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What Strategic Choices Do We Have?

Mihai Ionescu - Senior Strategy Consultant, Owner Balanced Scorecard Romania, Author.

Strategy is defined at the intersection of two critical dimensions: Where-To-Play and How-to-Win there. If you didn't have the opportunity to listen Prof. Roger Martin presenting the Strategic Choices concept, or to read his reference book Playing to Win (Harvard Business Review Press, 2013, co-authored with A.G. Lafley), please invest a few minutes in listening to this quick introduction:

The Penta Model for Jobs-to-Be-Done

One model that helps us identify the distinctive Strategic Choices available to us concerning the Market Boundaries (where-to-play) and Competitive Factors (how-to-win) dimensions, is the Penta Model, presented below in its latest version, which is adapted to the Job-to-Be-Done concept.

For more information on the Jobs-to-Be-Done concept, read Prof. Clayton Christensen's latest book Competing Against Luck (Harper Collins, 2016). For more information on the relationship between the Jobs-to-be-Done and the Penta Model, read this: Linking Jobs-to-Be-Done to Strategy.

Since the Penta Model has been built on a lot of research and breakthrough concepts created by many Strategy thought leaders, you can find more examples than those provided here, related to one Strategic Choice or another (or to several of them), in one or more of the following reference books:

Important observation: Any of the Strategic Choices pair (where-to-play and how-to-win) may support a viable Value Proposition, with the exception of some combinations that are toxic (e.g. Market Edges - Top Market and Lowest Cost).

Penta Model Alpha (where-to-play)

In the Penta Model Alpha, we have 5 distinctive Strategic Positions (the corners) and 10 distinctive Strategic Choices categories that represent Market Boundaries alternatives that can be used for building our Value Proposition (and focusing our Strategy), along the where-to-play dimension.

The A1 ... E2 are the where-to-play Strategic Choices categories, adapted for the Job-to-Be-Done concept. They represent a portfolio of choices from which we can select those that will allow us to target the Jobs that our potential customers need to do.

If we would be talking about customers and products or services, instead of customers' Jobs-to-Be-Done and ways-of-Doing them, we could overlay the Ansoff matrix quadrants over the Strategic Choices in the model. Although we are overlaying different concepts, this may help us to better understand the model.

If we would be again talking about customers and products or services, instead of customers' Jobs-to-Be-Done and ways-of-Doing them, we could also overlay the Adjacent Moves (described by Chris Zook in Beyond the Core) over the Strategic Choices in the Penta Model Alpha. We are overlaying different concepts, as well, but this may also help us to better understand the model.

If we would be talking once more about customers and products or services, instead of customers' Jobs-to-Be-Done and ways-of-Doing them, we could overlay even the Six Path framework (described by W. Chan Kim and Renée Mauborgne in The Blue Ocean Strategy) over the Strategic Choices in the model (except for New Geography Jobs, for understandable reasons). Once more, we are overlaying different concepts, but this may again help us to better understand the model.

The Strategic Choices for where-to-play

A. Strategic Positioning for Segmented Jobs

► The Strategic Choices A1 - Mid-Market Jobs focus our Strategy on the distinctive customer Jobs categories for which our products or services may be highly-specific ways of Doing.

If we would be referring to customers, instead of customers' Jobs-to-Be-Done, we would identify an equivalent of these choices with the traditional Marketing STP (Segmenting, Targeting, Positioning), but the equivalence is strictly informative.

The Jobs market segmentation is performed based on the aspirations of customers in certain situations characterized by specificity, specialization or proficiency, that require customized ways of doing them, or when facing the constraints of circumstances that require compliance with regulations or with mandatory safety or security requirements.

Take a look back at the Airbnb example. What customer Jobs segments (and what Jobs reasons) are they targeting? The Jobs of travelers looking for interesting journey destinations and/or convenient & home-like accommodations, as well as those of hosts looking for guests for their spare property space. Does Airbnb target any of the specific customer demographic, professional or geographic segments of the market? Not at all. They target highly-specific Jobs segments of any customers, part of anydemographic, professional or geographic market segment.

Customer Jobs segmentation: Virgin Holidays

Take a look at the customer Jobs segmentation used by Virgin Holidays. What do you think, do they target segments of customer demographics, or segments of Jobsthat their customers intend to do? Even for the families (a typical demographic), the Value Propositions and the where-to-play Strategic Choices are targeting a variety of customer needs and desires.

► The Strategic Choices A2 - Market Edges Jobs focus our Strategy on the distinctive and special customers Jobs categories that are driven by comfort reasonsrelated either to belonging to an elite or special group, or to the need for luxury or vanity satisfaction. Traditionally, the customers with such Jobs are part of what is called High-End market.

Since we are talking about market edges, we also have the other side of the market: the customers who need to address the dissatisfaction with high costs, high upfront costs or depreciation, or who have to deal with the constraints of their income limitations. Traditionally, this is called Long Tail market.

These two Jobs segments are set apart from those targeted by the A1 - Strategic Choices because they require very specific ways of Doing the Job.

What do you think, which customer Jobs in the above example (Virgin Holidays) are targeted by their Value Propositions for Market Edges (luxury/delight: High-Endmarket, or budget/income constraints: Long Tail market)? We can easily see that Virgin Holidays are using a mix of Strategic Choices, which is not limited to targeting Segmented Jobs, only. Look closer at the mosaic of their Value Propositions and you'll spot those targeting the Top-End market (Luxury, Platinum, Sandals & Beaches) as well as those targeting the Long Tail market (Group bookings, Self-catering, Family, Multi-destinations).

B. Strategic Positioning for Convenience Jobs

► The Strategic Choices B1 - Time-sensitive Jobs focus our Strategy on Jobsgenerated by the aspiration for more efficiency, speed or better availability, including the quick access to specific products or services (e.g. critical spare parts deliver, emergency services, search & rescue, etc.), but also for convenience tasks, related to physical or virtual proximity and the desire for more ubiquity of such tasks (e.g. meal ingredients purchased from the closest proximity grocery instead of the distant supermarket, click & mortar stores, restaurants with home delivery, etc.).

Another area of Strategy focus, based on these choices, are the Jobs driven by customers' dissatisfaction with the current products or services, addressing the discomfort, misfit or time consumption of the ways to reach or use them (e.g. learning a new language, curing an illness, having an audit performed, etc.).

► The Strategic Choices B2 - Customer Proxy Jobs focus our Strategy on Jobs segments that require the convenience provided by the direct or highly-customized relationship between the customer and the product or service provider. We are talking about targeting specific stages in the sales/distribution chain that satisfies the comfort requirements of direct customer relationship (e.g. local agents, account managers, franchisees, distributors or supplier's own retail locations), or re-positioning and re-defining the customer. Don't be fooled by the narrow definition of what the way of Doing the Job means - it always includes the marketing, sales & support functions of the customer relationship.

On the other hand, these choices may address customers' aspiration to have their Jobs Done in a way that offers a high specialization level, as opposed to various generalist alternatives (e.g. buying a GPS car navigation system from a specialised automotive accessories shop, rather than from the non-food section of a supermarket).

Redefining the customer: McDonald's

With the new 2006 'Forever Young' design, the first major redesign in nearly 40 years, McDonald's has taken a big leap forward in redefined their customers. What did they do? The restaurants have been remodeled, featuring dining zones with 'distinct personalities'.

A linger zone was designed to accommodate people who were inclined to dawdle and socialize while sitting comfortably on armchairs or sofas. Another zone offers counters and stools for customers in a hurry who might just grab a bite and go. A third zone is designed for families or groups, with seating arrangements that can be reconfigured for various needs, like birthday parties.

Moreover, crisp colors and hard plastics have been replaced with earth tones and flexible pads covering the booth chairs. The McDonald's menu has been 'redesigned', as well, offering more of what is referred to as healthy food, including breakfasts without burgers, white meat and large fresh salads.

What happened at McDonald's and why? Following a significant drop in prestige and financial performance, during the late 1990s and early 2000's, McDonald's realized that something has gone wrong with their system. For many years their main focus was the growth of their restaurants network: during the late 1980s and early 1990s, the growth rate has been of up to 2,000 new restaurants opened every year.

The franchisees (their customer proxies) took the biggest chunk of this expansion and, at some extent, they became the main 'customers' of McDonald's, being helped to get up and running as fast as possible and their employees even trained in off-site Burger Academies.

All this focus on fast network growth and on the franchisees has backfired, as the McDonald's restaurants became synonymous with low-quality locations, unhealthy eating and even cleanliness deficiency. McDonald's realized that they were focusing on the wrong customer and that they had to turn their Strategy to reinvent the customer experience and focus on the consumers, instead of the network of franchisees.

Who are your customers?

I remember asking the management team of a construction materials manufacturer (roofing materials, roof tiles, etc.): "Who are your customers?" The answer was: "The chains of construction materials stores [their customer proxies]. They are the ones who pay our invoices for the goods that we deliver to them!"

The next question was: "But who are those who ultimately buy your products?" It turned out that they didn't even had a formal term for them ... "We may call them consumers, or end-customers, but we don't do any direct business with them!" It didn't took more than a year until they had to reconsider who their real customers are, mainly due to the pressure from their 'customers' to lower their prices. This is how they realized that they don't really know who the end-customers are, but also that they lack entirely the capabilities to build any kind of relationships with them.

What followed was a marketing, sales & customer support functions restructuring, followed by a massive campaign aimed at building a direct relationships with the end-customers whose highly-specific requirements for the Jobs-to-Be-Done was to repair or completely change the roofs of their homes. Their new Value Propositionincluded a {materials + services} Way-of-Doing the jobs, together with a selection of their former 'customers', who have been trained by the manufacturer to perform houses roofs maintenance & replacement services within exclusive local territories.

C. Strategic Positioning for Integration Jobs

► The Strategic Choices C1 - Value Chain Jobs focus our Strategy on the Jobs segments generated by the aspiration to have a single supplier for all the parts of the Job that involve solution components from different stages of the value chain. The benefit of these choices is often linked to the responsibility for the entire Job fulfillment (e.g. having the car repaired with original parts by a repair shop in car's manufacturer's network, buying a software/hardware platform and the bespoke software development services, provided as an integrated package, by the same IT supplier, etc.).

The same choices can focus our Strategy on addressing the constraints of some Job segments that require an advanced trace-ability along the value chain (e.g. the vaccines or diabetes drugs that require a strict temperature trace-ability along the factory-store-transport-retail-patient cold chain, organic or Halal food that require the complete trace-ability along the production cycle, from the natural/specific origin along the entire food-chain, to the preparation process and retail distribution, etc.).

► The Strategic Choices C2 - Adjacent Jobs focus our Strategy on multiple Jobsof customers seeking the comfort of trust and familiarity of an existing relationship with a supplier that has adjacent business lines, offering more than one type of product category or services to the same customers (e.g. multiple utilities and/or communication services charged on a single bill, credit cards issued by our preferred grocery store, like Tesco or Sainsbury's, using the administrative and communication services, IT equipment rental or cafeteria/food-catering services, provided by the supplier from which we have rented our office space, etc.).

At the same time, these choices can focus our Strategy on Jobs caused by customers' dissatisfaction with too many separate suppliers for related needs (e.g. having a company registered by an integrated services provider, instead of dealing ourselves with various authorities or service providers, purchasing the air travel tickets together with the car rental and hotel reservation from the same travel agency, etc.).

D. Strategic Positioning for Alternative Jobs

► The Strategic Choices D1 - Substitute Jobs focus our Strategy on the Jobs that are caused by the comfort need for a new, innovative, different product or service, often provided by new market entrants, replacing the current obsolete or too boring ones (e.g. typical cases for consumers of fashion, luxury, entertainment, high-tech, etc.).

The most popular Strategic Choices that target Substitute Jobs today are the likes of Uber (substitute for taxis) or Airbnb (substitute for hotels). But that's even more. Take a look at the Airbnb Experiences and at Virgin Holidays (or at any travel agency, for that matter). Isn't Airbnb targeting substitute Jobs-to-Be-Done of customers who normally use travel agencies for finding new city break experiences? So, Airbnb went beyond offering just booking for private residence accommodation, as a substitute for hotels, and are now offering 'Booking for new Experiences', as a substitute for travel agencies' city breaks.

The same Substitute Jobs Strategic Choices choices address the Jobs driven by the dissatisfaction with the current products or services that are no longer effective or compatible with other products or services purchased later (e.g. moving into a new house and buying new, more flexible, more modern and modular furniture, instead of bringing the furniture from the previous home, moving from PC to Laptop and from Laptop to Tablet or Fablet, changing the on-premise servers with cloud solutions for business applications, etc.).

► The Strategic Choices D2 - New Geography Jobs focus our Strategy on new geographical markets (not necessarily international), driven by customer's aspirationfor Jobs that should ideally be Done by suppliers with national or multi-geographies coverage for their nation-wide or international locations (e.g. suppliers follow their key customers that expand geographically), or by the constraint of performing supply-side functions that cannot be performed by local suppliers, or when they are performed at lower standards than the ones offered by suppliers that move in from outside the region or the country.

We can find hundreds of examples of suppliers expanding from developed markets(e.g. from Western Europe) into developing ones (e.g. Eastern Europe), offering products or services superior to those of local suppliers and sometimes, even more, accelerating such geographical expansion by acquiring local suppliers that own established infrastructures, customers portfolios or brand awareness.

E. Strategic Positioning for Emergent Jobs

► The Strategic Choices E1 - Trend Market Jobs focus our Strategy on customers' Jobs that are based on the comfort provided by their fulfilled search for innovative and exciting new products or services, for modern or trendy functions and experiences, for which they are early adopters (e.g. web-based courses delivery, innovative use of drones, new fashion designs, innovative consumer electronics, hybrid/electric cars, etc.).

The same choices can focus our Strategy on customers' Jobs driven by their dissatisfaction with obsolete products or services they are currently using (e.g. old versions of software or operating systems, cars with high fuel consumption, legacy IT systems that no longer fit evolving business requirements or versions with discontinued support, old equipment that has maintenance problems due to spare parts no longer manufactured, etc.).

► The Strategic Choices E2 - New Market Jobs focus our Strategy on accomplishing Jobs that didn't exist before, desired by marginal customers or by non-consumers (those who don't buy neither from us, nor from our competitors), who aspire to have Jobs performed by products or services that don't currently exist in the marketplace, because they require new experiences never fulfilled before as they expect it. Take a look at the wealth of the Blue Ocean stories and you'll have plenty of examples of such new customer Jobs.

At the same time, these choices can focus our Strategy on the Jobs that many customers didn't think to be within their reach, not long ago. But new technologies or methods made them available, so the constraints can now be bypassed. Take a look at the wealth of the Disruptive Innovation stories and you'll have plenty of examples of such new customer Jobs.

Penta Model Beta (how-to-win)

In the Penta Model Beta, we have 5 distinctive Strategic Positions (the corners) and 10 distinctive Strategic Choices categories that represent Competitive Factors alternatives that can be used for building our Value Proposition (and focusing our Strategy), on the how-to-win dimension.

The F1 ... J2 are the how-to-win Strategic Choices categories, adapted for the Job-to-Be-Done concept. They represent a portfolio of choices from which we should select those that allow us to provide customers with the best possible ways of Doing the Jobs that they need to do.

Important observation: Any of the how-to-win Strategic Choices may support a viable Value Proposition. For instance, our Strategy may be focused on Customer Intimacy, supporting a Competitive Advantage that can beat, for specific customers, the advantages of our competitors with Value Propositions based on Cost/Price or Product Differentiation. However, the Value Propositions are based, most of the time, on a mix of multiple how-to-win Strategic Choices, leading to some more competitive Value Propositions that are preferred by more potential customers who share the same Jobs that needs to Be-Done.