3 Signs Your Strategy is Actually Worth Pursuing

Is your business plan a list of ambitious goals that looks exactly like your competitor’s plan? Identifying the characteristics of a good strategy helps you determine if you're building a unique market or just fighting for a seat in a crowded room. Most companies spend their time trying to outshine rivals by offering a little more for a little less. This approach often leads to shrinking margins and a generic brand that buyers can’t distinguish from the rest of the pack. You need a way to verify that your strategic direction will actually create new demand instead of just shuffling existing customers around.

W. Chan Kim and Renée Mauborgne introduced a powerful diagnostic tool in their book, Blue Ocean Strategy, called the Strategy Canvas. This tool visualizes how your business performs compared to the rest of the industry across various factors like price, service, and features. A strong value curve on this canvas will always show three distinct traits that prove your idea has staying power. If your strategy lacks these, you’re likely stuck in a 'red ocean' where competition is fierce and profits are thin.

Why a Strategic Profile is Your Most Important Asset

A strategic profile is a graphic representation of your company’s relative performance across the factors the industry competes on. In the book Blue Ocean Strategy, Kim and Mauborgne explain that this profile is the heart of your market-creating move. It’s not enough to have a great product; you must have a value curve that stands apart from the industry standards. This visual map shows where you are investing and, more importantly, where you aren't.

Most businesses have value curves that look nearly identical to their competitors. They all invest heavily in the same areas, creating a sea of 'me-too' offerings. A good strategy breaks this cycle by intentionally choosing to ignore certain industry norms. This allows you to redirect your energy and money toward things that buyers actually care about but haven't been offered yet.

Research from the authors' study of 108 business launches found that while 86% were incremental improvements, they only accounted for 39% of total profits. The 14% of launches aimed at creating new markets generated a staggering 61% of total profits. This data highlights why having a distinct strategic profile is a financial necessity, not just a marketing trick.

Identifying the Characteristics of a Good Strategy Through Focus

Focus is the first sign that you’ve made a hard choice about your business direction. Every great strategy avoids the trap of trying to be everything to everyone. When you look at a value curve with focus, it doesn't diffuse effort across every single factor of competition. Instead, it highlights a few key areas where the company has decided to excel while letting others fall away.

Without focus, your cost structure stays high because you're trying to match every move your rivals make. You end up over-engineering your service and offering features that add cost without adding real value to the customer. A focused strategic profile clearly shows that the company has said 'no' to the distractions of the traditional market.

Southwest Airlines is a classic example of this focus in action. They don't invest in meals, lounges, or assigned seating, which are standard in the airline industry. Instead, they focus exclusively on three things: friendly service, speed, and frequent departures. This focus allows them to offer the speed of air travel at a price that competes with driving a car.

Highlighting the Characteristics of a Good Strategy via Divergence

Divergence occurs when your strategic profile stands apart from the industry's average profile. When a company acts reactively to keep up with rivals, its strategy becomes muddled and lacks uniqueness. You can tell a strategy is divergent when its value curve doesn't march in lockstep with the rest of the strategic group. It takes a different shape entirely by eliminating and reducing standard factors while raising and creating new ones.

This divergence is what makes the competition irrelevant. If you’re just a better version of your neighbor, you're still competing. If you're fundamentally different, you're in a category of your own. Divergence is the visual evidence that you’ve looked across alternative industries and noncustomers to find new sources of value.

Yellow Tail wine achieved this by diverging from the elite, refined image of the traditional wine industry. While other wineries focused on tannins, oak, and aging, Yellow Tail eliminated these complex factors. They created a fun, social drink that was sweet and easy to drink, appealing to beer and cocktail lovers who previously found wine intimidating. Within two years, Yellow Tail became the fastest-growing brand in the history of both the Australian and U.S. wine industries.

Confirming the Characteristics of a Good Strategy with a Tagline

A compelling tagline is the third and final litmus test of a successful strategy. It isn't just a catchy phrase for an ad; it’s a way to prove that your strategy is simple and authentic. If a strategy is too complex to be reduced to a single, powerful sentence, it’s likely internally driven and lacks a clear value proposition for the buyer. A good tagline delivers a clear message and advertises an offering truthfully.

Think of the message: 'The speed of a plane at the price of a car—whenever you need it.' This could easily be Southwest Airlines’ tagline because it reflects their focused and divergent strategy. If you try to create a tagline for a traditional airline, you'd struggle to summarize meals, lounges, and hub-and-spoke connections into something memorable. Their strategy is too scattered for a simple message.

When your strategy has a clear tagline, it shows that your organization understands its core promise. It makes communication with employees and customers effortless. If your strategic profile is divergent and focused, the tagline will practically write itself. It becomes the ultimate proof that you’ve created something worth the market’s attention.

Famous Successes in Uncontested Markets

Cirque du Soleil redefined the circus industry by merging the fun of the circus with the intellectual sophistication of the theater. They eliminated animal acts and star performers, which were the highest costs for traditional circuses. By creating a theme, a story, and original music, they reached an adult audience willing to pay theater prices for a totally new experience. Their strategic profile was sharply divergent from Ringling Bros., focusing on artistic richness instead of slapstick humor.

Another example is the Italian company, Casella Wines. They saw that the U.S. wine market was a 'red ocean' where companies fought for a stagnant customer base. By focusing on ease of selection and fun, they removed the jargon-filled labels that confused the average shopper. They offered only two varieties initially: a red and a white. This simplicity allowed them to manage their stock efficiently while making the choice easy for the buyer.

These examples show that you don't need a technological breakthrough to create a blue ocean. You just need to look at what the industry takes for granted and decide what to stop doing. Both companies grew the market by pulling in people who were previously noncustomers of their respective industries. They didn't just win a bigger slice of the pie; they made a bigger pie.

Drawing Your Path to Market Leadership

You can verify your own strategic direction by following these three steps this week. This process moves the concept of strategy from an abstract document to a clear, visual action plan.

1. Map your industry’s current value curve. Identify the seven to ten factors your competitors currently invest in, such as price, marketing, or technical specifications. Draw a line showing how the average competitor performs in each area so you can see the 'red ocean' you are currently swimming in.

2. Apply the Four Actions Framework to your profile. Ask yourself what you can eliminate and reduce from the industry standard to lower your costs. Then, determine what you can raise and create that the industry has never offered before to lift your value to the buyer.

3. Evaluate your new curve against the three litmus tests. Check if your new value curve has a clear focus on specific factors. Ensure it diverges significantly from your original industry map. Finally, write a one-sentence tagline that captures the essence of this new profile to see if it’s simple enough for a customer to understand immediately.

Where the Strategy Canvas Meets Reality

Critics of this framework often argue that creating a divergent strategy is risky because it involves ignoring established customer expectations. They suggest that eliminating factors people are used to might alienate existing buyers. This is a fair point, as moving away from the pack requires a deep understanding of why those customers were there in the first place. If you eliminate something that is a 'must-have' for the core market, you might lose your footing before you find new ground.

Others point out that a compelling tagline can sometimes be used to mask a lack of substance. A catchy phrase might attract initial interest, but if the focus and divergence aren't actually built into the business model, the strategy will fail. It's also possible to diverge in a way that doesn't actually add value. Being different for the sake of being different isn't a strategy; it's a distraction. You must ensure that your new curve removes real 'pain points' for the buyer.

Strategy focus prevents you from wasting resources on things that don't matter. Divergence ensures you aren't just a copycat. A tagline proves your message is simple enough to spread through word of mouth. By testing your plan against these three characteristics of a good strategy, you can confidently move toward a market where the competition is irrelevant. Map your current strategic profile on a canvas today to see where your business is really headed.