Formulating Strategy – Building future advantage from strategic assets

Overview

Effective strategy begins by treating the firm as a bundle of tangible and intangible assets. This paper outlines a practical method for identifying, assessing, and enhancing these assets to deliver long-term value. The goal is a credible, actionable strategy that helps leaders steer the organisation with clarity.

Why Strategy Needs to Start with Assets

Most companies already operate with an implicit strategy. However, to deliberately shape the future, executives must understand what truly drives current success—and what to preserve or change. Strategic assets are those that help win business or lower costs better than rivals.

Types of Strategic Assets

The paper categorises assets into:

• Tangible: equipment, infrastructure, intellectual property
• System: internal processes and procedures
• Cultural: values, behaviours, team dynamics
• Knowledge: know-how, expertise, innovation
• Relational: brands, customer trust, networks

Assets common across competitors are labelled entry assets, while unique or hard-to-replicate ones are strategic assets.

Tools for Strategy Formulation

Three practical tools help firms identify and develop strategy:

1. Perceived Use Value Chart – compares customer perceptions across competing products.
2. Customer Matrix – maps how customers view value versus price.
3. Cause Maps – trace back from wins to the internal factors that drove them.

Improving Competitive Position

To strengthen market position, firms can:

• Cut prices (if they are low-cost producers)
• Add perceived value (through innovation or service)
• Do both (north-west strategy in the Customer Matrix)

Augmenting the Asset Base

The paper explores four methods:

• Consolidation: make better use of underutilised resources
• Leveraging: apply existing assets in new contexts
• Developing: build new capabilities through learning and experimentation
• Acquisition: buy firms or talent with needed assets

Dynamic Capabilities

Adaptability is key. The paper highlights the role of dynamic capabilities—systems and routines that allow firms to refresh their resource base in line with changing markets.

Conclusion

A robust strategy emerges when firms identify their distinctive assets, understand what customers truly value, and plan how to expand and evolve their capabilities. Strategy becomes less about abstract goals and more about building real, sustainable competitive advantage—asset by asset.