Why do High-End Audio Organizations Require Strategy?

Strategy – it’s everywhere!

The term ‘strategy’ is perhaps most easily conceptualized in military and competitive sport settings.  We can understand with clarity how each side needs to identify patterns in the offense or defense that need to be exploited in order to gain an advantage.  We also know that strategy is often referenced in corporate settings, and possibly overused.  Many large companies have strategic leaders are part of their Executive Team who evaluate and test strategic execution and adjustments. I would argue that business strategy remains poorly understood and/or subject to very loose interpretations.  For instance, some will contend that creating near-term and long-term objectives are fulsome corporate strategies.  While objectives are necessary to develop your strategy, they are merely components of a complete strategy.  Others will argue that a formalized business plan is representative of strategy.  While there is some degree of overlap, a business plan is a static document whereas strategy is fluid and dynamic as it evolves and adapts to various inputs and changing conditions.   

How do we Define Strategy?

Let’s now address this fundamental question – what exactly is meant by strategy?  There are a number of definitions of strategy within the business literature with varying degrees of complexity.  Ultimately, there is a very straightforward and common theme throughout these definitions and frameworks.  Strategy can be somewhat simply described as business decisions that create a competitive advantage.   As a business leader, you must formulate a hypothesis of what actions or decisions will lead to the best outcomes for your organizations based on the available information.  These decisions can be endless and involve considerations such as product or service offerings, pricing, markets, geographies, value, differentiation, and scale.  The outcomes can be tied to hard corporate objectives such as financial goals including revenue, profit, and financial ratios, or period-over-period growth, market share, or units sold/services delivered.  The outcomes can also involve soft goals that are tied to your mission or values and have more of a social purpose.    

As an example within high-end audio, an organization may decide to create a new digital network media player, release a line of cables, obtain distribution in North America or China, release a flagship product or value product in a new pricing category, or design an integrated all-in-one active system.  All of these scenarios can be viewed as calculated decisions that are inherent to your overall business strategy and designed to improve the health and sustainability of your company.     

 Why do we need a Formalized Strategy?

Some view the creation of strategy as a task that is reserved for large corporate conglomerates to ensure alignment and cohesive thinking among various subsidiaries, business units, and departments.  However, a comprehensive strategy is a crucial exercise for a business of any size including sole proprietorships and boutique organizations targeting a very niche audience such as high-end audio consumers (as a not-so-random example). Strategy serves as your guide to navigate constantly evolving conditions, and to take the most correct course of action to mitigate risk and increase your chances of success.  Does an effective strategy completely prevent reduced revenues or declining growth or increased spend or any other financial challenge or adverse business outcome?  Certainly not. There is always the potential for difficult conditions that are beyond our control, but effective strategy equips us to weather the storm and reduce the impact of negative or unanticipated events. 

What are Strategic Frameworks?

There are a number of best-selling business publications that describe strategic frameworks which can be applied to almost any industry or organization.  Perhaps most well-known is the Five Forces Analysis developed by Micheal E. Porter of Harvard University in 1979.  This pioneering framework assesses the competitive environment to establish the ‘attractiveness’ of a given industry.  There have been subsequent guides and analyses devoted exclusively to Porter’s Competitive Strategy that continue to be taught in business schools globally.

More recently, a landmark publication was released in 2005 by INSEAD professors W. Chan Kim and Renee Mauborgne called Blue Ocean Strategy.  Briefly, this book describes the concept of opening new market space by focusing on value innovation rather than competitive offerings.

There are also several other notable strategic frameworks since and after the publications of the Competitive Strategy and Blue Ocean Strategy that offer valuable insights.  Ultimately, each strategic framework will provide a different level of benefit depending on your industry and aspirations.  Which brings us to the next section. 

How do we Formulate a Strategy?

Despite the abundance of information on business strategy, there is no tried-and-true method or ‘best fit’ approach to formulating a comprehensive business strategy.  Strategic formulation is highly individualized and dependent on internal factors such as your goals, management style, and organizational structure, as well as external factors such the industry and current market conditions.  

As described previously, strategic formulation is dynamic and involves continuous refinement and testing based on new and evolving information.

Strategic Consulting

External consultants can be utilized to facilitate the process of strategic formulation. Their experience and business knowledge can provide insights that would otherwise remain hidden and not considered for future planning.

Some business leaders may have a view of consulting that can be briefly described as follows: strategic experts are tasked with gathering information involving your organizational goals and current challenges, formulating a diagnosis based on this information, and generating a solution.  The concern with this approach is that external consultants can never obtain the level of information possessed by the business, and the proposed solution will have collateral impacts due to their limited understanding of the numerous complexities faced by the organization. 

My methodology for high-end audio clients involves a consulting model developed by the late Edgar H. Schein in his 2016 publication called Humble Consulting.  In this model, consulting is a collaborative approach involving authenticity and curiosity.  My desired outcome is to refine the current strategy by working through the most applicable elements of established strategic frameworks to provide the clarity and insights on what is required to achieve your corporate goals and address current and anticipated challenges (rather than providing a transformative solution that may not align with your current philosophy or operational capabilities).

This may be interpreted as a ‘feel free to schedule an initial assessment’ pitch but the intention here is to convey the process and benefits of strategic formulation for organizations in high-end audio.  Given the overwhelming evidence of forthcoming challenges impacting our industry, now might be the most important time to develop a comprehensive strategy and establish next steps for the future direction and success of your company.