11 Types of Strategic Maturity:
Which One Describes Your Company
Almost every business today faces major strategic challenges, but
different companies are challenged in different ways. That’s why so much
conventional wisdom surrounding strategy — for example, understanding your
external environment — can fall short of what a company needs. Winning today
requires you to carefully balance your strengths (what you can do incredibly
well) against your opportunities (what the market will reward). That complexity
requires a level of strategic maturity: the ability to understand what is
fundamentally holding you back, and to correct your course accordingly.
A new
body of extensive research at Strategy&, PwC’s strategy consulting
business, has informed the Strategy
Profiler survey, which classifies companies according to the
stage they’re at in developing and executing a coherent strategy. The survey
takes only three to five minutes to complete, but it can help you see your own
company’s strategic maturity more clearly.
We equate maturity with progress on the path to coherence.
Companies are coherent when they align their value proposition and distinctive
capabilities system with the right marketplace opportunities — and their whole
portfolio of products and services. This typically means identifying the few
things your company needs to be really good at, and then developing those few
complex capabilities until they’re world-class and interlocking. If you
can do this, the market rewards you with outsize returns.
These days, most companies recognize the value of this strategic
approach, but it isn’t always easy to get from today’s incoherence to
tomorrow’s focused strategy. We have identified 11 archetypes, each
representing a different level of progress along this path. This analysis
incorporated more than 5,000 data points from a previous global study of
company decision makers, and from ongoing observations of business strategies.
Chances are, your company matches one of these 11 archetypes.
The first three archetypes represent companies that are not
concerned about coherence at all. They have not tried to establish focus and
consistency in their portfolio of products and services, their capabilities, or
value propositions, and they are not visibly moving in that direction:
1. Strategically adrift companies
are either failing or lucky. They don’t have a meaningful strategic direction
or a clear view of how they create value. The market generally does not
perceive them as being advantaged.
2. Undifferentiated companies
have products and services that compete effectively, but they lack a focused
identity that sets them apart. Because individual products are relatively easy
to copy, their advantage generally isn’t sustainable.
3. Underleveraged companies
have a relevant strategic direction and good execution; they do many things
right. But their strategy lacks coherence — it is based on following multiple
directions, even if they fit together poorly. These companies risk losing to
more focused competitors.
Two archetypes describe companies that aspire to a coherent
strategy but struggle to develop one:
4. Portfolio-constrained companies
offer a diverse group of products and services, which makes it very difficult
to agree on company-wide priorities (although they’d like to do so).
5. Unfocused companies
are pretty good at a lot of things, but not great at anything — and thus,
although they value coherence, they struggle to choose which capabilities to
prioritize.
Four archetypes refer to companies that have developed a coherent
strategy but struggle to execute it:
6. Distracted companies
have defined a coherent identity for their company, but they have a hard time
resisting diversions. They pursue market opportunities that aren’t in line with
their strategy.
7. Resource-constrained companies
struggle to find the funds to execute their strategy. Building differentiating
capabilities is difficult and expensive, and the executives at these companies
don’t think their financial situation allows them to make the bold moves they
need.
8. Capability-constrained companies
lack the knowledge, skills, or technology needed to build out their
capabilities to a world-class level, or to scale them throughout the
organization.
9. Overstretched companies
have defined a coherent identity for themselves, but it is so far away from the
company’s current status — and their ability to enlist customers, employees,
and investors on their behalf — that they can’t successfully realize their
goals.
The final two categories depict companies that are living a
coherent identity:
10. Coherent companies
have a powerful value proposition and a system of a few differentiating
capabilities that support that value proposition. Their portfolio of products
and services grows successfully because of the strengths they consistently
bring to bear.
11. Supercompetitors use
their coherence to shape their future. They apply their capabilities to a
broader range of challenges and loftier goals, serve the fundamental needs and
wants of their customers, and ultimately lead their industries. These companies
are not just playing the game of business well — they’re changing the rules.
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