The Four Types of Business Strategy

Business leaders often talk about business strategy in the broadest of terms.

They talk about their brand strategy, their marketing strategy, their AI strategy.

Or they talk about how they’re doubling down on their business strategy.

But rarely do I hear leaders really getting into the details of what these strategies actually are.

There’s a whole world of nuance in the word “strategy,” and understanding where in that nuance your organization fits can be incredibly helpful.

Jonathan Trevor, in his book Re:Align: A Leadership Blueprint for Overcoming Disruption and Improving Performance, offers a compelling lens through which leaders can evaluate their strategic approach.

He outlines four distinct business strategies—product-led, customer-led, synergy-led, and platform-led—that can offer clarity and a pathway forward for your organization.

As you explore these four strategies, ask yourself how each aligns with your organization’s strengths and goals, reflecting on which strategy matches your operations and core competencies, how effectively your chosen strategy positions you for future growth, and how blending elements from different strategies might enhance your competitive advantage. (I know, that was a mouthful.)

Product-Led Strategy

Companies embracing a product-led strategy center their innovation efforts around outstanding, often groundbreaking products or services.

Organizations such as Apple and Tesla exemplify this approach.

• Strengths: Product-led firms are market disruptors, creating strong brand equity through superior design, functionality, or innovation.
• Vulnerabilities: They risk becoming disconnected from changing customer demands, potentially prioritizing innovation at the expense of usability or accessibility.

Customer-Led Strategy

A customer-led strategy places deep consumer understanding at the core.

These organizations constantly adapt and tailor their offerings based on consumer feedback and market trends. Companies like Amazon and Netflix are prime examples.

• Strengths: Exceptional customer loyalty and the ability to rapidly adapt offerings to changing market conditions.
• Vulnerabilities: Overemphasis on customer feedback can lead to incremental rather than transformative innovation, risking stagnation.

Synergy-Led Strategy

Synergy-led organizations leverage integration across multiple business units or diverse capabilities to create compounded value.

Disney and Procter & Gamble embody this strategic choice, harnessing synergies among diverse brands and services.

• Strengths: Achieve significant competitive advantages through integration, economies of scale, and cross-unit collaboration.
• Vulnerabilities: Complexity and internal friction can hinder agility, making quick pivots or rapid innovation challenging.

Platform-Led Strategy

Platform-led businesses create value primarily by facilitating interactions between external users and providers, leveraging network effects—the phenomenon where the value of the platform increases as more people join and use it. Think Airbnb, Uber, and Salesforce.

• Strengths: Scalability, flexibility, and rapid growth potential thanks to network effects and broad user engagement.
• Vulnerabilities: Dependence on reaching critical mass quickly; vulnerable to regulatory challenges and external disruptions.

Combining Strategies

Organizations often blend these strategies, typically adopting a primary strategy complemented by a secondary approach.

For example:

• Apple primarily focuses on product innovation but also emphasizes customer feedback for iterative improvements, blending product-led with customer-led strategies.
• Amazon primarily leverages a platform strategy but significantly integrates customer insights, effectively combining platform-led and customer-led approaches.

Understanding that you can embody more than one strategy can help you clarify your strategic decisions and maintain alignment within your various teams.

Know Yourself

Choosing the right strategic path is crucial.

Whether product-led, customer-led, synergy-led, or platform-led, clarity in your strategy is never a bad thing.

If you need help thinking about it, reach out.