Donald Hambrick and James Fredrickson created the Strategy Diamond to illuminate how different strategy parts align with one other.
Main Benefits of HAMBRICK AND FREDERICKSON’S STRATEGY DIAMOND
The STRATEGY DIAMOND helps you:
- Measure and review the effectiveness of your strategies
- Identify the extent of competition which businesses could fate
- Create a direction for the future activities
- Back-check the areas the businesses need improvement.
Explanation of the STRATEGY DIAMOND
The winning aspiration of a business is inconclusive without a well-planned strategy. A practical method requires a solid basis with elements that reinforce one another.
Hambrick and Frederickson’s framework acts as a checklist to see where the business requires further improvement and reckons with 5 key elements to guarantee fully integrated strategic planning.
1) Arenas
Decide where the business will be active – and how much emphasis. When defining the arena, be specific in your choice of product categories, channels, market segments, geographies, core technologies, and value-creation stages.
2) Vehicles
Determine the vehicles that will move you to the arena. Consider the following options: Franchising, partnerships, joint ventures, licensing, mergers and acquisitions.
3) Differentiators
Find out how you will win. A company does not need extremes to achieve; the best combination of differentiators is essential. Pricing, customization, reliability, and image are the key factors.
4) Staging and pacing
Plan the sequence of strategic moves and your speed. Timing is one of the most critical elements to succeed. Be conscious of your rate of expansion and timing of initiatives.
5) Economic Logic
Create an economic logic for both your company and your customers. There are four main options, one of which you can focus on lowest cost through scale, lowest cost through scope and replication, premium price due to unmatchable service, and premium price due to proprietary product features.
How to Apply the STRATEGY DIAMOND?
- Arena – Decide areas where the business will be active. To be specific when choosing the targeted area, use Break-even Analysis, Market Life Cycle, Buyer Persona, and Porter’s Five Forces.
- Vehicles – Determine how to get to the targeted arena. To reach the arenas defined in the first step, you can benefit from Optimize Your Investment Strategy even under volatile market circumstances.
- Differentiators – Know what separates the business from the competitors. To learn your unique selling propositions, use Kotler’s 4Ps of Marketing, The Five Product Levels, Keller’s Brand Equity Pyramid, and Unique Selling Proposition.
- Staging and pacing – Find out the speed and sequence of the business’s moves. To make every part of your plan work in a symphony, use PESTEL Analysis, Business Model Canvas, and TOWS Analysis.
- Economic logic – Form a win-win business model. To build a strategy that earns enough financial profit, use The ADL Matrix, GE – McKinsey Matrix, and Price Sensitivity Meter.
Additional Tips and Readings
As alternative models for the STRATEGY DIAMOND, you can also read:
- 7 Strategy Question to implement your strategy successfully,
- Five-Step Strategy Model to develop your winning strategy
- Sequence of Blue Ocean Strategy to understand how to apply Blue Ocean Framework,
Contact us to fit every part of your organization’s strategy with each other.
