Back to the on-screen lesson · Print

Choosing what to do, and what not to

Who the business is for, what they get that they cannot easily get elsewhere, why that is hard to copy, what the business will not do, and what saying no costs in dollars a month.

Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.

1. What you will learn

You will write a choice about where to compete in five parts — the customer, the advantage, why it is hard to copy, the work you will not take, and what refusing it costs — and tell an advantage from a claim with the Monday test. You will also price a refusal from the inquiries turned away and set it beside the contribution it protects.

2. What you already have

You can compare two options on the figures, describe a customer and what they value, and cost the parts of an offer. This lesson adds what the arithmetic cannot supply by itself: which customer the business is for, and which work it will turn away — and then brings the arithmetic back, to put a price on each refusal.

3. Words this lesson uses

4. A choice has five parts, and learners write four

Deciding where to compete is five sentences, in this order.

One: who it is for. A person, not a market: workers with a short break, not anyone who eats lunch.

Two: what they get that they cannot easily get elsewhere. In their words, not yours.

Three: why that is hard to copy. An advantage a competitor can copy on Monday is not one — and working harder, caring more and charging less are copyable by lunchtime.

Four: what the business will not do. The part learners skip, and skipping it makes the other four meaningless.

Five: what saying no costs. A refusal that costs nothing was not a refusal.

This is how to work the number out and read it, not a recommendation about what to charge. What any particular business should do depends on a market nobody here can see, and on rules that differ from place to place.

5. The method, step by step, and how to check it

Start from the customer the records point at. The lessons on customers, demand and repeat business have produced counts: who buys, who comes back, who refers others. Name the group that the business already serves best and that is worth the most over a year.

Say what that group gets, in their words. Use what the tallies showed they ask about and pay for, not what the owner is proudest of.

Apply the Monday test. For each advantage, ask what a competitor would have to do on Monday to match it. Keep only those that would cost them money, months or a change to their whole week.

Name what the business will not do. Look for the work that pulls against the advantage: the job that fills the slack a reliable schedule needs, the order that takes the kiln from the gift sets, the hours that clash with the ones the customer uses.

Price each refusal. The declined work's contribution over a month, from the inquiries actually turned away. Then set it beside the contribution the refusal protects.

Check the choice in two ways. It should be possible to be wrong about it: a statement nobody could disagree with is not a choice. And each refusal should have a price in dollars a month; a refusal with no price will be abandoned the first time a large inquiry arrives, because nobody will know what saying yes gives up.

6. The Monday test

Take any sentence you would call an advantage and ask: what would a competitor do on Monday to match it?

The two that pass both cost something: the cost is why nobody has copied them. An advantage free to hold is free to copy.

7. When a refusal should be reviewed

A priced refusal is not a permanent rule; it is a decision with a known cost, and the cost can change. Three things are worth watching at the monthly review.

The price of the refusal rises. If water-damage inquiries double, the contribution turned away doubles too, and it may now be worth building a way to take them — a diagnosis fee, a quote after opening — without breaking the promise of prices quoted first.

The protected work stops earning. If the gift sets that the kiln is kept for stop selling, the refusal of wholesale is protecting nothing, and the arithmetic of the choice has changed.

The customer changes. Neighbourhoods, habits and competitors move. A late-opening stall built for commuters after the last bus needs a new look if the bus timetable changes.

What is not a good reason to abandon a refusal is a single large inquiry. One lucrative job that breaks the promise the regular customers pay for can cost more in lost regulars than it earns, and the priced refusal is what lets an owner see that in the moment, rather than a year later. Say yes to a refused kind of work only when the review of the figures, not the size of one offer, says the choice has changed.

8. Saying no without losing the customer

A refusal is kept or broken at the counter, in the moment somebody asks for the work the business has decided not to do. How it is said matters as much as the decision behind it.

Say it plainly and early. We don't do water-damage repairs — we can't quote them honestly before we open the phone is clearer and kinder than a vague we're very busy that leaves the customer waiting for a call that never comes.

Say why, in the customer's terms. The reason is usually the promise the business keeps for its regulars, and customers generally respect a business that keeps a promise, even when it is not the one they wanted today.

Point somewhere useful. Knowing who does take the work — a specialist, a larger firm, a colleague in the trade — turns a refusal into a small favor. Some of those referrals come back the other way, and the customer often returns for the work the business does do.

Write the refusal where it will be seen. On the website, on the card in the window, in the reply to an inquiry. A refusal the customer reads before asking saves both of them the conversation, and it tells the customers the business is for that it is built around them.

Owners often fear that every refusal loses a customer. In practice, a clear refusal loses the work and usually keeps the goodwill; a vague acceptance followed by a broken promise loses both. Keep a note of each refused inquiry in the daily record, so the monthly review can price the refusal from what actually came in.

9. In the world: a bicycle shop that stopped selling bikes

A small bicycle shop sold new bikes and did repairs. New bikes took a third of its floor space, tied up about 18,000 dollars in stock, and contributed around 900 dollars a month after the discounts needed to compete with online sellers. Repairs contributed about 4,000 a month, but customers regularly waited a week because the one mechanic was often pulled onto the shop floor to sell.

The owner wrote the five lines. The shop is for people who ride every day and cannot be without the bike for long. They get a repair back in two days, priced before work starts. That is hard to copy because it needs a second mechanic and a stock of common parts, both costs a rival would have to carry. The shop will not sell new bikes. That costs about 900 dollars a month of contribution.

Selling off the bike stock released 18,000 of cash, which paid for the second mechanic's first six months and a parts stock. The floor space became a second bench. Within a year repairs contributed about 6,800 a month, and the two-day promise was being kept. The refusal cost 900 a month and made room for 2,800 more; the owner could see that only because the refusal had been priced from the start.

10. In the world: positioning

Writers on strategy often argue that the essence of strategy is choosing what not to do, and that a position built on trade-offs — things a competitor would have to give up to copy — lasts longer than one built on being generally better. The five lines in this lesson are that idea at the scale of a single stall or bench.

11. Where this goes wrong

Strategy is a statement of ambition. To be the best bakery in the city names no customer and refuses nothing. It cannot be wrong, which is its problem.

Working harder is an advantage. Everyone says it, nobody can check it, and a competitor matches it by deciding to. Same for caring more.

Charging less is an advantage. Only to whoever has the lowest costs; otherwise it is a countdown.

The choice is about what you will do. Half of it is what you will not. The refusals make the promises keepable.

A refusal is free. It turns away real contribution every month; price it.

A choice can be made once and left. It is reviewed against what the refusals cost — not abandoned one lucrative inquiry at a time.

12. Northside Repairs prices its refusal

1. Name the customer.

   $\text{people who need the phone working tonight}$

   A person, not a market.

2. Name the advantage.

   $\text{priced before it is opened, back by five}$

   What that customer gets.

3. Name the refusal.

   $\text{no water damage}$

   It cannot be quoted honestly before opening.

4. Count the inquiries turned away.

   $90 \div 6 = 15 \text{ a month}$

   One inquiry in six.

5. Price the refusal at 45 a job.

   $15 \times 45 = 675 \text{ a month}$

   The fifth line, in dollars.

13. Bright Home Cleaning turns down the best-paid work

1. Name the customer.

   $\text{households wanting the same slot every week for a year}$

   A person, not a market.

2. Name the advantage.

   $\text{same cleaner, same day, written down and kept}$

   It needs a schedule with slack in it.

3. Say why it is hard to copy.

   $\text{the slack cuts the hours that can be sold}$

   The cost is the moat.

4. Price the refusal: 3 deep cleans a month at 70.

   $3 \times 70 = 210$

   Her best-paid work, turned away.

5. Find what the refusal protects: 4 regular slots at 35 a week.

   $4 \times 35 \times 4 = 560$

   The slots the slack keeps open.

6. Compare the two figures.

   $560 - 210 = 350 \text{ a month in favor of refusing}$

   Before counting that regulars stay for a year.

14. A statement with nothing in it, rewritten

1. Read the first draft.

   $\text{we fix phones for everyone, fast, cheap, with a smile}$

   Four claims, no choice.

2. Ask who it is for.

   $\text{everyone} \Rightarrow \text{no stocking decisions}$

   No customer, no decisions.

3. Apply the Monday test to fast, cheap and friendly.

   $\text{all copyable by tomorrow}$

   Nothing passes.

4. Rewrite the customer and the advantage.

   $\text{phone working tonight; priced before opening}$

   Now a rival would have to change how they quote.

5. Add the refusal.

   $\text{no water damage}$

   The work that would break the promise.

6. Price it from the records.

   $15 \text{ inquiries} \times 45 = 675 \text{ a month}$

   What the choice gives up.

7. Read the new statement.

   $\text{a choice that can be wrong}$

   A choice you can be wrong about is a choice.

15. Your turn: a market stall that stays open late

1. Name who Monica's stall is for.

   $\text{people walking home after the last bus}$

   Start with the customer.

2. Name what she will not do.

   $\text{open early for the morning trade}$

   The late opening rules out a dawn start.

3. Your turn: work this step out. Its working is at the end of the packet.

   Price the refusal: a morning rush she estimates at 30 sales contributing 1.50 each, 20 days a month.

16. Guided practice

Four businesses, and four pieces of work each of them could take and has decided not to. Match each business to the thing it has ruled out.

17. Guided practice

Complete the worked solution: a cleaner turns down about $5$ one-off deep cleans a month, each of which would contribute $56$ dollars. Keeping the week free of them lets her keep $7$ more regular weekly slots on the schedule, each contributing $34$ dollars a week, about 4 weeks a month. What does the refusal cost, and what does it protect?

1. Find what the refusal gives up in a month.

   $5 \times 56 =$ _g

   The contribution of the work turned away.

2. Find what the protected slots contribute in a month.

   $7 \times 34 \times 4 =$ _p

   The work the refusal makes room for.

3. Subtract.

   $(\text{protected}) - (\text{given up}) =$ _n

   What the choice is worth this month, on the figures.

4. Add what the figures leave out.

   $\text{regulars stay; deep cleans do not return}$

   A kept regular is worth a year, not a month.

5. Write the refusal with its price.

   $\text{no deep cleans, which costs } (\text{given up}) \text{ a month}$

   A refusal that is priced can be reviewed rather than abandoned one inquiry at a time.

18. Guided practice

Northside Repairs does not take water-damage jobs, because they cannot be quoted honestly before the phone is opened. It gets about $60$ inquiries a month, and about one in six is water damage. Each such job would contribute about $78$ dollars. What does the refusal cost the business in a month, in dollars?

Answer:

19. Practice

Monica's Market Stall is for people walking home after the last bus gets in. Which of these is an advantage a competitor on the same street could not easily copy?

• she is open when nothing else on that street is
• We work harder than anybody else on this street
• We charge less than the business across the road
• We care more about our customers than they do

20. Practice

Maya is offered a wholesale order of $190$ plain mugs a month at a trade price that would contribute $6$ dollars a mug. Making them would take the kiln time she now uses for about $22$ boxed gift sets a month, each contributing $15$ dollars. On the figures, by how many dollars a month is saying no to the wholesale order better than saying yes?

Answer:

21. Practice

Neighborhood Kitchen has written down where it competes, in five lines and in no particular order. Say which part of the choice each line is.

22. Somewhere new

A small print shop decides it is for architects and designers who need exact color on short runs, and stops taking large runs of flyers, which tie up the press for a day each. It turns away about $7$ flyer jobs a month, each of which would have contributed $142$ dollars. What does the refusal cost the shop in a month, in dollars?

23. Lesson test

Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.

24. Test question

Bright Home Cleaning has written down where it competes, in five lines and in no particular order. Say which part of the choice each line is.

25. What you can do now

You can name a customer, an advantage, the reason it is hard to copy, the work you will turn away and the price of turning it away in dollars a month. Tell someone why working harder and caring more are not advantages. Next: turning that choice into a goal a Friday can settle, and a plan for the first ninety days.

Working for the steps left to you

15. Your turn: a market stall that stays open late, step 3