Commitment, not Choice

During strategy sessions with CEOs, I ask: “How does your company intend to win?” Answers are often surprisingly vague—better service, great people, innovation, quality, relationships. The worst answer is “we work harder.”

These are commendable goals. But they are not strategies.

To earn superior margins, you must make a clear choice in how you compete. In my presentations, I introduce two options: become your market’s lowest cost producer or achieve meaningful differentiation. However, most companies are stuck in the middle, neither the lowest cost nor truly unique. That indecision undermines both strategy and margins.

Recently, however, I have begun introducing a third dimension: customer intimacy. This shift is important because many executives choose this option when they cannot compete on price or differentiate themselves materially. I believe this is an easy way out, and it is not necessarily true.

Let’s look at the differences:

Low-cost leadership is structural. Cost leaders design organizations, processes, technology, supply chains, incentives, and culture for efficiency. Every investment asks, “Does this lower cost?” Consider Walmart or Southwest Airlines. Their edge came from years of relentless discipline—not a single initiative.

The most differentiated firms continuously invest in innovation, talent, brand, intellectual property, and unique capabilities that competitors struggle to replicate. Apple did not become Apple because someone decided to “differentiate.” It became differentiated through decades of design obsession, ecosystem building, and uncompromising standards.

Customer intimacy is different. While some structure matters, this advantage stems from how a company develops deep customer knowledge and adapts its processes and behaviors to meet specific needs. Customer intimacy means understanding individual customers better than competitors, being flexible to their changing preferences, and building long-term relationships based on trust. Customer-intimate companies listen attentively, respond promptly, customize their offerings effectively, and dedicate themselves to earning trust. Their advantage lies in everyday customer interactions and requires extraordinary commitment.

Ultimately, your strategic choice must yield better-than-average margins; otherwise, you miss the point.

Stop treating strategy as an annual retreat exercise. Strategy is a multi-year commitment to a defined operating model. Remember Gladwell’s 10,000-hour rule for mastery; building competitive advantage demands at least that focus and discipline at every level.

You cannot simply declare customer intimacy and expect employees to change overnight. Each position demands years of investment, difficult trade-offs, and leadership persistence. The real strategic question is not, “Which strategic position do we prefer?” but “What are we willing to dedicate ourselves to becoming?” Success comes from unwavering commitment, not just smart decisions.