Does your strategy give you the right to win?

Today the business environment is rapidly changing and facing uncertainty, with constant pressure to compete. In this context, it is easy for leaders to overlook a basic principle: Build from your strengths. When you understand what you’re great at, by designing your strategy from your capabilities, you can define how you want to compete to shape your future.

More than 6,000 executives across the globe took part in the PwC Strategy Profiler, where two out of three respondents admit that their company’s capabilities don’t fully support their strategy, and only one in five are fully confident that they have a right to win.

Most organisations agree that their company has too many conflicting priorities, and struggle to make strategies that are right for them. Instead of focusing on what makes them unique, they search for growth wherever it may happen, spending resources in many areas, leaving them with great ambition but no real advantage.

So how can organisations have the right to win?

The right to win comes from understanding the things your company can do better than anyone else. These differentiating capabilities can set you apart from your competition and open the market where you are uniquely positioned to win. This is what creates a true and powerful engine for growth and the key to building a strategy that works.

A company's right to win in any market depends not just on external market positioning, and not just on internal capabilities, but on a coherent strategy that aligns them at every level.

There are three interlocking elements to formulate a capabilities-driven strategy: defining a way to play, leveraging your capabilities system, and formulating a product and service fit. Coherence is the glue that binds these three elements.

Successful companies have a clear understanding of the way they create value for customers. A well-developed way to play is a chosen position in a market, grounded in a view of your capabilities and where the market is going.

Effective ways to play will fulfil four criteria:

there will be a market that will value your way to play
it will be differentiated from the ways to play competitors
it will be relevant given the expected changes that might take place in the industry
it will be supported by the company’s capabilities system, and therefore feasible

The engine of value creation is the system of identifying 3 to 6 differentiating capabilities that allow companies to deliver their value proposition.

The key concept to consider when creating a strategy is that your company’s assets can be replicated by competitors, but capabilities cannot. Assets are material resources, such as facilities, machinery, supplier and customer connections, and so forth. Capabilities, by contrast, are the ability to deliver a distinctive outcome reliably and consistently, responding to the question: “What do we do well to deliver value?”

Most organisations try to be best in class in many areas. This results in them being ordinary at many things, but great at nothing. Since great capabilities may require significant investment, an organisation must focus on a few areas which matter the most.

Companies with products and services that are aligned to their capabilities system offer superior returns to their shareholders.

Products and services are the most visible and tangible element of what a company does. Nonetheless, surprisingly few companies set out to create a product and service portfolio that fits their way to play, most fit the way to play around their existing portfolio.

The ability to extract value from a product or service is dependent exactly on alignment with a company’s capabilities system, keeping in mind that different companies are not equally suited to exploit a particular opportunity.

A right to win comes from coherence between way to play, capabilities system, as well as product and service portfolio

A right to win is the recognition that the company is better prepared than its competitors to attract and keep the customers they care about.

Companies with a right to win will have a way to play that is:

differentiated from their competitors’ ways to play
relevant, given the changes that might take place in the industry
supported by their capabilities system, and it is therefore feasible

Lastly, the products and services offered by the company will also benefit from this capabilities system.

Achieving coherence with one, or even two, of these elements is not enough. Only when all three are in sync, with one another and with the right market conditions, can a company truly claim the right to win sustainably.

Does your strategy give you the right to win?

So how can organisations have the right to win?

A right to win comes from coherence between way to play, capabilities system, as well as product and service portfolio

How can we help?

If you are interested in discussing how we can assist your organisation in formulating your strategy, please contact our dedicated team.

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