The One Question You Must Answer Before Setting Strategy

To illustrate this point in advance, let's start with a quick exercise. For the next minute, brainstorm ideas on how you could make $10 cash (or €10 or £10) in the next 4 hours. Go ahead. I'll wait.

Ready?

Some of the typical responses I hear include washing cars, delivering lunches and begging for money. Here's the "a ha" follow-up question:  Which of your ideas could you turn into a $1 million business? How about $10 million or $100 million? I'm still waiting for the day when someone jumps up enthusiastically and runs out of the room to pursue their brilliant idea!

How the question is framed shapes your thinking and, therefore, the outcome. The same goes for strategic planning.

So the one question you must answer before setting strategy is

"What is our goal?"

Is the goal to grow the business to $10 or $100 million? That's the difference between grabbing a bucket and sponge to wash cars and creating a highly valuable, scalable, differentiated product.

Is the goal to achieve market share of x% or profitability of y%? That's the difference between Google's strategy to maximize Android market share (according to Statista, Android market share is approaching 90%) and Apple's strategy to maximize profits (according to Strategy Analytics, Apple Captured Record 91 Percent Share of Global Smartphone Profits in Q3 2016). Yes, I know that this isn't exactly an apples-to-apples (no pun intended) comparison, but you get the idea.

To get to the best possible outcome from your strategic planning process, start by getting all of your stakeholders aligned on the most important question to answer:  What is our goal?


[P.S. I'm pretty sure that I did not come up with the $10 strategy exercise above...but I can't remember the source and I can't find one. I'm happy to acknowledge the source if anyone knows it.]

Apple's Brilliant Pricing Strategy

Setting prices is one of the most difficult things to figure out in Marketing and Product Management.  There’s no simple formula to follow.  On the upside, psychology is being applied more frequently to understand buying decisions and there is more and more research on the subject.

Here’s an article that I just read on Business Insider about Apple’s pricing for the new iPhone 6:  Thanks To Apple's Financial Geniuses, The iPhone 6 Isn't Just A Smartphone — It's A Magic Profit Machine.  Brilliant.  When I made my iPhone 6 purchase decision, I never hesitated to upgrade memory to the maximum amount.  The basic level model with 16GB of storage isn't even an option that I would consider.  Neither is the mid-level upgrade--I already have a hard time with my old iPhone that has 64GB of storage.

The high price of the extra storage is annoying to me—but absolutely worth it.  As a result, Apple is making $160 extra in pure profit from me.  And the Apple money-making machine has shifted to an even higher gear!