BY DR. TANAI CHARINSARN

MARCH 2, 2017

“You cannot be everything to everyone. If you decide to go north, you cannot go south at the same time.”— Jeroen De Flander

Many businesses are facing challenges, and executives are reviewing their own operations. Some businesses are at a saturation point where growth is slow or may have stopped. The next question is, what should be done from here? Which direction should the business move forward in? Some may choose to invest in other industries, while others may opt to expand into related businesses. Some still need to address the issues with their existing business to improve performance. Some may need to reposition the business to ensure its continued success. Regardless of the business's current situation, strategic organizational direction remains crucial in assessing the business landscape. Therefore, the question is, what should be reviewed to develop a strategy that leads to the intended success? The following three points need to be considered:

First point: Where Should You Focus?

One business cannot be everything to everyone due to limited resources. Therefore, it is crucial for an organization to choose where it wants to be, what it wants to be, what it wants to offer, and which customer group it wants to serve. You must assess the overall market and the industry, identifying what is missing in the market, what opportunities exist, and what trends may shape the future. The most important question that an organization should answer is, "Why will customers buy our products or services?" As mentioned above, with limited time and resources, organizations need to quickly find the positioning they should focus on in their business. In this day and age, businesses cannot afford to wait; if we don't act, someone else will. Part of the competition depends on timing—those who act first often gain a competitive advantage.

The process of selecting a position has three subcriteria as follows:

1. Uniqueness: The position must be distinctive, meaning it should be a position that no one else currently occupies or one that might be in demand in the future. For example, Starbucks positioned itself as a "third place," different from traditional coffee shops. Initially, people used Starbucks for business meetings, customer interactions, and as a place for students to study or read. However, in recent years, more individuals use Starbucks for quiet, solo work. Entrepreneurs and freelancers are among the customers who see Starbucks as their go-to workspace. While other coffee shops have also started offering conveniences like power outlets and Wi-Fi, none have achieved the same level of success as Starbucks.

2. Alignment with Organizational Capability: The organization should have the capability to deliver on the promises made to customers. If an organization communicates certain commitments to customers, it must be capable of delivering on those promises. Failure to do so means that the organization does not truly own the position. A successful example is Dusit Thani, which is not just one of the luxury hotels, but also a symbol of world-class Thai hospitality and culture. Dusit Thani manages not only its own hotels but also those of others, especially internationally. Additionally, Dusit Thani is involved in various related businesses, such as spas, cooking schools, and hotel management colleges. Currently, Dusit Thani operates many hotel businesses in various countries, including the United States, India, China, Maldives, and the Philippines.

3. Profitability: Ultimately, every business must be able to generate revenue to sustain itself. When choosing a focus, organizations should not overlook the financial aspect. Preliminary research should be conducted to determine how the business can generate income from the selected customer group and business model. The business model may vary in certain industries. For instance, the car rental industry may not seem attractive at first glance due to a relatively limited customer base, often consisting of lower-income individuals, and the higher cost compared to public transportation. However, market growth is favorable as more international travelers come to Thailand. Flight numbers, both domestic and international, are on the rise. Overall, people are willing to pay a premium for convenience, privacy, and the ability to control their own transportation. At the same time, the industry can generate income through various avenues, such as offering GPS rentals, chauffeur services, and fuel tank refills, which can be considered additional revenue streams.

Second point: How to win in the long run?

If the organization chooses the right position and is profitable, other players will soon follow. The next question is, how can a business compete and win in the long run? This is a question that should be addressed early on rather than waiting for declining results or for competitors to catch up. To succeed in the competitive market (the "red ocean"), a business must establish a competitive advantage. This can be achieved through two main strategies: increasing customer willingness to pay and reducing costs.

1. Increasing Willingness to Pay: This strategy involves making the business more desirable to customers, increasing the benefits and value provided to them. It requires continuously understanding customer needs and staying ahead of customer demands by developing products and services that cater to their changing preferences. Organizations need to adopt a consumer-centric approach and be responsive to external factors that influence customer needs. For example, Apple stores in the United States have transformed into community hubs, offering free Wi-Fi, workspaces, and hosting weekly concerts. These changes are aimed at creating an experiential atmosphere and inspiring visitors. Additionally, Apple has expanded its target customer base to include businesses and has designed "Boardroom" spaces for corporate customers to consult with Apple teams on business strategies using Apple platforms.

2. Cost Reduction: While increasing willingness to pay is valuable, it can be imitated by competitors, and customer reactions may not always align with expectations. Thus, cost reduction is a more controllable approach. Reducing costs should never be overlooked, even if the business is already profitable, as it can further enhance profitability. The additional profits from cost reduction can be reinvested into the business to improve its competitive edge. For example, Amazon initially outsourced its shipping operations to third parties, despite the high costs. However, over time, Amazon acquired the capabilities to manage its shipping in-house, especially in areas with a high concentration of customers or near its warehouses. More recently, Amazon has also explored using drones for delivery to cut down on labor and fuel costs. Additionally, Amazon uses its own solar energy farms to produce electricity, reducing the cost of drone operations.

In summary, to achieve long-term success, organizations should focus on creating a distinctive position, enhancing customer value, reducing costs, and continually adapting to changing customer needs and market dynamics. These strategies can help organizations build a strong competitive advantage and thrive in the long run.

Third point: How to proceed and what to learn?

After deliberation and decision-making about where to focus and how to win the competition, the next step is to put into practice what has been planned and written. Taking action is a crucial step to understand whether the planned strategies align with reality. In addition to being a step in actual implementation, it is also a learning process used for further refinement and development of the strategy.

The process of practical implementation includes four main steps: planning, execution, monitoring, and learning.

Planning: In this stage, the organization takes the first two initial questions about positioning and competitive advantage and summarizes them into an action plan. This plan should be as realistic as possible, something that can be executed by the workforce, including clear indicators and responsibilities. It should also be an intelligent plan, which means it uses minimal resources, gets things done quickly, and doesn't involve ongoing, never-ending tasks. This ensures that the organization can realistically execute the plan.

Execution: Execution here does not merely refer to carrying out tasks but involves actively engaging and participating in the activities that make things happen. The workforce will inevitably encounter new problems and challenges, which require precise and decisive decision-making. Successful execution is not possible unless the entire team and management participate fully in the new activities the organization is undertaking.

Monitoring and Tracking: Two things organizations must constantly observe and track are results and assumptions. It is necessary to check whether the results align with the plan and whether the initial assumptions still hold. Many organizations focus on the results. When results don't match the plan, they may believe that the strategy is failing and halt their operations without revisiting the various assumptions and attempting to align them with reality.

Learning: In most cases, true learning occurs as a result of practical implementation. After monitoring results, the next step is to hold regular meetings to update the project's progress. Team members share what they've learned during execution and how that learning can be used to refine or even change the strategy.

The outcome of monitoring, tracking, and learning in results that are close to the Agile implementation method. This method fosters a disciplined approach to project management, promotes continuous examination and adjustment, encourages teamwork and shared responsibility, and develops products or services that genuinely meet customer needs without conflicting with the organization's goals. An example of this is Commerce Bank, which introduced the concept of 'retailtainment' in its bank branches to improve the customer experience and increase customer satisfaction. However, they encountered various challenges during execution, such as inconsistent branch standards and increased expenses without increased revenue. They learned that excitement about new things doesn't always equal customer satisfaction and ultimately abandoned the initial plan. 

When all four processes (planning, execution, monitoring, and learning) are combined, managers will have a much clearer direction for the business. They will have a well-supported strategic plan along with operational plans that employees can execute. The success of the set goals will not be too far out of reach. However, the most crucial aspect is defining where the business will focus. It's important to remember that your business cannot be everything to everyone, and simultaneously, managers need to consider the organization's capabilities and whether they align with the organization's goals.

Managers should evaluate whether the workforce has the ability to execute the strategic plan and achieve the set goals. If there are gaps in capabilities within the organization, they need to find ways to address them, whether through employee training or hiring new staff. If the organization lacks the required capabilities, the execution of the action plan in step three will not be efficient, leading to results that do not align with the predetermined objectives.