by Rajesh Kandaswamy | September 28, 2015 | Comments Off on Delivery Excellence Is Not A Strategy
I often ask providers how they plan to grow in the banking and securities market. Most respond by speaking about the strength of their solutions and the abilities of their people. They share that they have used these to deliver successfully at their clients and that they expect to do more of this to grow. Many also assure me that their delivery is superior to their competitors. Further, they mention their investments to improve the breadth and depth of their coverage across business functions, geographies and technologies. There is nothing wrong with great execution or expansion. Excellence in execution is important and you will need it to survive and grow, but do not confuse it as having a good strategy.
Strategy is about fundamental choices that a company makes in who it serves, what unique value it creates, how it achieves this and why someone else cannot easily copy their strategy. According to Michael E. Porter, the essence of strategy is in the activities – choosing to perform activities differently or to perform different activities than rivals (“What is Strategy”, Harvard Business Review, November-December 1996). The activities might involve external elements such as customer needs, product attributes, distribution, marketing and sales, as well as internal ones such as operations, support systems, and human resources. The intent is to develop a unique combination that creates a high amount of value, but one that cannot be easily imitated. A strong strategic position will involve trade-offs across the activities or elements, and these define the strategy and does not limit it. Lack of clear limitations indicates the absence of a well-connected strategy where connected elements reinforce each other.
Most providers, especially ones mostly offer people-based services, focus sharply on delivery excellence, competition and expansion. But, they lack sophistication in developing a unique strategy that has a well-connected set of activities and elements, one that uncovers a high amount of new value that they can split with their client. They identify the segments and the services they will perform but since the selection is from a list of choices that all use, they end up competing with many others without much differentiation. As the demand for value-based services (and software) over skill-based services increases, providers require more sophistication in their strategy to maximize chances of growth. Delivery excellence will help, will not compensate for lack of a strong strategy.
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