At the heart of strategy are two questions. If one sought to stir their strategic thinking, they would need to learn those two questions and learn them well. Those two questions are:
- Where should we compete?
- How should we compete?
All else flows from the ability to articulate answers to these questions. Let’s take the first question. Where should we compete? This can mean many things. The question is drawing one to make a choice. In what geographical spaces should you compete? In what arenas should you play? Should you play in the down streams of the value chain or the up streams? Where should a business position itself on a landscape? Strategy is a game of choices.
Should a new business play in the mass market aka be broad based? Or should it be niche and narrow down to a few customers?
The second question is about how to compete? How should one play? Should one play an offensive or defensive role? Do you have the advantage to play a given style? Because strategy requires one to make a choice, every choice comes with a trade-off.
In the end, what we seek from strategy are mutually reinforcing and integrated choices that give a business a sustainable competitive advantage and create a superior performance above the industry. The act of finding mutually reinforcing and integrated choices and activities results into a strategic fit. Below, we reproduce the famous Disney Activity fit, it says a lot about the choices the business made early on.
The 1957 Walt Disney Activity Fit
In 1957, Walt Disney defined their Strategic fit through a set of reinforcing choices. In Uganda, we can think of the Mandela Group. The Group started off as a re-seller of tyres, it then added the segment of spares. From spares, the group grew to have an auto-shop as people sought repair services. This later reinforced their choices to have a Petrol station business. As people waited for their cars, it called for a sall cafe to serve them. And this later became Cafe Javas. From Cafe Javas, the Group realized the demand for reliable wheat products and thus ventured into the milling segment. From milling, the group is adding the animal feeds section. This is the activity fit, where activities reinforce each other.