Creating a strategy with 3 circles

3-circles.png

How do you come up with a strategy for your business?

This can be an unexpectedly hard question to answer. We tend to think of things like USPs – the unique service propositions that differentiate us from others – but are we missing the bigger picture?

Joel E. Urbany and James H. Davis developed a simple tool to help work through this problem – the 3 Circles model.

An adapted form of the model is shown in the picture above. In essence, we need to consider 3 broad areas:

  1. What we do.
  2. What customers need.
  3. What competitors do.

If you draw a Venn diagram representing these three areas, you end up with seven sections, each of which are important to review and consider.

Urbany and Davis suggest that you carry out a thinking exercise. First, what do you think your customers want? Next, how well do you think your products overlap with their needs? Finally, how well do your competitors do it?

Then, work through the various sections of the Venn diagram.

In section 4, if you and your competitors both do something that doesn’t overlap with what your customer needs that’s obviously not much use. You need to find a different customer for those services or stop doing them.

Sections 7 and 5 are ones to think about carefully. You have an advantage in some areas and your competitors have an advantage in others. If neither of you can meet all your customer’s needs, then you need to figure out how to overcome your weaknesses in their eyes when it comes to what your competitor does.

Section 6, where all the circles overlap, is a bit like being in stalemate. You and your competitors produce something that your customer needs about as well as each other. It’s a 50:50 chance which one of you gets the job.

The amount to which there is a strategic fit between your products and your customer’s needs is important.

Urbany and Davis point out, however, that the green area – what you do better and what makes up your USP, is often much less important than you think to the customer.

The thing that comes across from working through the 3 circles model is that if you think about things only from your point of view, then you’ll end up being squished into a small space that you think is your sweet spot in section 7.

If you speak to your customer about what they need, you might discover a vast empty space in section 2. where neither you nor your competitors are yet providing a service and where you might be able to grow your offering.

Perhaps not surprisingly, if you want to grow your business, the best strategy is to try and see things from your customer’s point of view.

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