“The Strategic Compass Model” Defined

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Table of Contents
1.
CHAPTER 1: INTRODUCTION TO THE CUSTOMER-CONNECTED WORLD
2.
CHAPTER 2: “THE STRATEGIC COMPASS MODEL” DEFINED
3.
CHAPTER 3: ELEMENTS OF THE MODEL
4.
CHAPTER 4: BUILDING ALIGNMENT INTO YOUR BUSINESS STRATEGY
5.
CHAPTER 5: THE STRATEGIC COMPASS MODEL FOR YOUR STORE
Chapter 1:
Introduction to the Customer-connected
World
With the rapid rate of change, new rules for new games, and ever-shifting communication methods,
businesses will benefit from strategies that are connected to consumers and simple for all to
understand and follow.
There is no doubt about it. To win in business, your tactics have to be “right on the money.” If you
miss on sales, service, merchandise assortments, food presentation, store design or mall tenant mix,
your opportunities to grow will be limited. And, considering the number of options available to
today’s consumer and their craving for convenience, businesses that stand out from the crowd and
become legends are the ones that have mastered the art of assembling a team of people that get
business tactics right... every time.
This e-book provides a compass for your business. It offers a simple approach to thinking
about and choosing a strategic direction that will focus and coordinate your business tactics in a
clear and logical manner. This approach provides a framework that ensures a strong alignment and
support between your business’s strategic direction and the tactics that will both emerge from and
support your strategy.
Some Thoughts on Strategy
The role of strategy is to guide the organization in a direction that will reach its objectives and
realize its vision. This route requires linking your strategic direction to your goals—or your intended
results.
In other words, you need to ask, “what will the result of your decisions be?” For consumerconnected companies, the choice of strategy is central to shoppers, which makes it absolutely vital
to your organization. There is no sense in focusing on something that is not significant to either
your organization or your consumer.
The most effective strategic goal is to create and maintain a monopoly position in the
marketplace and in your target consumer’s mind. The result will be a position that is unique and
defendable. This will usually require a business to make clear-cut decisions about trade-offs so that
all assets and actions are clearly focused and obvious to both the company team and to shoppers
and clients. The important word to consider when making those clear-cut decisions is “no”: we are
not going to do that because we need to put our resources towards doing this—because this is the
way we will rise above and turn our brand and offering into something extraordinary— even
legendary.
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Another key factor to consider when choosing a strategic direction is deciding
whether to focus on a specific new direction and attack a new market opportunity,
or to reinforce and cement your current position and defend it from competitors.
Wisdom from business experience suggests that it is easier and more productive to build a powerful
defense of a position than it is to venture into new fields or endeavors. Think about it: the cost of
attracting new customers is far riskier than supporting current relationships.
Innovation turns shoppers into loyal customers—the people who are advocates for your
store. Consumers recognize exceptional, consistent experiences, whether from a discounter (e.g.,
Honest Ed’s in Toronto} from a business that provides efficient service (e.g., McDonald’s or Rexall),
an exceptional experience (e.g., Take A Hike in Thunder bay, ON, or Starbucks), or an ego-booster
(e.g., Ron White Shoes, Tiffany’s, or Holt Renfrew). Exceeding your customer’s expectations requires
more than operational efficiency — a legendary reputation is earned only after many years of doing
all the little things right... every time.
Using The Strategic Compass Model will help your organization decide the right trade-offs for your
chosen strategic direction, such as:
 Investing in highly efficient systems (rather than creating a fancy store) to lower prices (e.g.,
Costco, 7-Eleven, ATMs for banks);
 Covering a market thoroughly with many easily recognized restaurants (rather than creating
fewer, larger restaurants) that are easy to get to (e.g., McDonald’s);
 Raising the store status with premium service and brands for an exceptional experience (e.g.,
Harry Rosen); and
 Having comfortable chairs, customized beverages and music, along with higher prices
(rather than a bare-bones environment at a lower price) to give customers a special treat
(e.g., Balzac’s Coffee Roasters or Starbucks).
What Retailers Can Provide
There are four simple and fundamental needs that shoppers have and want from
restaurants, retailers, or personal service providers. Some of these purchasing requirements will be
necessity or “must have” items or services, while others will just be “nice to have.” The Strategic
Compass Model identifies shoppers who want to save time and make it easy and efficient, save
money and economize, enjoy an entertaining or educational experience; or take an opportunity to
express their ego.
The Strategic Compass Model prevents businesses from adopting the disastrous “all things to all
people” direction. It will also help you in choosing and implementing a focused strategy to help
manage the consumer-connected business that’s becoming more complicated every day with more
pressures on the business than ever before. The pressures on businesses can be classified in five main
areas — competition, consumer, operations, financial and industry requirements, which are shown in
Figure 1 on the following page.
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Figure 1: Constant, High Pressure, and Faster Change
A. Competitive Business Challenges
Today’s business world is hyper-competitive.
How can consumer-connected businesses respond with unique and differentiating
strategies?
For example, whereas consumers once had a simple choice when shopping for groceries—the local
corner store or supermarket—they now have a huge range of choices in a highly fragmented market.
Consumers can now choose to purchase food from warehouse clubs, supercentres, supermarkets,
neighbourhood markets, convenience stores, drug stores, service stations, ethnic food stores,
catalogues, websites, home delivery services, public or farmers’ markets, specialty bakers and
butchers, restaurants, and new entry stores testing grocery offerings.
B. The Confusing Consumer
The complexity of building and maintaining relationships with consumers is made even more
difficult by the huge range of choices that offer little differentiation or innovation. This is the road
to nowhere that The Strategic Compass Model can help your company avoid.
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C. Operations Options
Many consumer-connected businesses find operations challenging. They not only need to
consistently execute their strategy and reinforce their brand message across multiple channels and
locations, but in many cases need to find ways to do more with less to stay profitable and meet
stakeholder objectives.
Cost-cutting is being forced on the mass industry as big box retailers use buying clout
and technology to relentlessly reduce prices. And mass swings in the economy are forcing
retailers to ensure that operations are lean and mean.
Businesses that have discovered the power of omni-channel (combining stores,
catalogues, and the Internet) are experiencing robust sales and profit growth. And the ones
that offer consumers multiple channels to connect with them in a consistent manner have also
reaped significant rewards. Firms such as JCPenney (shown in Figure 2), ING, HSBC, and Mountain
Equipment Coop are enjoying increased sales as Figures 2 and 3 on the following page show.
However, companies that have not yet committed to an omni-channel business model could be
missing the opportunity to build market share by reaching out to new shoppers or gaining
increased share-of-wallet from present customers.
Figure 2: JCPenney.com omni-channel Synergy
Source: JCPenny Company, Inc., 2010
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Figure 3: Mountain Equipment Co-op omni-channel Synergy
Source: Mountain Equipment Co-op, 2009
D. Financial Turmoil
Sustaining profitable growth is challenging due to continued pressure on margins from low cost
formats and less than robust consumer demand. The shock waves of the 2008 recession and its
aftermath will be felt for years to come. The clear winners are the low margin, high efficiency
operations that offer needed (as opposed to merely wanted) products and services, or stores that
have (mass) unique luxury merchandise with high margins.
E. Industry Impact
The consumer-connected business cycle resembles a typical bell curve, with a period of
development for an emerging concept, followed by a period of rapid growth, then maturity as the
curve flattens with market saturation or as the concept becomes tired, and eventually declines, as
shown on the following page in Figure 4.
This cycle has been shortening as new business and concepts emerge, grow, mature, and decline
faster than ever. This is especially true for food services, retailing and personal services, which are
low capital/cost entry industries.
The Internet influences North American consumer-connected businesses in a variety
of ways. First, an omni-channel strategy has become essential because the Web has become
indispensable to consumers, whether researching major purchases, booking travel and hotels,
buying merchandise, or planning and conducting financial transactions. Most businesses now have
a Web presence where online sales are growing faster than other channels and where one in five
offline purchases are influenced by the Web. US e-commerce retail sales in the second quarter of
2012 amounted to $54.8 billion (U.S. Census Bureau, 2012). The amount of US retail e-commerce
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sales in 2012 is estimated to be $224.2 billion with a growth rate of 15.4 per cent, and $361.9
billion by 2016 with a growth rate of 11.3 per cent (eMarketer, 2012).
New Internet-based business models have entirely upended several categories such as travel,
consumer electronics, financial services, music, books, and photography. The Internet has also
enabled previously unthinkable business models: eBay.com with auctions, affiliate and partnering
models, price comparison sites, marketing, music services, and more.
Consumer communications continue to evolve and now include social networks such as
Facebook, Twitter, and Pinterest, which are increasingly accessed via mobile devices. Moreover, the
communication is interactive, with consumers often acting more like “pro-sumers,” both producing
and consuming information. Consumers co-innovate products and services, collaborating with the
company by providing information and feedback on the products and services they need and want.
Figure 4: The Retail Lifecycle*
*After the Product Lifecycle by Theodore Levitt (1965) in “Exploit the Product Lifecycle,” Harvard Business
Review
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Chapter 2:
“The Strategic Compass Model” Defined
All businesses will benefit from a guide to decision making. Finding a model that facilitates the
choice of the right strategy is a must have for management.
Management can simply and quickly choose a dedicated strategic course; staff can understand
strategic directions when they are explained in The Strategic Compass Model framework; and all
businesspeople can measure both competitors’ and their own performance on the rating scale of the
compass.
The J.C. Williams Group’s Strategic Compass Model is shown below:
Each point on the compass identifies a solution provided by a consumer-connected business
that meets a consumer’s need. With today’s economic and social turmoil, purchasing is about
finding solutions — not just about acquiring merchandise or services. Shoppers want solutions to
their lower purchasing power, their lack of time, their need for an alternative to the everyday grind,
or their need for an ego boost.
Simply put, people purchase goods and services to satisfy one of these four basic needs:
1. Save time and effort: E-asy  “I need to save time.” E.g., Shopper Drug Mart, Staples,
7-Eleven, McDonald’s, Amazon, ATMs
2. Save money: E-conomic  “Help me save money.” E.g., Costco, Walmart, Amazon, Zara,
Frenchys in Atlantic Canada
3. Engage the senses: E-xperience  “I’d like to treat myself and relax somewhere special.” E.g.,
Lululemon, Starbucks, Toy Jungle
4. Express oneself: E-go  “That store really reflects who I am.” E.g., Le Chateau, Gucci,
Tiffany, Henry Singer menswear, Tristan
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A successful business chooses a unique direction to succeed. A consumer-connected organization
will benefit from beginning its strategic plans by selecting one of the compass points where it will
excel.
The shopping trip, whether at a shopping centre, city street, restaurant, hotel, or store; and whether
in-store, or from a catalogue, on a smartphone, or on the Internet, can be viewed on the model
(shown above). This consumer-connected activity can be rated as excellent and completely
satisfying to the shopper (5 points) or the reverse (0 points) by either using one’s judgment, or by
conducting research on how a consumer-centric business rates on this model. You can simply chart
the strengths and weaknesses of a specific business, whether your own or a competitor’s.
Managing Multiple Opportunities
Marriott International, Inc., with its 3,100 properties in 66
countries under 15 brand names uses a business model
similar to The Strategic Compass Model, according to Scott
Allison, Vice President Canadian Operations. The Strategic Compass Model approach helps
identify the people seeking one of the solutions. Marriott knows that the same customers want
all the Es at different times. By solving a current problem or giving hotel guests a desired
experience, businesses add value. For instance, Marriott’s resorts offer a unique experience, the
Ritz-Carlton hotels appeal to the ego of travelers expecting their name to be used by staff.
Courtyard hotels are designed as convenient and easy places for business people who want a
simple, easy to use room, while Fairfield Inns offer lodging at an affordable and economic price.
All of this is clear so that it resonates with customers.
The Strategic Compass Model gives both management and staff clarity regarding a particular offer.
When Marriott did this for their various properties and defined the appropriate emotional
connection, they got an immediate sales lift. Critically, human resources must understand this.
Each E and property requires a special team. The Strategic Compass Model avoids the mistake of
trying to be all things to all people and as a result creates authenticity.
Plotting a Strategic Direction
It is no surprise that some traditional department stores have lost market share so dramatically.
When shoppers rate them, they tend to get a “2 or 3” on all 4 Es: saving money—Economic, saving
time—Easy, a good social Experience, and an Ego or status boost. In other words, they are mediocre
at everything and excel at nothing. For every E, there are competitors that perform at the “5” level,
so naturally many shoppers have abandoned traditional department stores for “5 out of 5” specialty
solution providers.
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Typical profiles are shown below.
A traditional business that is “okay” at everything, but has no strategic edge, such as department
stores, many banks, and hotels is rated at 2 to 3.
Businesses that focus on being easy to reach, such as McDonald’s, Canadian Tire Corporation (90
per cent of Canadians are within a 15 minute drive from a Canadian Tire store), and banks with
networks of ATMs are located at the “E-asy” point of the Strategic Compass.
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A business that aligns its resources with lower costs and prices such as Costco, Dollarama, Payless
ShoeSource, will be located at the “E-conomic” point of the compass.
A business that creates a special experience, adds value through enjoyment and prices this
appropriately, such as premium Starbucks or Balzak’s coffee, Lululemon, or Zappos.com, is at the
E-xperience point of the compass.
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A business that responds to purchasers’ needs for ego gratification and a display of high status, such
as Tiffany’s, Harry Rosen, or Birks, operate at the “E-go” point of the compass.
A key benefit of using The Strategic Compass Model is that it is applied to specific acts
of buying, rather than to specific customers. For as we know, the same person can shop at a
food discounter to save money, go online to book travel to save time, treat themselves to a hotel spa
experience, and buy a new sweater at their favourite specialty store. The key for your business is to
focus on being superlative at the “E” you have chosen. The customer, depending on their
circumstances and mood, will make their choice at the time of purchase.
The Strategic Compass Model also helps consumer-connected businesses understand where they are
vis-à-vis both customer wants or needs and the competition.
Aligning the Resources of your Business
We experience it every day: a place where we go to buy something that promises one thing, but
delivers another; a department store where the merchandise is laid out in a glass showcase fixture,
but then there is no staff to serve you, so you walk away; a hotel that offers efficient online
reservations, but the typeface is white on black and impossible to read making it too long to
complete the reservation, so you cancel; a company that claims that “our employees are our biggest
asset,” yet spends only two days training them and has an annual turnover of 130 per cent,
providing service that’s so poor that you don’t go back; a drive to “your store” for an advertised sale,
but their poor inventory control means they are out of the key seasonal item you wanted to buy, so
you buy at a competitor only three blocks away. Consumer research shows that these experiences
are all too common.
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Choosing the direction to take is the most important step, but it is just one of many
decisions. Whether you choose to become the highest ranked in your trade area on Ego, Experience,
Economy, or Easy, it is important to:
 Provide what a large segment of the population truly wants or needs;
 Ensure there is no competitor that can do a far better job (and sustain that position e.g.,
Walmart or Costco on Economy);
 Ensure the component or tactical parts of your strategy are carefully chosen and lined up to
reinforce the compass point you have chosen and build it up to a “5” rating; and
 Ensure you have analyzed the consumer and competitive marketplace and your company’s
resources before committing to one (or more) of the compass points. (Only once your
business has reached the exalted “5” rating do you have the luxury of deciding whether or
not to go for a second “5” on another compass point.)
This decision should likely be based on market research such as listening to shoppers, auditing
competitor’s operations, and looking at model businesses in another city.
Using the Strategic Compass Model
The Strategic Compass Model requires consumer-connected businesses to examine the key elements
that will support the organization’s chosen strategic direction. Businesses must understand the
needs or wants behind consumer decisions and what solutions will be offered to shoppers.
The first step in creating a strategic model involves identifying the basic elements or tactical/action
components that create the solution. These “moving parts” of your business should be aligned with
one another to support the strategic direction you have chosen. To do this, you should write down
the key elements of the strategic direction: how will each of the tactical components or business
elements contribute to your organization excelling and achieving a “5” rating as judged by users,
shoppers, or solution seekers?
These elements of strategy include the following:
 Culture, employee characteristics, and people-practices;
 Products;
 Services and service;
 Real estate, channels, locations;
 Marketing and branding;
 Operations;
 Design;
 Information technology and business processes; and
 The financial model that will reflect the outcome of the above elements.
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Chapter 3:
Elements of the Model
The right resources are usually scarce and expensive. All businesses will benefit from going to
market understanding that all tactical elements supporting the corporate strategic direction are
carefully aligned to guarantee success.
Before deciding which “E-solution” to pursue, the business will benefit from its founder or
management team setting a strategic direction and identifying the unique culture on which the
business is founded. More often than not, the essential personal characteristics of the founder are
reflected in the corporate mission and vision statement, which is discussed below.
Organizational Culture
The culture of a business is the real base of any organization. As such, it should be made of
granite so that it is long lasting and true to the strategic direction. If you get it wrong to begin with,
like concrete, the business will develop cracks and fissures and then eventually crumble. Get it right
and the enterprise will always have a solid, granite-like base.
Ensuring that your business is aligned with the strategic direction starts with ensuring that your
company’s culture and your strategic compass point are compatible. Each company will benefit
from having a template for selecting, developing, and rewarding team members’ skills and
behaviour. This should be particular to and supportive of the chosen ‘E’ compass point.
Company culture works primarily on three levels:
1. Core values that show individuals how to conduct themselves, behave, and treat others;
2. Business values that stem from the core values and reflect the unique principles of
managing a specific business; and
3. Fundamental activities that an organization chooses to excel at compared to other
activities, which are deemed less important (the ones that you say “no” to).
a.
The core values are based on the ethical values and behavior of the founder
or initiation team. These core values translate into policies and practices that guide
how the business treats its staff, suppliers, customers, community and shareholders.
When difficult decisions have to be made, management can turn to the core values for
guidance.
b. The second level at which company culture works is business values. These
stem from the core values and are embedded in the policies, processes, and procedures
that are unique to every organization. For instance, some companies have “the sunset
rule,” whereby if there is a “people problem,” it must be addressed before the end of the
day.
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c.
The third level where an organization’s culture is entrenched is through
“war stories” about the business, which focus on what is most important, rewarded,
relied on, and celebrated. These are ingrained in the culture and are the fundamental
activities that have been deemed important to the business both strategically and
tactically. These are the cutting edge of the strategic direction. They are what is talked
about by clients when your business is the subject of conversation.
Tactical Alignment
Human Resources
Human resources policies and practices ensure that when employees are selected to join the
business team their fit with the selected compass point is 100 per cent.
Product Offerings
Discipline is needed to plan the key products and services that will be emphasized within the strategy.
Too often assortments are spread beyond what is effective. The solutions that customers seek, which
can be provided by the strategic compass points, need to guide decisions about merchandise or
services. Extending product lines is acceptable as long as new ones still relate to the core concept.
Too much assortment can be confusing, costly, and can slow shoppers’ buying decisions.
Customer Service
Perhaps the greatest challenge in consumer-connected businesses is excelling at the point of
customer contact. The convenience store industry reported that for 2008, turnover of management
was 29 per cent and 109 per cent for non-management staff. Ouch! Think about a review of your
company’s culture and H.R. practices. The goal of service should be to build relationships and stay
connected to customers.
Design
Design tells the story, or at the very least is the stage for the merchandise and services show. The
design criteria must be carefully noted so that they enhance the business environment and
customer rating of the strategic direction. Fancy fixtures and carpeting would send the wrong
message in a hard-discount store.
Marketing
Marketing must “package” the communications of the particular business brand. There is no longer
a mass market — just a market that is a mass of niches and individuals, hence, the enormous
fragmentation of media and businesses. Consumers face mind-boggling choices, whether in a large
bookstore, watching TV, surfing the Web, interacting with social media such as Facebook and
Twitter, or communicating on their mobile devices.
Operations
Operations have dramatically changed with the new omni-channel retailing operation supplanting
the traditional view of the retail store. All businesses will benefit from a disciplined and consistent
level of service for Web-based information, purchasing, catalogue use, and in-store to meet the
needs and today’s customer.
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Technology
Technology continues to offer new ways for businesses to interact with consumers, deliver an
exceptional in-store experience, manage inventory, access information, and more. But no business
can afford it all. So how do you choose what’s right for your organization? Seeking professional help
is highly recommended to make this decision.
Real Estate
Real Estate discussions must be guided by the “E” within The Strategic Compass Model that you’ve
chosen for your business. Economy-focused businesses cannot afford Bloor Street or Georgia Street
rents, while Ego-focused businesses require this type of status location to appeal to its customers.
Easy will require multiple locations and omni-channel options, and experience-focused businesses
can be either local or in a destination location.
Financial Model
Of course, all of this is only useful if The Strategic Compass Model produces a profit. The Strategic
Compass Model offers guidelines that are based on the financial results of best-in-class companies.
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Chapter 4:
Building Alignment into Your Business
Strategy
Easy – “Please make things easy for me.”
Economical – “You should go there because they always have the lowest prices.”
Experience – “Let’s go there to experience a treat!”
Ego – “I feel so good after shopping there!
Easy – “Please make things easy for me.”
Perhaps there is no greater need and opportunity to offer shoppers or clients than an exceptionally
efficient relationship. And now the business world has the chance to embrace the digital world’s
range of new solutions (think smartphones) with the creation of an omni-channel relationship.
These new solutions should be embraced.
The “E-asy” strategy is based on saving consumers time and adding efficiency to their
contact with a consumer-connected business. “E-asy” is especially important for time-pressed
customers, many of whom are well off. Research shows that for many consumers, “E-asy” is the
most important “E-solution” and that most of these people will pay a little more for an efficient
transaction and an easy total shopping experience. One study found that 28 per cent of shoppers
described themselves as “preferring to spend more if it saves them time” (Brand Weekly, 2009).
An omni-channel offering—which has become is especially important to these buyers of
services and merchandise who appreciate having the option of shopping either in a store, by
catalogue, or on the Web. Time-starved purchasers use their computers or smartphones to research
potential spending. Depending on the category, an online preview can range from 30–70 per cent of
purchases.
The Key Elements of Easy
Easy can offer two time-saving options for consumers:
 “I’ll do it myself” or self-service, which can also include the checkout process. Giving
shoppers easy access and offering a highly edited selection (e.g., convenience stores) saves
them precious time;
 One-stop shopping: offering consumers the largest selection of merchandise, food services,
and travel in the trade area or online, may take shoppers a bit longer to access, but saves
them from having to drive all over town because, “If they don’t have it, no one else will.”
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These stores must have knowledgeable sales associates because the technical aspects of some
products or services require special service.
For the “I’ll do it myself” shopper, location is critical. Those companies that use it aggressively have
built formidable positions in the marketplace. A dominant Canadian food service organization is
Tim Hortons coffee shops, where a vast country with a population of over 34 million is served by
3,326 restaurants in Canada, compared to Dunkin Donuts with 7,015 outlets for 311 million
Americans. Often “just being there” (accessibility and convenience) is a compelling strategy!
McDonald’s operates more than 1,400 stores in North America, making it easy for hungry people
who are in a hurry to buy just about anywhere and anytime.
Guidelines for the self-service approach to E-asy include the following:
 Ample and correctly placed stores, restaurants, hotels, or offices;
 Easy to use website;
 Open long hours: day, night, Sundays;
 Omni-channel: bricks and mortar, catalogue, Internet, and social media;
 Easy access/egress and parking: at/or near the place of business, with snow cleared in winter;
shade in summer;
 Easy to navigate and find wanted merchandise/services on fixtures, pages, and Web screens
that are efficiently designed with clear directional signs providing guidance on how to make
a purchase;
 Well signed and high in-stock position;
 Efficient purchase transaction;
 Self check-out is available; and
 Assortments are carefully edited, whether on a menu (Chipotle Grill), options for financial
services (ING Bank), or for stores (Gap apparel).
There are new customers today who are important and demanding. They are the new “Total Touch”
consumer who wants it any way, anywhere, and any time – as shown below:
Figure 5: Total Touch Distribution
© J.C. Williams Group
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Easy Culture and Employee Characteristics
Easy strategy team members are different: they hustle. They are also helpful, supportive, have a “can
do” service attitude, and enjoy being efficient.
In a similar manner, the Container Store makes organizing homes, offices and other places easy.
Launched in 1978 in a single 1,600 square-foot location, the company now has more than 60 stores
(growing at 5 per year) that average 16,000 square-feet in size and carry more than 10,000 items.
Their conveniently located stores are easy to shop and have staff who are exceptional at meeting
shoppers’ storage and organization needs.
Easy Products and Services Tend To Be Polarized
Retailers can make it easy for shoppers in two distinct ways. For replenishment type merchandise
where the customer knows what they want, a self-service environment is ideal. These operators
have edited assortments of high-demand brands, effective signs to orient shoppers and efficient
checkout systems. The convenience store, 7–11, is one retailer that understands what customers
want and how they like to shop. Key items are placed in the convenient “front and forward”
position of the store and are changed depending on the time of day and the clientele that are
shopping: in early morning, coffee is available for people going to work; at mid-morning,
homemakers easily find fill-in items “front and forward”; at noon school kids can pick up lunch
and snack items; and later in the day travelling business people can find cold drinks and other items
they need.
Another way for businesses to “make it easy” for consumers is the opposite of the
convenience store model–the “big box” store that offers vast merchandise assortments.
In the case of Lee Valley, the entrepreneur Leonard Lee created a destination business that started
with precision crafted working tools, which then blossomed into a range of specialty products. Lee
Valley Tools has a global business now with www.LeeValleyTools.com. In an interview for Profit
magazine Lee explained the success of Lee Valley Tools: keeping to its specialty and then expanding
to become best in their niche. Lee also emphasized the importance of service standards and policies
that reinforced this best-in-class status. Foregoing sales commissions and making solving customers’
problems a priority have contributed to the company’s success.
Sporting Life makes it easy with its huge range of brands and products online, in-store, and in
branch operations.
Easy Marketing
Marketing “E-asy” businesses involves building brand recognition and encouraging consumers to
choose the nearest business unit of the “E-asy” strategy company. This requires:
 Building the brand name for immediate recognition and understanding, e.g., McDonald’s,
all Canadian banks, or easy to use websites. Ideally, this goes beyond just logo recognition
to creating the basis for trust.
 Focusing on location identifiers such as an exterior design and communicating the benefit
of travelling the extra distance to get what you want. Powerful identification programs need
to include store signage, interior store design, windows and directional signs; catalogue
covers; and websites and systems to enable consumers to find what they want.
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
Creating an online experience that easily takes the customer to the store or a section on the
website without delays or glitches.
The 150-year-old F.A.O. Schwarz
New York based F.A.O. Schwarz makes it very easy for shoppers by
providing the following:
 A great website with hundreds of brands;
 A well located store (Fifth Avenue & 59th);
 An easy to navigate store;
 Helpful signage;
 Dozens of timeless brands;
 Lots of friendly demonstrations;
 Well located service desks and services;
 Kid-friendly visual presentation; and
 Entertainment from their “Big Piano.”
Beware Grandparents: visiting F.A.O. Schwarz can be dangerous to your bank account!
Easy Real Estate
An efficient store experience is all about the speed of the shopping trip. For the “do it yourself”
store, this requires a location in a trade area to capture pedestrian traffic (e.g., McDonald’s in an
office tower food court), access to parking (e.g., McDonald’s with street front parking) or ample
parking or drive-through (e.g., McDonald’s in dedicated real estate pads).
Stores with huge, category dominant assortments can fare well on their own, but also prefer being
located with similar type stores in power centres (“good adjacencies”). These then become major
destinations and draw customers from up to 100 kilometers or more. It is easier for shoppers to
make the trip to the single destination where they know they’ll find what they’re looking for, rather
than having to drive from one shop to another looking for a specific item. Another strategy is for
smaller specialty stores to locate adjacent to competitors.
Easy Operations
To create efficiency for staff and consumers, the operations of “E-asy” businesses tend to be highly
standardized, which requires:
 Consistency across stores and channels;
 Available and accessible locations, hours, layout, high in-stock percentages; and
 Efficient processes that save time at check-out/check-in.
Easy Design
Design is paramount to providing solutions consumers need and want. Easy design means:
 Easy access to store, website, and products by following their maps, guides, or apps;
 Efficient browsing of products and services such as easy to navigate/user-friendly website;
and
 Consistency across stores and other channels for a seamless omni-channel experience.
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Easy design in turn requires understanding the need for a hierarchy of communications, which
includes:
 Clear business and brand identification;
 Easy entry, whether store, catalogue or website;
 Merchandise, Web pages, and screens that are logically organized;
 Natural adjacencies of services or products;
 Easy access to merchandise; and
 Efficient completion of the purchase or transaction.
Technology and Business Processes
Technology and business processes provide the foundation for many of the key “E-asy” elements,
both for “Do it yourself” and “Done for me” business models.
At Tim Hortons coffee shop, digital signage gives customers the information they need for their
purchasing decisions.
Assortment management and forecasting and replenishment systems provide businesses with
intelligent tools to edit assortments and stay in-stock with products customers want; business
intelligence systems can guide retailers like 7-11 to offer the right products to each target market
throughout the day.
Online checkout requires effective and efficient technology. Amazon’s patented one-click checkout
is a great example of making it easy for customers to buy online using previously entered credit card
information. Retailers like Home Depot, Walmart and Sears also make it easy for customers to buy
online and pick up the product in the store: customers can be assured that the item will be available
in the store when they arrive.
Easy Financial Model
Businesses that adopt the “E-asy” strategy can be very profitable. While each of the companies
discussed so far differ from each other, they all enjoy good metrics on Earnings Before Interest,
Taxes, Depreciation, and Amortization (EBITDA), Return on Equity (ROE), and Operating Profits.
Economical – “You should go there because they always have the lowest
prices”
Generally speaking, the “E-conomical” strategy is strictly for the larger players. They play a ruthless
game based on the “virtuous circle” (lower prices» more sales» buy more at lower prices» operate at
lower costs» sell more at lower prices» repeat) The game is played by discounters, warehouse clubs
and Amazon. But there are also retail and other outliers in the game like Salvation Army Thrift
Store, and Odd Lots.
The key elements of an “Economical” strategy are distinct from the other compass points and are
epitomized by Walmart. The ongoing focus of businesses like Walmart is lowering costs and offering
lower prices to consumers. A key aspect of this model is “every day low prices” (EDLP). This is the
opposite of high-low pricing. Strikingly, one consumer survey we did found that the majority of
consumers believe that the “sale” price was the “real” price.
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As a trade-off for the low cost, the consumer experiences a simpler environment where
there is a low capital investment, with a no-frills store, hotel or airplane. These businesses give
shoppers a bare-bones environment such as a warehouse setting and generally reduce service levels
or use self-service.
Key Elements of the “Economical” Strategy
To take advantage of an Economical strategy, businesses have to make concessions,
which shoppers tend to anticipate and accept. For lower prices, consumers are willing to give
up the convenience of online shopping or a neighbourhood store or service, the luxurious feeling of
Ego’s status building environment and service, or an experience beyond the norm. In return,
consumers have lower expectations about environment and product/service ranges. The key
elements in an “E-conomy” strategy are as follows:
 An expense and operating model involving
o low cost real estate (big box stores, restaurants in strip mall type locations or nostores for e-tailers);
o logistics (minimal warehouses with efficient cross-dock shipping, low inventory and
high stock turnover);
o service (largely self-service with self-checkout or computer/smartphone supplied
information); minimal advertising; low investment in fixtures, offices, and capital
costs;
 Low prices based on the low costs and the purchasing power that is built up from huge sales
volumes; and
 Policies like EDLP and price rollbacks build trust in this business model, which further
increases the power of “the virtuous circle.” EDLP pricing eliminates the cost of marking or
re-pricing merchandise down and allows the business to offer a low-margin bargain price
every day.
Even large, classic specialty stores such as Holt Renfrew, Saks Fifth Avenue, and Nordstrom are using
the “E-conomy” strategy, with lower price zones like Holt Renfrew’s HR2, Saks “Off Fifth,” and
Nordstrom’s “The Rack” in low rent power centres.
Culture and Employee Characteristics
Costco people are different: first, they are proud of the efficiency of their operations and the low
gross margins which enables their company to run and still make handsome net profits; and
second, they embrace an organizational structure that is truly lean. Everyone understands that with
a 12–13 per cent gross margin, there is no room for shrinkage, waste, slow selling items, or
extravagances of any sort.
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A Win-win Culture!
When faced with the 2008-2011 recession, Costco co-founder and
CEO Jim Sinegal told the Seattle Times that “We said two things: one, we want to drive the
business to succeed so we’re going to lower prices… in addition, our employees deserve our
loyalty so we said, let’s see how we can get through this thing without having layoffs.”
“We feel good we are able to accomplish it and I think our people appreciate that and
understand our effort we made to make sure everyone kept their jobs.”
Now isn’t this the type of company culture you’d like to work with?
Walmart’s management is different from that of most other retailers and consumerconnected businesses. You will find them in their offices at 7:00 a.m. and at work on Saturday
morning. If they have a company car it is a standard, bottom-of-the-line, energy efficient model.
They are reaction- (rather than strategy) driven and of course, focused on cost cutting everything
(except wages rates) and are legendary negotiators.
Products and Services
Obviously, the service and product characteristics of “E-conomy”-focused businesses are different
because they offer:
 Both branded and house brand products, that play off one another;
 A low ratio of service to products;
 Designated (entry level price points) products with the lowest prices;
 Global sourcing; and
 Mostly self-service because the key to offering low prices is the downloading of services to
the shoppers. Self-checkout, self-run photo kiosks and ATMs, and Web-based travel
reservations are ways that consumers save service charges. However, the range of services is
not necessarily reduced; rather, gift and bridal registries are computerized to enable selfservice.
“Economical” Marketing
Marketing tends to play a lower profile role in an “E-conomy”-focused strategy; common
characteristics of marketing for “E-conomy” businesses are as follows:
 Low spending as a percentage of sales, although this does not always translate into low
marketing budgets since 1 per cent or 2 per cent of a multi-million or billion dollar business
is a huge sum;
 The use of mass media such as T.V., print and radio to reach a broad market in order to
move tonnage/volume;
 Price-item advertising which provides concrete proof that prices and price/value are better
than competitors; and
 Word-of-mouth from consistent performance (which is easy to demonstrate if your prices
are always lower than those of your competitors) transforms shoppers from “observers” to
“believers” to “advocates” and even “apostles” for the business. This is greatly facilitated by
social media.
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“Economical” Operations
Low cost operations are essential to saving money and require the following:
 Innovation and excellence to cut costs and programs involving continuous improvement;
 Automation to eliminate costly wages and increase quality;
 Customer self-service and self-checkout whereby these functions are downloaded to
shoppers along with the savings;
 Efficiency in supply chain management and global sourcing to guarantee lowest prices;
 Outsourcing of fringe activity to exclude anything but core skills and reduce fixed costs;
 Supply chain partnering to reduce expenses and increase the in-stock percentage (to +95 per
cent); and
 Business intelligence to drive inventory management efficiency.
Many large retailers have even decided that back-room operations are such a specialized non-core
competency that they outsource this activity. Companies such as Excel handle every phase of the
supply chain including analysis and design, management, warehouse and order fulfillment,
assembly and packaging, transportation management, service parts logistics, and service logistics
from the store to the back of the distribution centre.
“Economical” Design
Economical design works two ways. First, “E-conomy”-focused design eliminates non-productive
costs (both capital and operating) that do not add value. Secondly, “E-conomy”-focused design
avoids repetition and the additional costs to run each business unit. Management makes a strategic
decision to respond to the shoppers need to economize, recognizing that frugal shoppers are willing
to give up a fancy environment in exchange for lower prices.
As with all The Strategic Compass Model strategic options, design is key to correctly aligning the
tactics. Some of the principles that guide “Economical” design are a) consistency, so that the same
options work for every business unit; b) speed, so that time is not wasted in construction; c)
simplicity, to minimize costs; d) flexibility, so that one fixture, office or counter can be used in
many ways; and e) a no frills environment that communicates a cost-savings message to customers.
“Economical” Technology and Business Processes
The technology platform and system tools provide a critical starting point. A central architecture
with one version of data can eliminate the need to synchronize databases, which is costly.
Centralized applications, accessible from stores, eliminate or reduce the need for applications to be
installed across all stores. Using transaction engines that can be configured make it easier and less
costly to modify applications, and a separate graphical user interface (GUI) layer makes it easier to
transfer applications to mobile devices, enabling check out from a handheld device instead of a
fixed POS register.
“Economical” Real Estate
There are two keys to “Economical” real estate. First, the location must be able to generate a high
sales volume of visitors or shoppers, which contribute to sales volumes and reduces the rent-to-sales
ratio. Second, the rent per square-foot must be low, which is why “Economical” stores and
businesses often locate outside of urban cores (for the low taxes) in power centres, strip service
centres, and warehouse districts. Of course, one of the lowest priced businesses, Amazon, has no
stores at all, so pays no “retail” rent — a key ingredient of its strategy.
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Economical Financial Model
The model is based on the virtuous circle:
Experience – “Let’s go there to experience a treat!”
The desire for a special experience beyond a rational price or an efficient transaction has likely
existed since the days of customer connection at medieval fairs. The yearning for “that little
something” as a reward or for a break from our everyday life is part of human nature.
The “E-xperience” strategy is about engaging people’s senses and emotions, for consumers are willing
to spend money for a change of (shopping) pace. Such spending often takes the form of a treat for
personal gratification in a social setting such as Lux Beauty Boutique, Starbucks, Build-A-Bear
Workshop, Granville Island Market, Bass Pro Shops, American Girl, St. Lawrence Market, Whole
Foods.
A key characteristic of a successful “E-xperience” strategy business is to continually
innovate. Disney is a leader in this game. A new concept, “Imagination Park” opened in
Montebello, California, with more stores set to open across the United States and Europe. The store
is more than simply another place to sell licensed Disney products. The experience park allows
children to watch film clips of their own choosing, participate in karaoke contests, chat live with
Disney Channel stars via satellite, catch their image in a “reflective mirror” and have a special
birthday treat and show. One retailer that has used this strategy with great success is Eataly in New
York (23rd Street and Broadway) — all retailers would benefit from making a trip to see this
innovative store.
Key Elements of the “E-xperience” Strategy
The strategy required to build a special “E-xperience” may be the trickiest of all the “E” strategies
because it requires doing the following:
 Creating a unique event, environment, or educational element that adds value;
 Training employees to take a role or act in the theatrical event of retail, restaurant, hotel
service, or personal service;
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


Constant renewal and fine-tuning, for what is unique today can quickly become stale after
one or two repeat visits;
Being completely different from the other “E” elements; and
Delighting clients, while largely downplaying the economical or efficiency issues.
“E-xperience” Cultural and Employee Characteristics
The employees at Apple stores are different: they look different (casual “I dress my way”) and act
different (“I am here to open up an Apple VISA for you”). The Apple store is pure theatre, with
different stages organized around different needs or solutions for clients. The same can be said for
the Hard Rock Café, where fans are immersed in the fantasy and history of rock-and-roll, with staff
playing their part in the entertainment.
The employees of “E-xperience”-focused businesses must be
 Passionate about creating the experience;
 Knowledgeable and creative;
 Happily acting for and interacting with the customer; and
 Participants in the show.
“E-xperience” Products and Services
Consumers seeking to escape the mundane who are offered unique (and sometimes even frivolous)
products and services are willing to pay a premium for them. Lego’s shopping experience, Legoland,
sells their basic building cubes with a fantasy tour where the scenes and characters are created from
Lego cubes.
“E-xperience” strategy products and services are:
 Usually premium-priced (e.g. Starbucks vs. Tim Hortons);
 Part of a theatre, show, or other unique experience (e.g. T&T live fish and seafood tanks or
Lululemon’s free yoga classes);
 An extension of the experience (e.g., Harrods UK department store’s vast range of brand
logo products, Bass Pro shops fish tanks and wild animal picturamas);
 Unique enough that fees can be charged for some services; and
 Non-standard and part of the show — and whether the service is entertaining or
educational, it is fully integrated into the product or service assortments.
“E-xperience” Marketing
Marketing “E-xperience”-focused retail often involves flagship stores or “experience centres” that
not only complete the product and service ranges, but also involve the consumers. Puma’s Berlin
store shows all the component parts of a Puma shoe on a workbench with a myriad of different
patterns for shoppers to mix and match to create their own one-of-a-kind shoe.
Marketing these businesses involves creating experiences for consumers. This is often done
in non-traditional ways, through cross promotions, demonstrations, pop-up stores, and publicity
events that engage people and involve them in the experience.
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“E-xperience” Operations
Operations for “E-xperience”-focused businesses can be tricky. The need for continuous change that
customers expect requires that the operations of any “E-xperience”-based business have employees
who can manage complex situations. Cabela’s outdoor and sporting goods stores have experts who
not only have encyclopedic knowledge about their department, but who are also able to translate
their knowledge into demonstrations that captivate the imagination of customers.
The operations of “E-xperience”-focused businesses:
 Are labour intensive;
 Are complex and customized;
 Require highly dedicated employees; and
 Need continual upgrading and renewal.
“E-xperience” Design
Unlike design for “E-go” and “Efficiency” strategic directions, which plays a less central role, design
is often the key feature of the experience. The environment that consumers are immersed in must
be kept current and meet shoppers’ expectations.
Businesses must think in terms of building stage sets rather than monuments.
The design of “E-xperience”-focused businesses
 Is often the most fundamental element in experience;
 Includes product and service enhancement across multiple channels; and
 Acts as a key element in strategic differentiation.
Technology and Business Processes for “E-xperience” Businesses
To create a unique and memorable experience, technology can be employed primarily in two key
areas. System tools can be used to enable continuous reinvention and to keep the concept fresh.
“E-xperience” Real Estate
Real estate selection criteria will vary for every “E-xperience”-driven business, but will always
depend on the following:
 The quality of the experience, e.g. Disney far outside of Orlando;
 The role the real estate location plays, e.g. is it a “brand-shrine” that must be located on
upper Bloor or Georgia Streets in a high status district?;
 The number of people your business wishes to reach, e.g. M&M stores, Hershey, Forever 21,
Toys “R” Us in Times Square;
 The desire to have good adjacencies, e.g., a home decorating store locating in a furniture
node, car dealers creating “auto malls.”
“E-xperience” Financial Model
Companies that use “E-xperience” as a strategy are adding value that can justify high margins to
pay for the special sensual or emotional treats that customers want. Examples include Starbucks,
and Whole Foods Market which have
 Exceptionally high sales growth; and
 Strong Return On Investment.
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Ego – “I feel so good after shopping there!”
We all have our own unique ego — whether brash or humble, creative or conformist, outrageous or
conservative. This provides an opportunity to cater to consumers’ innate desire to express
themselves. To some extent, we are what we consume. And a large part of the affluent world
believes in the right to demonstrate this by spending money on shopping, travel, entertainment or
whatever else they choose.
Like “E-xperience”, the “E-go” strategy meets consumers’ emotional rather than rational
needs; however, rather than focusing on creating an “E-xperience” for shoppers, the “E-go” strategy
is about making consumers feel special. An “E-go” strategy provides shoppers with a status
enhancing product or service. Consumers want shopping trips and purchases that can help them
express what they stand for and give them personal gratification from the badge value of their
purchases. But “E-go” is not exclusive to high price-points. Brands such as Juicy Couture, Nike,
Puma, Swatch, Triple Flip, H&M, Zara, or Robert Simmonds (Fredericton, NB) all convey a special
status to a particular consumer niche segment, depending on the ego needs (and mind) of the
beholder.
“E-go” Key Elements
The most common element of all “E-go”-based businesses is that the environment, service and
products are delivered according to a set of rigidly controlled standards and include the following:
 A recognized and respected brand, designer, name, place, logo, and colors;
 A focused attention to a specific market segment;
 Controlled distribution and supply to the right cities, streets, stores, and websites;
 Priced according to what the market will bear (in many instances the ridiculously high price
and mark up is essential to the brand’s cache); and
 Continuous fine-tuning of the competitive positioning.
“E-go” Culture
At the Four Seasons hotel, staff and management are selected from a pool of prospects for each job.
The search is for a cultural fit that will reinforce the status of the hotel as the premier chain in the
world. According to a Four Seasons executive, unique culture must be grown organically within the
organization and is not easily replicated: “a culture cannot be copied, it cannot be imitated. It has
to grow from within over a very long time, based upon the consistent action of the senior
management. That is the barrier to entry for other hotels trying to compete against us — it isn’t just
having a fine building.”
The same concept can also work on a lower price scale when consumers carry a shopping
bag from Browns Shoes, Zara, or Abercrombie that signals that their ego-gratification has
found its match with these stores. No matter what the price range or the products or services, ego
gratification practices include the following:
 Choosing a niche market segment on which to focus: understanding and appealing to
someone’s ego requires sensitivity to their personality type and shopping habits;
 The business and its associates must reflect their clients’ lifestyle as the brand becomes a
mirror image of the target customers’ ego needs; and
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
A culture that expects service staff to be exceptionally sensitive, creative, and confident
enough to go the extra mile on their own initiative.
“E-go” Products and Services
The branding of “E-go”-based products range from the subtle to the extreme. The not-so-subtle
“LV”s all over Louis Vuitton products shout, “I’ve got the money to buy these products!” Yet
regardless of the service or product, consumer-connected businesses following the “E-go” strategy
have:
 Branded, named, distinctive, and exclusive products;
 Logos embedded in the design;
 Personalized and customized services;
 Concierge and lifestyle support through all channels; and
 Fees for some services.
“E-go” Marketing
“E-go”-directed communications reinforce customers’ entry into the brand’s “club.”
Buying the product or service and wearing it, showing it off, and being in the company of (a few
select) others answers people’s need to be part of a special group or club of discerning consumers.
Club membership is granted through shopping in the particular brand’s environment, the level of
service provided to the shopper, the extras such as special delivery, highly targeted and personalized
communication, and invitations to events and parties. Harley Davidson stores/dealers are a great
example!
“E-go” Operations
Operations must support the other distinctive “E-go” elements. Typically, gross margins are
extremely high because “E-go”-based companies leverage a highly desirable name brand or service.
For instance, designer jeans that sell for several hundred dollars often cost the brand company only
a few dollars more than those that national or private store brands pay.
“E-go”-based company operations benefit from having the following:
 Customer information available for high touch service: Both technology and service staff’s
personal records help track shoppers’ personal data (birthday, room preference, age to
retirement) and purchase records (preference in clothes, brands, shoe size, table preference,
etc.), all used to please the purchaser;
 Speed to market with new items/services: Having the latest and greatest is important for
many people;
 Premium priced, high margins: At all levels and for all products and services, a brand is an
opportunity to increase prices and gross margins. While most specialty retailers work on
gross margins (sale price – cost of merchandise) of 30–40 per cent, some premium brands
have gross margins of up to 90 per cent (10 per cent product cost); and
 After-sales service reconnects with the purchasers for further ego-enhancement.
“E-go” Design
Design is paramount to “E-go” gratification shopping. Whether it is in a hotel or cafe, the store,
catalogue, or website, the design should embody the product or service’s position in the
marketplace and its position in relation to competitors. Careful attention must be paid to packaging
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and staging the merchandise or service. Great brands create “shrines,” such as the Louis Vuitton
store on the Champs Elysees, the Apple store at Fifth Avenue and 57th Street in New York City, or
Whole Foods new Chicago emporium.
Cleverly executed design supports the “brand club.”
“E-go” Technology and Business Processes
There was a time when the sales associate at the local general store knew everyone by name, and
everything about them, but this is no longer possible. However, innovative technology and business
processes enable us to go back to the future where (with a little help from technology) we can know
each customer regardless of where and when they shop and make sure their preferred products are
on hand.
System tools and consolidated databases can share customer information across all
channels and stores to create a seamless experience.
At Sales of Over $5,000 per Square-Foot – It Works!
Apple has designed the ultimate “E-go”-based business model to build
customer relationships and loyalty, through the seamless integration of its
online music store, proprietary software, and ultimate player and design
icon, the iPad. The business model is further enhanced through a large business web filled
with content and accessory providers and strategic partners. These partners further
entrench the iPad, iPod, iPhone and Mac (e.g., Mac users group) into everyday life.
iPad and iTunes appeal to the customer’s ego by providing brand cachet, the ability to
customize the product for self-expression, and membership in the Apple iTunes user
community. Once customized to express the personality and tastes of the customer, the
device becomes part of his or her identity.
“E-go” Real Estate
Selecting “E-go” strategy real estate should be straightforward: locate the business where there are
lots of your target market clients or shoppers and very similar businesses to yours (eg. Gucci being
next to Louis Vuitton, H&M along with Zara and Joe Fresh all being within a street-crossing on Fifth
Avenue, New York City).
“E-go” Financial Model
The “E-go” Financial model is based on creating merchandise and services that express and cater to
the ego gratification of the specific client and/or segment, which is usually a high cost/high capital
model. Examples of highly focused high-end “E-go” strategy retailers are Coach, Tiffany & Co.,
Harley Davidson, and Neiman Marcus, characterized by the following:
 Above industry sales growth; and
 High ROE, ROA profit margin, and EBITDA.
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Chapter 5:
Creating the Strategic Compass Model for
Your Business
It is critical that progress and success toward becoming a “5 out of 5” business, and eventually a
legend, is objectively measured.
Using The Strategic Compass Model is simple as 1, 2, and 3.
1. Start with understanding where your company is now as rated by the target market segment
customers;
2. Decide on the compass point in which you want to excel, and communicating this to all
staff so they know “what it will be like when we get there” and;
3. Allocate and realign resources to reach your objectives.
Getting Off “3”
As you now know, to be exceptional, pre-eminent, or even legendary, and to start to enjoy the perks
of customer loyalty and advocacy and high profits, your business must be rated at least a 4.5 or 5 on
The Strategic Compass Model. This requires at least above par (or 3) ratings in two other Es and
hopefully another 4-5 in one of them.
The reality is that companies that are “good” or a “3” will stagnate. A familiar case is the traditional
bank, hotel, department store, or airline.
E-asy
Apple Store
American Girl
Home Depot
Cabela’s
5
5
4
5
E-conomical
4
3
4
4
E-xperience
5
5
5
5
E-go
5
5
3
5
So Start Right Now!
1. Honestly and objectively, how would you rate your store against the very best in
Canada/USA for each of the Es? Scale of 5 to 1.
Easy? __________
Economy? _________
Experience? ____________
Ego? ___________
Ask your staff to do this and to give examples of their idea of stores that are 5-out-of-5 for each “E”.
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Fill in what your position is on the Strategic Compass now.
2. Now it’s decision time!
a.
With what “E” direction(s) can I not ever really compete and be a 5-out-of-5 retailer?
_____________________________________________________________________________________
Why?
Resources? Y N
Culture? Y N
Formidable competitor? Y N
b. In what “E” direction(s) do I (and my key staff) feel really comfortable in? Enjoy? Have fun?
Feel passionate about?
_____________________________________________________________________________________
c.
Which “E” directions could we reduce our efforts in in order to increase our chosen “E”
rating to a 4 or 5?
_____________________________________________________________________________________
d. List several stores or customer-connected businesses that your store could emulate? (They
can be in Canada, USA, global or a “dream store.”)
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
e.
Is there enough market potential for this idea? (If it’s really unique and sound your trade
area will expand.)
_____________________________________________________________________________________
_____________________________________________________________________________________
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3. Now it’s action time!
a.
Collectively assemble your “end goal dream store team.” Everybody should be challenged to
listen to your vision, comment on it, and then suggest ideas for all the tactical building
blocks. List the ideas, show pictures, sketch ideas.
Where will you be on the Strategic Compass…
In three years?
In five years?
b. If you don’t have the right leaders and team for your strategic direction, you will benefit
from challenging them or their abilities and attitudes.
Action on managers __________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
c.
Start building a set of aligned tactics around:
Products – change, keep, add, edit, brand
Services – how many, when, how good, train and reward
Real estate – stay or move, reduce or expand
Marketing – traditional and new wave, role of social media, website
Operations – firmly focused in one direction
Design – your brand new package
IT and business processes – supports your strategic direction
Finances – time to build a new business model, pro forma, higher or lower margins
d. Plan your priorities, dates to implement, and share these with your team. And be sure to
celebrate your victories along the way. Keep asking shoppers “how are we doing?”
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Choosing Your Strategic Direction
When deciding on your strategic direction, ask yourself the following questions:
 Should we try to add a second “E-solution” to our strategy? Many consumer-connected
businesses (even with one “E” rated at 5) looking to sharpen their strategic advantage decide
not to add a second “E-solution” to their competitive arsenal. It’s because they may not have
the required culture and skills or the will to invest in the resources to take them in an
additional direction. Even a slight change in strategic emphasis would confuse shoppers and
detract the retailer from their core strength manifested through the one “E”.
 While the consumer market is constantly in flux, where are the new, untapped
opportunities that can be detected, pursued, and captured relatively easily with a “5”
performance?
 Can we reach out to new, emerging consumer segments before the competition meets these
needs?
 What must we do to remain in a position that pre-empts and defends against competitors?
Sustaining Success
The development of the right strategy for your business and ensuring that your tactics are aligned to
achieve your business goals will allow you to continue building on your successes. And maintaining
a focus and direction for your organization by using the Strategic Compass Model will enable you to
excel at what you do best to meet the needs of your consumer and your business.
Whether you become a leader in saving your customer time (E-asy), saving them money (E-conomic),
providing them with an exceptional experience (E-experience), or in catering to their wellbeing
(E-go), a single focus will go a long way toward your organization being rated a “5 out of 5” in the
minds of your customers.
Once leadership in one of the points on the Strategic Compass is achieved, it’s up to you where you
want your business to go. You can choose to continue your leadership in the point in which your
business excels (something that many Canadian businesses have done to great effect), or you can
attempt to add a second or even a third focus to your organization.
However, remember that you are in business for your customers – to meet their needs and desires –
and that every decision you make for your organization will be reflected in their response to it.
So develop your strategy, align your tactics and elevate your business to go beyond great.
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