STRATEGIC CAPABILITIES DEFINE STRATEGIC POSITIONS In order to identify the strategic positions in your own organization, you must first identify your organization’s strategic capabilities— that is, the activities that you can perform in a way that is hard for rivals to imitate and that make customers want to choose your product or service over others. As a shortcut, consider this. You know an activity is strategic if it positively affects your customers’ perception of value, allows you to make or deliver your product or service at the desired cost, and finally, enables you to charge your desired price, be it high or low. Most organizations and business units will probably have no more than four or five strategic capabilities. Walmart, for example, has strategic capabilities in its IT system, which tracks customer purchasing patterns in great detail, and in its ability to purchase products in bulk, which pushes down costs. By contrast, the strategic capabilities at Neiman Marcus revolve around stylish products and well-designed interiors, both of which drive the company’s strategy of providing a high-end, glamorous shopping experience. – Page 5 – Understanding your strategic capabilities will help you identify your strategic positions. Take another pair of retailers, Nordstrom and Costco. Both rely on customer satisfaction to produce growth and shareholder value—but they rely on very different capabilities to generate that satisfaction. Nordstrom satisfies customers with its ability to provide personalized service and advice; Costco satisfies with its ability to offer a wide range of products at rock-bottom prices. That means the strategic jobs at the two companies are different. Whereas front line sales associates are vital at Nordstrom, they can hardly be found at Costco, where purchasing managers are central to the company’s success. MANAGING YOUR A, B, AND C PLAYERS Not surprisingly, discussions about which positions in a company are strategic can be pretty contentious. Everyone wants to think of his job—or the jobs he oversees—as strategic. But as we’ve noted, few jobs in an organization merit this designation. That said, determining which positions are essential to your strategy can make you much more efficient in managing your workforce. You certainly don’t want to spend inordinate amounts of time trying to improve the work of someone in a job that has little direct impact upon your organization’s success. – Page 6 – The converse is true as well. Take the store cashier we discussed earlier. If your strategic advantage lies with the customer experience, you don’t want to settle on someone who is merely proficient in the job—scanning products correctly and collecting money with a friendly smile. You want a person who might, for example, notice what a customer is buying and suggest other products. You want a person who likes to move quickly and understands that people waiting in line do, too. Put simply, it is critical to fill A jobs with A players. If that’s not the case in your organization, you have an immediate opportunity to improve performance by doing so. You’ll also need to make sure that people in your strategic positions are paid appropriately. Topperforming people in strategic roles should earn better-than-market rates. And by all means, devote extra effort on programs to recruit, develop, and retain people in your strategic positions.

 

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