Basic Strategy – Part III

By Guest Blogger Adam Bullied
This is the final segment in a three-part series about Basic Strategy. Read Part I and Part II.

Short Case Study 1: General Electric

OK, bad to start off with a big monolithic company when I’ve spent the entire post talking about keeping things simple and lightweight, right? Well, possibly. But in reality, this is one of the best examples ever of corporate strategy put in to action and achieving the intended results.

Image: Flickr

When Jack Welch took over GE in 1981, GE was, by all accounts and measures, and insanely successful organization. But he saw room for vast improvement and growth. One of the boldest things he did was implement the # 1 or # 2 strategy. If GE had a business that wasn’t # 1 or # 2 in its given market, GE would either dismantle it or sell it off.

This helped GE achieve goals of reducing bureaucracy and needless overhead within the business. It also helped grow revenues by leaps and bounds by pushing all of their businesses to the top of their class. In addition, it would reduce costs by trimming inventory levels.

So this is a vast and complex strategy that spans thousands of people, billions of dollars, and hundreds of industries on a global scale. But at its core, it has the same elements that a small business can take advantage of as well:

1. The goal was pretty clear – impact the bottom line
2. The metrics were well defined – COGS (cost of goods sold), inventory levels, market share, revenue
3. The strategy was very clear – if a GE business is not # 1 or # 2 in its given market (or industry) it will be removed from GE one way or another (preferably through sale)

Short Case Study 2: Twitter

Let’s look a much smaller organization for a second case study – one that is fast approaching (or maybe it already has crossed the threshold) critical mass.

Image: Twitter Logo

Any interview or article written about the company typically calls in to question its lack of a revenue model. Fred Wilson, one of the lead investors, the founders, and others closely involved with the company have all answered this question by clearly laying out the core strategy of the business.

1. The goal is to scale the product as quickly as possible
2. The metrics would probably be number of active users on a monthly (maybe weekly or daily) basis
3. The strategy would be to: maintain laser-like product focus (you don’t see Twitter adding boatloads of new features daily), keep things free, and take advantage of all marketing opportunities possible

It’s been working out really well for them so far. If more start-ups had the ability, and investor support, to maintain that focus on their core audience then I think we may end-up with more successful options out there to choose from as consumers – but I could be wrong.

In Closing

Much of making a strategy successful relies on focus, which is something I will be discussing in more detail during a future post. Anyone can write a strategy – and it doesn’t have to be the greatest way to execute on a vision ever put down on paper. Having a strategy succeed is actually 90% execution – you just have to do it.

But be sure to write it down and communicate it clearly throughout your organization as well and you’ll be miles ahead of your competition.

This is the final part in the series about Basic Strategy. Read Part I and Part II.

Adam Bullied has more over 8 years of experience working in start-ups and maintains a blog on product management at WriteThatDown.com.