Design a winning strategy for your new idea with the ABCDE Planning model
September 29, 2014
As we enter into the final quarter of 2014, companies will start sprinting for the finish line. But through all the hustle and bustle, a group of us will also start looking at 2015 and answer the “What Next?” question. If you have been charged with looking at your business and to come up with a proposal for next year’s strategic plan but would like some help in doing that, read on, as I am going to introduce to you our ABCDE Planning Model.
The ABCDE Model
This is a 5-step model as shown:
Arena is the space within which the strategic activity will be carried out. It refers to both market and geographical locations, complete with environment scanning and incumbent knowledge. It ends up identifying white space within which your business can operate and why.
By refers to “by who”, “by what”, “by when”. It expands the who, what, when, where and how of the strategy.
Course then takes all the information and plots the best execution path.
Differentiator is the element of strategic thinking that explains the areas where your company can be different from the rest of the market. Whatever is contained within here is applied to all the elements of the strategic plan.
Economics is the dollars-and-cents evaluation, to ensure that the plan can derive economic value to the company.
Here are two stories of how new market spaces are found using this methodology.
Artisanal paper by the pound?
Philip runs a $7M company selling printer paper in bulk to major distributors. Philip has already covered all the distribution channels and as a result, has not seen significant growth in his business since 2011. His margins are also razor thin! So Philip starts his strategic planning with the question of how to get higher margin for such a traditional product. Mapping his arena by business model, he found that most of the players were using traditional models, selling paper by the pound. There was another cluster of smaller players that supplied art paper, which was dominated not by grammage, but by use. Their model was to sell artisanal paper, usually by the piece and in larger format, through smaller, higher-end channels. And then nothing in between. Philip sensed white space when he realized that he could work with the paper mills to offer artisanal paper-by-the-pound; i.e. mashing the two business models. The differentiator really was to offer mass-market artisanal paper. Instead of simply selling per sheet on A2 or A1 size, there may be a market for these paper in A3 or even A4 size in a pack of 20. Philip thinks he may be on to something and is now conducting rapid prototyping and market testing. Initial results seem promising.
From trucks to people
Art is an inventor. He developed a mobile locator that can track its position using GPRS. There has been good adoption of the product by fleet managers. But the market is highly competitive and margins are thin. Mapping out the mobile locator space, Art realized that most manufacturers focus on a larger-sized locator because manufacturing was easier and cheaper; and not a problem for vehicles. But when the size is shrunk, production costs go up. It would not make sense to put those on vehicles; but what about for people? Suddenly, the question becomes, “Who can we offer this to?” There are already personal locator apps for smartphones so there doesn’t seem to be a market – unless they find white space - the elderly, especially those suffering dementia. They don’t really know how to use smartphones and when push comes to shove, all they need to do is push the panic button! Suddenly Art has his differentiator. And the economics works because personal safety is important for all families; they will pay for it. The margins are now increasing.
These are two short success stories of people using the ABCDE model. Obviously there was more to the process than just the stories tell, but if you use this consciously, you may well be able to plan your next strategic coup!
Call us to lead your strategy session
If you need help in driving your next strategic planning session, just drop us an email at email@example.com. You will be surprised just how far we will go for your success!