Richard Coates digs into the five essential tests of good business strategy.

A successful business strategy can be measured in several ways; however, fundamentally it is about creating value for the organisation aligned to its core purpose. For many (although not all) this is focused on profit delivery and sustainability; underpinned and supported by a strong balance sheet, market share, customer engagement and advocacy.

In this blog, with the help of some well-known quotes from Michael Porter, Jim Collins and Sun Wu, I reflect on Porter’s five tests of a good strategy, and the extent to which we see them applied in practice:

A unique value proposition:

“Which needs will you serve, which customers, at what relative price? Have you staked out a positioning that’s different from rivals?” [Collins]

“If all you’re trying to do is essentially the same thing as your rivals, then it’s unlikely that you’ll be very successful.” [Porter]

“Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” [Porter]

Delivering value for targeted customers is the cornerstone of any strategy. Providing uniqueness is more challenging. This is especially the case for established corporates or organisations who have dominated traditional market sectors; they may deliver economies of scale, but less so in terms of material differentiation. New entrants and start-up / scale-up firms target and develop specific value propositions to build and scale innovative propositions, with the luxury of not being encumbered with legacy issues.


A distinctive value chain:

“Competitive advantage lies in the activities, in choosing to perform activities differently or to perform different activities than rivals. These ultimately are the choices that result in a company’s ability to charge premium prices or to operate at lower cost.” [Collins]

“The value chain disaggregates a firm into its strategically relevant activities in order to understand the behaviour of costs and the existing and potential sources of differentiation.” [Porter]

“A value network must be deliberately and specifically tailored to satisfy the needs of a particular customer segment.” [Sun Wu]

We are seeing a shift in value chain structures from being wholly or significantly built and owned and controlled in-house, to becoming a collection or network of specialist suppliers and partners to deliver specific competences for the benefit of customers and the organisation. Of course, many industries and market sectors are at different levels of maturity, but the trend is evident and creates opportunities for specialisms to develop and for innovation.


Clear trade-offs, and decisions about what not to do:

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different”. [Porter]

“The essence of strategy is choosing what not to do.” [Porter]

“This may be hardest, as it means accepting limits – saying no to some customers, for example, so that you can better serve others.” [Collins]

For us, this is all about clarity and focus. Confirming the organisational purpose, analysing and understanding the competitive environment, identifying where value lies, assessing the competences the organisation has and can realistically develop, and then defining the target future state and the key strategic initiatives needed to achieve this aim. The challenge is to achieve a high state of colleague and partner engagement, but avoid irrelevant distraction and organisational drift.


A value chain where activities reinforce each other and fit together:

“Fit locks out imitators by creating a chain that is as strong as its strongest link.” [Porter]

“Great strategies are like complex systems in which all of the parts fit together seamlessly. Each thing you’ve chosen to do amplifies the value of the other things you do.” [Collins]

“A value chain is a synergistic system where activities are linked together to produce a value proposition.” [Sun Wu]

The design, inter-relationships, synergy and efficiency of the value chain, and its overall performance, are critical elements of proposition delivery. This is especially the case where many markets and distribution channels are increasingly driven by and/or enabled by digital technology and data exchange. Many firms operating with manual and legacy processes and assets are reappraising their value chain to ensure fit and complementary operations.



“Continuity of strategy helps companies to make good choices about whether and how to change in the face of turbulence.” [Collins]

“If you change your strategy every year, you will not have enough time to build a value chain that is difficult to copy.” [Sun Wu]

“The company without a strategy is willing to try anything.” [Porter]

“Finally, strategy must have continuity. It can’t be constantly reinvented.” [Porter]

Strategies are increasingly developed over a shorter time horizon to help executives understand, navigate and respond to market changes and multiple disruptive factors. And strategies should not be viewed as a rigid plan! Rather, the business strategy should provide a framework for decisions, actions and investments in response to changing customer needs, competitive activity and new opportunities. Regularly reviewing and ‘course correcting’ should mean that the strategy always remains ‘live’ and relevant.

Strategy is a well-debated (and quoted!) topic and we are keen to hear your views on these points, as well as any perspectives from your own experiences in putting strategy into practice. Please post your thoughts and tag ‘Whitecap Consulting’ (LinkedIn) or @Whitecapconsult (Twitter), or alternatively send me an email at [email protected] to share your thoughts.


Hopefully you’ve found this article useful. If you feel that your strategy development and strategy implementation process would benefit from independent review and challenge, please get in touch.

Established in 2012, Whitecap Consulting is a regional strategy consultancy headquartered in Leeds, with offices in Manchester, Milton Keynes, Bristol, Newcastle and Birmingham. We typically work with boards, executives and investors of predominantly mid-sized organisations with a turnover of c£10m-£300m, helping clients analyse, develop and implement growth strategies. Also, we work with clients across a range of sectors including Financial Services, Technology, FinTech, Outsourcing, Consumer and Retail, Property, Healthcare, Higher Education and Professional Services, including Corporate Finance and PE.