is relatively straightforward:
- Always look to customer needs and attributes first – this is the basis of segmentation.
- In assessing customer segments, use standardized segmentation criteria and attribute weighting in your market analysis.
- Select markets for competing based on segments and segment attributes (make sure that customer segmentation is actionable from a marketing tactics perspective).
This is classic market segmentation and market positioning – for a specific subgroup of customers, understanding how an organization’s services are perceived differently from its competitors. But, the unique twist in this process is that market segmentation research typically happens after strategic decisions are made about markets – usually to fine tune marketing strategy and tactics. The change here is using the research about customer preferences and market positioning in a more proactive way in order to make decisions about markets at the strategic level. An interesting addition to the planning discussions.
For more on using segmentation and positioning in strategic decisionmaking, check out some of these resources:
- Using Technology To Improve Your Market Positioning: Understanding What Payers Want & How To Use Technology To Compete In The Payer Market Space
- Moving To A “Customer-Driven” Competitive Strategy: The Information And Analysis Needed For Strategic Market Positioning
- Assessing Your Organization’s Brand Identity: Is Your Market Positioning a “Winning” Position?
- The Market Metrics That Shape Your Positioning: Using Competitive Rates & Capacity To Estimate Market Supply & Demand
- Developing Strategic Plans & Positioning In A Changing Market: Tools, Systems & Techniques (Executive Web Briefing Recording)
- Strategic Positioning & Strategic Planning: Integrating Critical Marketing, Operations, and Finance Functions For Success
And for a deeper dive check out our strategy session at the 2014 OPEN MINDS Planning & Innovation Institute – The OPEN MINDS Guide To Strategic Planning: How To Find The Right Path For Your Organization In A Turbulent Market, with WellSpring Resources Chief Executive Officer, Karen Sopronyi-Tompkins, MPA, Bridgeway Rehabilitation Services Executive Director Cory Storch, and OPEN MINDS Senior Associate Joseph P. Naughton-Travers, Ed.M.