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This is the third blog in a five-part series outlining the whys and wherefores of strategic planning for family, middle-market, and closely held businesses.
Once you have invested in your industry analysis, you have the foundation on which to build your strategic plan. You should know better than anyone else in the world how your industry will evolve over the next five years. Based on this, you can leverage your strengths to maximize your return.
This is the heart of strategic positioning: defining your playing field and the rules by which you intend to win. In the middle market, strategic positioning is make-or-break. You have enough scale to compete—but not enough slack to get it wrong.
So the key is focus: choosing the right markets, targeting the right customers, and aligning your strengths where they matter most. Here’s how to choose where to compete and build a winning position.
Strategy Is a Choice—And So Is Positioning
Too many companies confuse motion with progress. They try to be everything to everyone, chase every lead, and react to every competitor’s move. But strategy is fundamentally about making choices:
- Where will we play? Markets, geographies, customer segments, product lines.
- How will we win? Pricing, service model, innovation, speed, brand.
Strategic positioning frameworks help you answer these questions with clarity and conviction. Without clear answers, your team will default to tactical decisions and opportunism. With clear answers, they’ll act with alignment and intention.
Step 1A: Take an Inward Look at Your Capabilities
The firms that drive the fastest growth do so by relying on what they do best. Every company that has a viable business must provide value to its customers that others cannot replicate at the same price.
So, let’s dive into capabilities. Capabilities are your company’s combination of:
- Processes
- Knowledge, skills, and behaviors
- Tools and systems
- Organization that enables it to generate customer value
Capabilities are most often seen or felt by the customer and, therefore, are not actions that drive internal efficiency, such as quickly closing the monthly financials or having a world-class internal IT helpdesk.
Capabilities are also maximized when they work as a system to feed each other. This systematic strength will amplify your capabilities.
An example of a well-known company’s capabilities is Frito-Lay, the snack maker that owns the Lays, Ruffles, Doritos, Cheetos, Fritos, and other brands. Consumers can purchase these snacks at grocery stores, big-box mass retailers, convenience shops, and many other retailers.
Let’s look at Frito-Lay’s three major capabilities:
- Direct Store Distribution: An army of Frito-Lay employees delivers directly to all retailers every day. This enables Frito-Lay employees to build relationships directly with store owners and managers to garner incremental shelf space and activate promotions at the store level.
- Research & Development (R&D): Many of us think of Frito-Lay’s product offering as the status quo. However, think about the many variations of Doritos. Nacho Cheese, Cool Ranch, Late Night, Twisted Queso, Hot Mustard, Tangy Pickle, Spicy Sweet Chili, and Loaded Taco are some of the flavors that offer consumers variety and occupy shelf space that a competitor would be thrilled to possess.
- Brands: Powerful brands with advertising support drive consumers to the store to purchase Frito-Lay products.
In addition to being three powerful capabilities themselves, when these capabilities work together, they drive immediate impact. For example, R&D creates new flavors, which can be communicated via social media to target consumers, and can be shipped directly to the store to gain immediate consumer feedback.
Step 1B: Defining Your Vision
In parallel to defining your capabilities, the CEO or company owner should define the company’s vision. This clarity helps you identify where to compete for business opportunities that align with your strengths.
As shared in our first blog in this series, we like to ask the question, “If you read an article five or ten years from now describing the company’s success, what would it say?”
The Scotts Miracle-Gro (Scotts) company undertook this exercise. Based upon their industry analysis, they knew that big-box DIY stores such as Home Depot and Lowe’s would drive tremendous industry growth in the 1990s and 2000s. This would become the most efficient way to get lawn and garden products into consumers’ hands.
Scott’s vision embodied powerful brands, driven by advertising that directed consumers to big retailers to meet all their lawn and garden needs, with products and company counselors in stores to answer questions.
In other words, the retailers’ lawn and garden departments would become Scotts product showcases, with Scotts providing both the muscle to stock the shelves and the intellect to help consumers succeed.
As the company leader or owner, once you define your vision in a simple and compelling manner, you can galvanize your team to prioritize their actions to achieve it.
Step 2A: Defining the Arena–Where Will You Compete?
Learning how to choose where to compete starts with identifying market opportunities that are both attractive and attainable.
Ask yourself:
- Are there underserved or fragmented segments where we can differentiate?
- Which customers value what we uniquely provide?
- What trends or disruptions can we capitalize on before others do?
For middle-market firms, this often means finding the niche within the niche. You don’t need to dominate the entire market; you just need to be the obvious choice in the space you serve best.
Step 2B: Crafting the Advantage–How Will You Win?
Winning requires more than just showing up. You need to create a strategic fit between your value proposition and your operational strengths.
Common ways middle market companies win include:
- Specialization in a vertical or use case
- Superior service or customer intimacy
- Faster turnaround times or speed to market
- High reliability in regulated or high-stakes industries
- Cost efficiency through lean operations
The key is to commit. Being “pretty good” at everything leads to mediocrity. Being excellent at one or two things—things that matter to your customers—builds loyalty and profit.
Step 2C: Aligning Capabilities to Strategy
Your strategy must align with your capabilities, the systems, processes, talent, and culture that power your business. Using a strategic positioning framework helps ensure your plan leverages your capabilities effectively. If it doesn’t, then you either failed to properly define your capabilities or your strategy will require new capabilities.
The Major League Baseball Manager knows to “Lead with their ace in the playoffs” in order to maximize their potential to win.
This step is often where middle-market companies get stuck. They’re trying to serve multiple strategies with one set of resources. Real alignment may require hard decisions: shedding non-core offerings, reassigning talent, or investing in operational improvements.
A Simple Strategic Positioning Framework: The Strategy Sweet Spot
Imagine three overlapping circles:
- What your customers value (today and in the future)
- What you do better than your competitors
- What your business can execute profitably
The overlap of all three is your strategic sweet spot. That’s where you compete. That’s where you win.
Still Trying to Be Everything to Everyone?
JACO Advisory Group specializes in helping middle-market companies make the hard choices that lead to sustainable growth. We’ll help you identify where to compete for business opportunities that match your unique strengths. Ready to define your strategic advantage and take action? Let’s work together to define where you’ll play—and how you’ll win.
