Strategy Or Customer: Which Comes First?

What do you want?

Your customer may not always know the answer to that question, but they can certainly point you in the right direction.

Strategy is about positioning the business – where and how to play – to achieve winning results. Marketing is traditionally a function of your business, supporting the strategy rather than leading it. It is part of the implementation. Or so we thought. The world today has turned tradition on its head by making marketing the basis for strategy development and changing what competitive advantage looks like. This is a critical shift for entrepreneurs who want to be strategic about strategy.

Rather than seeing marketing as a set of initiatives to activate strategy, marketing, and customer experience, should be the first step in the formation of your strategy. This approach has two attractions: firstly, it is founded on the customer and secondly, if used wisely, enables small companies to blast past the big guys.

One of the greatest joys of being an entrepreneur is the independence. To retain that sense of freedom the business must be profitable, or the walls narrow in very quickly. Profitability is grounded in the customer seeing value in what you do. By bringing customer experience and feedback into product development and, more importantly, strategy, it is easier to build competitive advantage. Partnering with the customer is the best – and sadly least travelled – road to independence. It is not the investor but the customer that matters most to the success of any start-up.

Still, there is a paradox in basing innovation and competitive advantage on the customer. Traditional product development has been focused on perfecting an innovation – whether incremental or revolutionary – before bringing it to market. We know from market experience studies that 84% of such innovations then fail! It shows we really are not that great at understanding what the customer wants. So, clearly, it makes sense to bring the customer into product development. The big question is where and how, and therein lies the paradox.

Customers only add value if you ask them the right questions – concerningexperience and not their wants and needs. As Steve Jobs famously said, the customer usually doesn’t know what they want. But if we look at how customers experience their use of the product, we find where innovation is needed. And that is the secret of customer-based innovation.

Here is where marketing steps in. Marketing is truly about understanding the customer, what they are trying to do, how they are doing it, what it is like for them, and seeing what may be coming at them that they don’t even yet realize. It is about how to influence behavior. Asking questions about the customer’s experience will lead to the ability to build an innovation process that actually matters to the customer, now and in the future.

I know that product development has been the mecca for entrepreneurs in the past, with the customer taking a back seat until we are ready for them. The “lean start-up” process has changed all that by bringing the customer into the product development process. The next step is to bring the customer into the strategy or consider moving to lean strategy. As Peter Drucker once said, “a business exists to provide value for the customer.” Strategy determines the direction a company takes to provide that value, so maybe the customer should drive strategy.

If you want your company to grow (I can hear your resounding yes!), your strategy should really focus on marketing, following three steps:

  1. Understand what the customer is doing and what it is like for them – understand their experience. This is the landscape for developing the strategy, so map the path the customer follows – what is it like now?, what works or doesn’t work?, and what is on the horizon?
  2. With your map in hand, think about how the customer feels at each step of the way. Look for gaps and how it all fits together. Customers may be happy with one touch point but when the overall experience has disappointing pitfalls, the overall feeling suffers. We are as strong as the weakest customer link. So look to innovate the process and create value that would enhance the customer experience.
  3. Deliberately design a short set of directions to fill the gap – how and where you will make changes to achieve a win. Now you have a strategy based on the customer.

Your strategy should be focused and flexible, so you can easily refine based on ongoing customer feedback.

The world has moved from simply getting a job done to the experience of getting that job done. So experience and, therefore, marketing should inform both strategy and innovation. The customer holds the answers you are looking for, but only if you ask the right questions, like...

How do you feel?