The Driving Force: Key to Strategy
The idea of the driving force can help you think with greater clarity about the present and future of your business, and everything you do.
The term driving force comes courtesy of business consultants John Zimmerman and Benjamin Tregoe and is a major concept in strategy. Once adopted, the driving force becomes the quantitative principle around which all planning is done.
There are several driving forces that you can choose from. But there is always one that becomes the most important organizing principle of your business.
Here’s an important point. Just because you have, for example, a product-driven driving force for your business does not mean that you are not also focused on other areas of customer need and customer satisfaction. Your driving force is the “point of the spear” in all of your thinking about your business, your customers, and your financial results.
The Product or Service Driving Force
The product or service driving force determines the scope of your markets and the range of your products. Let us say that you are a Domino’s Pizza or a McDonald’s. You would then have a product-driven driving force. The focus of your strategy and everything in your organization would be to sell more of your product to ever more customers in as many different ways as possible.
If you were an accounting or legal firm, you would have a service-driven driving force. Your goal would be to sell more of your specific services to more customers in as many different ways as possible.
The Market Needs Driving Force
This driving force exists when you identify a particular market and you ask yourself, “What is it that my market needs and wants?” You then develop the products or services for that specific market.
One of my clients has been All-State Legal Supply. It is an excellent company with a very clear focus. It is an all-purpose firm that provides everything that a law office needs to operate efficiently from the time it signs its lease to the time it closes its doors. This company supplies furniture, computers, software, stationery and office supplies, and even temporary services when necessary.
Technology-Driven Driving Force
This driving force occurs when you build your business around your technology. One prime example of a technology-driven driving force company is Apple. Apple does not produce refrigerators or sell groceries. Apple only manufactures products where its advantages and innovations in technology can give it market advantages over competitors.
Whether you are in computers, software, Internet marketing, telecommunications equipment, and so on, your technology will determine the products and services you offer, the markets you serve, and the new products that you would develop.
Production Capability Driving Force
In this case, your production capability would determine the products and services you offer and the markets that you aim at. For example, a furniture manufacturing company’s driving force would be to create more and better varieties of furniture that it can sell to more customers in more markets.
IKEA would be a perfect example of a production capability driving force company. Everything it does is to design and produce more varieties of easy-to-assemble furniture for more and more people in ever-expanding markets. It has the equipment—the lathes, drills, and assembly lines—for manufacturing furniture and furniture components. Its production capability determines how much and what kind of furniture it can make.
The Method of Sales Driving Force
In this case, it is your method of sales that determines your products, services, and all of your business activities. Sales methods could be retail, wholesale, direct mail, Internet, distributors, or manufacturer’s representatives.
In our business and in millions of other businesses worldwide today, the method of sales is digitally downloaded products sold via the Internet and delivered online. Because our method of sales is to contact prospective customers and offer them our knowledge-based digital products, this determines the entire structure of our business, from product development through to technology requirements, staffing, office facilities, marketing, sales, pricing, customer relationships, and everything else.
The Method of Distribution Driving Force
Sometimes your method of distribution determines the products or services that you offer, and the way that you offer them. For example, Avon distributes products by demonstrating its cosmetics to women both individually and in groups. This face-to-face method of distribution determines the entire structure of the company, including what new products Avon will offer, how those products will be priced, sold, and delivered, and the company’s entire reimbursement and financial structure.
The Natural Resources Driving Force
For companies like ExxonMobil, Weyerhaeuser, Shell, or British Petroleum, the driving force would be natural resources extraction, processing, shipping, and delivery, whether oil, gas, coal, timber, or various minerals like copper, gold, or iron ore. The location of natural resources and the customers or markets for those natural resources determine everything that the company does.
The Size/Growth Driving Force
For many companies, their driving force can be their goals for growth in sales and profitability. For many years, Toyota has had a size/growth driving force. The carmaker’s objective has been to gain market share. As it gained more market share, because of the economies of scale of manufacturing, Toyota’s costs of production decreased and its profitability increased.
The Return/Profit Driving Force
Many companies, especially those with multiple product/service lines, use return/profit as their driving force. They will purchase or start a company or enter into any market where they can earn excellent profits.
American Home Products was famous for this strategy for many years. It offered a variety of different products and services for individuals, corporations, businesses, and families throughout the country. The company had one simple driving force: Every single product must yield a 20 percent pretax return on sales. If a product does not have that kind of profitability, then a company driven by return/profit won’t carry it or will quickly abandon it.
What is your driving force? What is your primary driving force, and what are your secondary driving forces? The selection of your driving force is absolutely essential to your business future.
Because you select a single driving force, which you must do if you are going to focus and concentrate on maximizing sales and profitability in your industry, it doesn’t mean that you don’t have other forces operating as well. It just means that the driving force you select becomes the primary organizing principle of your business.