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Strategy Is Not What You Think - 3 Questions BSCs Must Ask

December 13, 2017

In the world of business, few terms get thrown around more often than the word “strategy.” And trust me, the janitorial industry is no exception. But oddly enough, despite the frequent talk of strategy, few people understand what strategy really is. We know strategy is important and that we should have one, but our “strategy talk” is quickly reduced to how we can increase our operational or sales effectiveness. But effectiveness and efficiency ARE NOT strategy - not in the janitorial industry or any industry. As Sun Tzu said, “Tactics without strategy is the noise before defeat.”

 

Strategy is complicated, you staggeringly simply. In its essence, strategy is about making choices. There are three simple questions you must answer when formulating your company strategy.

 

  1. What will you do as a company?

  2. What will you not do?

  3. How will you create advantage over the competition?

 

Now don’t be fooled by the simplicity of these questions. They are more profound than you can imagine and not easily answered. Let’s break them down, one by one.

 

What will you do as a company?

Most janitorial companies fail not from a lack of opportunities, but from not choosing the right opportunities. Any entrepreneur will soon realize that money can be made in an infinite number of ways. But a strategic leader will pick the few opportunities to chase and build a business around those. In the janitorial industry, this is no different. Cleaning is an incredibly broad industry that could encompass myriad options. ServiceMaster focuses on schools, hospitals, and other large institutions. Sodexo has built a business on serving clients who have both facility and food service needs. Merry Maids sticks only to residential service. A friend of mine in Colorado has built his janitorial business servicing medical facilities.

 

Now all of these are very obvious instances of “what will you do.” However, you too must answer the same question. To create market dominance and maintain long term success, you must pick your niche. Chasing every opportunity is a sure way to sink the ship, one leak at a time. Being a janitorial company that does everything for everybody is a sure way to be known and respected by nobody.

 

Here are a few questions to help you begin the journey of getting this first step right.

 

  • What types of customers am I best suited to serve? Retail? Medical? Manufacturing? Residential? Local office? Corporate office? High rise? Public venue?

  • What existing strengths do I have (or strengths I could develop) that position me well to serve a particular niche?

  • Are there certain geographic markets I would thrive in? Big city vs small city?

  • Am I well positioned to service small customers or large customers?

 

Answering the “who will I serve” question will help you develop a plan to uniquely serve this client base in a way no other competitor can. You can’t create a competitive advantage when everyone is your customer and every service is on your list of offerings.

 

Keep in mind that the above questions do not mean you must pick one type of customer or one location. However, there should be a combination of choices that creates a customer base that makes sense. For instance, at my company, we have chosen a few client types that are located in certain types of geographies. This allows us to focus on the key activities that help maintain a competitive advantage in our area of specialty.

 

What will you not do?

This question is equally important as question number one. In fact, Michael Porter of the Harvard Business School argues it is more important. He says, “The essence of strategy is choosing what NOT to do.” By knowing what you will not do, you add a level of clarity to what you will do. By saying, “we will not service retail clients,” you are indicating you are not well suited to take on 3rd shift, tenant leased clients where you don’t have regular interaction with the decision maker. Some companies have found a way to thrive on retail, but others choose to stay away.

 

The most difficult part of saying “no” is actually following through on your commitment. Every compromise veers you off the strategic path, jeopardizing your strategic position. Going back to our retail example, if nearly all your clients are manufacturers who are cleaned on 2nd shift, a retail client would force you to recruit for and manage a 3rd shift job. Such tasks could potentially divert your management team from servicing primary customers. Your operation should have a “fit” across all activities, creating a synergy not easily diffused.

 

How will you create advantage over the competition?

This is what everyone wants to know: How can I stand above my competition? How can I position myself as the superior janitorial contractor in the markets I serve? What is it that will differentiate me from my peers in the industry?

 

While I wish I had a silver bullet for you, the plain truth is that differentiation in the janitorial industry is hard. In every mature industry, competitive advantage is difficult to achieve, but don’t lose heart. Companies like Southwest, Chick-fil-A, and Honda have done it. You can too.

 

Let me conclude with an example of how a company could create a competitive advantage in the janitorial industry.

 

ABC Janitorial is located in a large metropolitan area filled with multi-tenant, property managed buildings. ABC has seen the opportunity and created a business model that fits the needs of this client type, giving ABC an advantage over their competition. These property managed buildings are primarily price driven, but have other unique needs. For instance, they constantly have tenants turning over, requiring spaces to be deep cleaned and prepped for new clients. Additionally, each building has multiple tenants which means multiple clients to know and keep happy. Finally, these clients often have diverse “handyman needs” which the property managers must find solutions to.

 

ABC janitorial has built its business around these unique needs of property management firms. They utilize cloud-based programs to manage the multiple clients needs, relationships, and requests. This helps the property managers stay in tune with tenant needs. Additionally, they have specialty crews to help with tenant turnover cleanups, handyman services, and more. They have built a model of supervision that knows and understands multi-tenant space. ABC janitorial is strategically positioned to serve property management companies well and outperform their would-be competitors.

 

So what will your strategy be? You can't beat industry averages in growth and profit over long periods of time without a sound strategy. Spend the time to be clear on this foundational issue. 

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