Effective corporate strategy requires defining a direction, fostering collaboration, and leveraging strengths for diversification.
At Zweig Group, our goal as strategic planning consultants is to ask the right questions to help identify existing strengths that can be leveraged to present new opportunities. In other words, we help to facilitate a plan for strategic growth/diversification. We want to determine how we can grow to further leverage our existing strengths. If your firm works in multiple business domains, this happens through separate corporate and business level strategies.
Business level strategies refer to activities a firm undertakes within its specific business units to gain an advantage over competitors in the marketplace. Typically, these take the form of multiple strategies determined by organizational structure. In the AEC industry, these are commonly based on market sector or geography. For example, Doe’s engineering firm employs two distinct business-level strategies. One for further market penetration into their existing K-12 vertical and another for diversification into the closely aligned higher education vertical. Two business units that may require different business level strategies to build a competitive advantage.
Corporate strategy refers to the overall direction of the organization. Corporate strategy is what enables a firm’s internal groups (in whatever form these come in) to collaborate and leverage one another effectively. It is what makes an organization greater than the sum of its parts. Having an effective corporate level strategy means the organization is successfully competing in multiple business arenas and utilizing this diversification to strengthen each arm individually – whether these arenas be geographies, market sectors, services, or even multiple industries. In this case, Doe’s engineering firm has established a corporate strategy to leverage its existing K-12 expertise to expand into higher ed, with the eventual goal of using higher ed to further penetrate into the K-12 market.
Outside of the AEC industry, Apple is a prime example of excellent corporate strategy. The $2.5 trillion organization operates in multiple business arenas – each collaborating and ultimately benefiting from one another.
Apple conducts business all over the world with a diverse range of device offerings. Once you’ve purchased one of their products, Apple ensures that it’s more advantageous to buy another Apple product over a competitor due to frictionless interoperability between each product line. The iPhone works with the Mac, the Mac works with the headphones, and the headphones work with the watch. Corporate dictates this strategy and the company’s overall direction, requiring the interoperability between product lines and therefore departments. However, interoperability is only half of the equation. Corporate simultaneously needs each group to innovate within their own business unit, each developing their own business level strategy.
This sounds great, but is easier said than done. A good corporate strategy requires complete dedication and needs to be ingrained in every decision a firm makes.
In Apple’s case, it has devoted decades of effort and resources to furthering this piece of its corporate strategy. For instance, when Steve Jobs returned to the failing organization in 1997, he fired the general managers of all business units (in one day) and instituted one P&L for the entire business in an attempt to expel internal silos. Decisions made since have incorporated their corporate strategy of connecting seemingly independent divisions of the company. As a result, the market has deemed Apple greater than the sum of its parts.
So what does corporate strategy look like within the AEC industry? Some examples include:
- Markets that translate to one another. Look for similarities that can be used in cross selling expertise.
- Innovative or unique offerings. For example, Zweig Group once worked with a firm whose corporate strategy was to develop a specialty in incorporating storm shelters – something that would make them uniquely qualified for specific projects.
- Ensuring each sector is operating in the same manner. This refers to consistency of client experience no matter which sector the client is working with – a simple, yet challenging objective. It also refers to consistent fee structure/value proposition – high fee, high quality – or cost competitive across the board.
- Finding ways to leverage experts in other business units. As Bobby Petrino, former head coach of the Arkansas Razorbacks, likes to say, “Feed the studs.”
These are merely a handful of different approaches we see as AEC exclusive advisors. The most common corporate strategy found in our industry is one based on client relationships. While this is a legitimate strategy and the most prolific approach to a competitive advantage in our industry, its common to the point that it could be considered a baseline expectation. Additionally, if your corporate strategy is to compete on fee alone, as Michael Porter puts it, that becomes “a race to the bottom.” It’s a legitimate strategy but one that’s difficult to win in the long run.
If you believe your firm could benefit from a rejuvenated corporate or business strategy, Zweig Group has a team of strategic advisors here to help. Click here to learn more.
Travis White is a strategy and operations advisor at Zweig Group. Contact him at twhite@zweiggroup.com.
