6.0 Strategy evaluation of Social Media Strategies – Basics 1 of 2

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Learning Objectives: To learn the basics of strategy evaluation in the potential-based strategy model pbsm and how to apply them.

Exercises: Exercises are in the PDF of all exercises of this course. Download it from here.

Basics

The importance of strategy evaluation in the potential-based strategy model

Although strategy evaluation may not sound like it, it is a strategically important process rather than an accounting consideration of options.

Based on the strategy assessment, we decide not least what we will not do as a company. This decision – what we won’t do – is no less strategically critical than deciding what we will do. On the contrary – we usually exclude more than we do. Therefore, in the strategy assessment, our priority should be on the strategic perspective.

Side note: In strategy evaluation, we often also recognize the spirit of the decision-makers as well as the company.

Usage

We use the evaluation of draft strategies to reduce the number of draft strategies and to prepare for the selection of the final social media strategy by the company management.

  • The reduction of strategy drafts is the task of social media management in coordination with the affected departments. The evaluation here ensures not least a common picture and a common evaluation of the various designs. Here, the social media management makes the decisions in consultation as to which strategy versions will be included in the final selection.
  • The selection of the final social media strategy is the responsibility of management. The assessment here highlights the strengths and weaknesses of the various (remaining) draft strategies and their implications to help management make a decision. Here, the company management decides which of the remaining strategy versions will become the final social media strategy.

Absolute valuation and relative valuation

We evaluate strategies both according to what they make possible from a given situation (absolute evaluation, evaluation in terms of potential) and according to how they perform in comparison with strategy alternatives (relative evaluation, evaluation in comparison with alternatives). Both forms of evaluation are, of course, closely related. The absolute valuation is ultimately the basis for comparing strategy versions with each other. Therefore, we should start with the absolute evaluation and give appropriate importance to its results.

Why we evaluate

The objecitve of the evaluation of strategy drafts is the selection of strategy alternatives that exhibit the best possible quality. In this way, we reduce the number of strategy drafts and present the remaining best possible strategy drafts for final decision (by the company management).

Reduction of strategy versions – pre-selection of strategy alternatives for the final decision

Social media management is responsible for reducing strategy versions to a few alternatives (for the final decision). This means that we have to weight the criteria on our own responsibility and, if possible, in consultation with the relevant departments. To this end, here are some explanations and recommendations.

  • we first evaluate the expected market and competitive impact because our strategies must first prove themselves in the market – with our users in competition with other offers. Of course, this effect is an assumption that we have to justify. If we do not prevail in competition, the desired effect for the business model and corporate objecitves will naturally not occur, or only to a much lesser extent.
  • we value structurally based competitive advantages and structurally based risks more highly than non-structurally based ones.
  • We place the resource requirements last in the evaluation in the process. This does not mean that the resource requirements are insignificant. We act in this way to focus first on the most competitive strategy possible.

What objects of the strategy we evaluate

We evaluate strategy options as a whole and according to the content of their strategy components.

  • We evaluate strategy versions as a whole according to their holistic competitive quality and use of social media performance potential.
  • We evaluate strategy components according to the degree to which they exploit social media potential, their performance quality in competition, their performance for the company (business model and corporate objecitves, their requirement for the company (resource requirements), and the identifiable risks.

We evaluate strategy versions as a whole to get an overall impression of the performance potential of that strategy. This also serves primarily to compare and select strategy alternatives for the final strategy selection by the company management.

We evaluate strategy components to ensure that the individual strategy components have the best possible quality.

As a reminder, different strategy versions (with different content in the strategy components result primarily from different emphases in the topics addressed by the respective strategy. In addition, very different strategic approaches quickly result from different usage formats, focal points in user benefits and different use of participation and motivation, but also different priorities in the use of social media channels.

What we do not rate

Strategies are answers to the question how we can achieve a certain objecitve with our possibilities in a certain situation. It would therefore be obvious to take the initial situation into account when evaluating strategies. But it is not, because

  • one objecitve of the strategy evaluation is the selection of the strategy drafts with the best competitiveness. It is a matter of filtering out the strategy designs with the best chance of success and weeding out the strategy designs with a lower or relatively lower chance of success.
  • strategy evaluation is not fair. A difficult starting situation counts for little. The potential success is crucial. A strategy that makes “the best” out of a particularly bad situation but is very likely to fail in competition is a strategy that is very likely to fail. And thus a strategy that we better not realize.

Strategy evaluation only asks how successful a strategy can be.

What we evaluate – categories of strategy evaluation

We evaluate strategy versions based on the strategy’s performance in the following categories

  • Support of business model and corporate objecitves
  • Exploiting the potential of social media for the company
  • Competitive effect
  • Impact on options and dependencies
  • recognizable risks
  • Resource requirements

Evaluation of the support of the business model and corporate objecitves

The core criterion for evaluating strategy designs is support for the business model and corporate objecitves. For this, we record which areas of the business model and which corporate objecitves are supported to what extent by the social media strategy / the social media strategy draft.

To this end, we draw on the analysis of the business model and the social media options for action for the business model and examine the extent to which the respective strategy supports the existing business model in detail. To do this, we contrast the potential of social media for each component of the business model and how each component of the business model is supported by the draft strategy. From this we can see how much of the existing performance potential of social media for this part of the business model is actually used by the present draft strategy. Here, too, the priorities of the issues (of business model components and corporate objecitve) must be taken into account when making decisions.

This assessment should by no means be carried out by social media management alone. Particularly with regard to the assessment of the support provided by social media for the business model and its specific components, it is highly recommended to involve those responsible for these areas in the evaluation. Social media support affects their area of responsibility and impacts the outcome of that area of responsibility. If, for example, those responsible for customer loyalty in the company do not agree with the level of support – because in their opinion too much of the potential of social media for customer loyalty is not being sufficiently exploited – this is a noticeable disadvantage for the acceptance of the social media strategy in the company and not a good start for the implementation of the social media strategy. In addition, we would damage the positive view of the work of social media management with such an approach.

The support of the business model as well as the corporate objecitves can take place in different ways.

  • via thecompany benefit: here we use our social media strategy to achieve a concrete benefit for the company, for example for a specific process or a specific module of our business model. This could be, for example, supporting customer loyalty through social media, but also other benefits such as attracting new customers/interested parties, creating brands, images or a positive evaluation of our value propositions.
  • through competitive advantage: here we achieve one or more competitive advantage(s) through social media – in social media or through social media. That is, in our customer loyalty example, we have a competitive advantage for our customer loyalty over other competitors. Perfect if it’s a structural competitive advantage that can’t be quickly replicated by the competition, but even a not-so-sustainable competitive advantage is gratifying.

Evaluation of the exploitation of the potential of social media for the company

As a reminder: At the beginning of the strategy development, we worked out the individual performance potential of social media for the company (in the form of its business model and corporate objecitves) and, by including the competitive situation, used this to work out the company’s sensible options for action in social media.

When evaluating strategy components and assessing a complete strategy draft, we examine what of this fundamentally possible performance potential and the resulting options for action are actually to be realized in the respective strategy version. It pays off here if, during the course of strategy development, it is not only recorded what is to be realized in the strategy (how) but also what is not to be realized in the strategy (why).

Explanation: Of course, it is not necessarily possible or sensible to comprehensively tap every possible performance potential with a social media strategy. This would strain the company’s resources beyond the expected benefit to the company. Or lead to an extremely complex strategy. However, it would be important to tap the performance potential possible for the company where it brings the greatest possible or indispensable benefit to the company. Therefore, when making decisions under this aspect, we should always consider the priorities of the business model and the company’s objecitves (which we have mapped in the priorities of the topics).

In this assessment, we must therefore take into account that restrictions in the use of social media performance potential are / can be justified strategic decisions. In order to take this factor sufficiently into account, we focus in the evaluation of strategies on the exploitation of the performance potential for a defined portfolio of topics by the respective strategy.

As a reminder, we use strategy versions to develop different strategies for defined sets of topics to come up with the best possible strategy. But we can also use strategy versions for different theme sets to meet different ideas / priorities.

Evaluation of the thematic scope of the strategy

We evaluate which range the strategy covers within the company’s topics. That is, we put the topics we use in our social media strategy in relation to the topics of the company as a whole.

As we have prioritized our company’s topics, we record how many priority topics are covered by each strategy.

Benefit and use: we use these findings

  • to evaluate the strategies individually, i.e., to identify the extent to which the individual strategy supports the business model and corporate objecitves in social media.
  • To be able to compare the strategies with each other based on the coverage of the most important topics

This insight is relevant both for the reduction of strategy versions and for the decision on the final strategy version.

What to do when we only have strategies with completely different theme sets to evaluate?

We then contrast the competitive performance from the core strategy components of each strategy. We therefore leave out the topics and concentrate only on the (competitive) effect that can be achieved with the respective strategy components.

Completely different theme sets

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Evaluation of the content of the core strategy components of the strategy.

Evaluating the content of the core strategy components are one possible approach to evaluate very different strategy approaches.

Method: To evaluate strategies according to how they exploit the social media performance potential for a given set of topics, we compare the best-performing possible content of the core strategy components (best courses of action) with the selected content of these strategy components and evaluate the competitive performance to be expected from this.

Evaluation Contents Strategy component Topics
  • Competitive effect: we evaluate which competitive situation the strategy aims at / enables within the individual topics / subject areas. That is, we can use it to identify the performance of the strategy for the competitive situation within the themes, and furthermore, to compare the performance of different strategies for the themes as a whole as well as for individual themes. In addition, the selection of topics and their priority in the strategy shows which field we want to shape which competitive situation. From this we can see the performance potential of the strategy for the themes (which are, after all, parts of the markets) in detail and as a whole.
  • Exploiting the potential of social media for the company: we assess the extent to which the strategy taps the performance potential of social media at the topic level. We evaluate this at the topic level based on the topics used by the strategy relative to the topics that are suitable for social media (social media affinity). This shows us, among other things, the extent to which the strategy is focused (on what). So whether it’s focused on all topics, focused on the high priority topics, or focused on the high social media relevance topics.
  • Impact of business model and corporate objectives (corporate benefit): we assess the benefit that the strategy contributes to the success of the business model and the corporate objectives. The yardstick here is the fundamentally possible corporate benefit (options for action)
  • identifiable risks: we assess identifiable risks at the level of the strategy’s themes. Identifiable risks at the topic level result, for example, from the decision in the strategy not to deal with topics that are suitable for social media and relevant for the company, or not to deal with them with high priority.
  • Resource requirements: we assess the resource requirements that arise for working on the topics based on the alternative courses of action in the topics.

Summary evaluation of the social media strategy in the strategy component Themes: via the combination of the results from competitive impact / competitive performance and potential utilization as well as support of business model and corporate objecitves, we recognize what the strategy has in terms of performance potential. We should be able to tell from this whether the strategy can be successful in competition and whether the potential of social media can be used sustainably for the success of the company.

Evaluation Content Strategy Component UserBenefit
  • Competitive impact: we evaluate the quality of the user benefit of the strategy measured by its competitive quality. That is, how do we evaluate whether we generate a sustainable competitive advantage with the intended UserBenefit, merely draw level with the competition, or deploy a UserBenefit that enables neither advantage nor level.
  • Exploiting the potential of social media for the company: we evaluate the user benefit of the strategy by the extent to which it exploits the performance potential of social media, i.e., taps the possible social media potential of the user benefit. In other words – whether our UserBenefit generates the best possible benefit in social media.
  • Supporting business model and corporate objecitve: we evaluate the UserBenefit of the strategy by how far the UserBenefit contributes to the success of the business model and the corporate objecitves based on the impact of the UserBenefit for the modules of the business model and the corporate objecitves.
  • identifiable risks: we assess the identifiable risks arising from the user benefits of the strategy. Recognizable risks from the UserBenefit arise in particular from weak competitiveness of the UserBenefit, problems in the permanent creation and safeguarding of the UserBenefit by the company and from dependencies of the UserBenefit on third parties.
  • Resource requirements: we evaluate the resource requirements needed for the user benefit.

Summary assessment of the content of the strategy component UserBenefit: Due to its importance to the success of the strategy, we should take special care not to leave any avoidable weaknesses in the content of this strategy component. If the competitive effect is not convincing and generates at least temporary competitive advantages, a revision of the content is recommended. We should take a similar approach to evaluating the use of social media’s performance potential in terms of user benefits as well as in its support of the business model and corporate objecitves.

Evaluation Content Strategy component Usage formats
  • Competitive effect: we evaluate the competitive effect of the usage format based on the competitive situation we enter with this usage format. Do we create a sustainable competitive advantage via the chosen usage format(s), are we merely drawing level with the competition, or is our usage format only competitive to a limited extent.
  • Exploiting the potential of social media for the company: we evaluate the usage format used by the extent to which it unlocks the performance potential of social media for the company. Are we using the best possible usage format / combination of usage formats, or are we limiting ourselves in this strategy component?
  • Support of business model and corporate objecitves: we evaluate the support of the business model and the corporate objecitves according to whether and how the usage formats of the strategy support the business model and the corporate objecitves. To do this, we check what performance is possible from the usage format for the modules of the business model and for the company’s objecitves, and what the quality of this performance is.
  • Options and dependencies: we check which additional options result from the selected usage format or which options are reduced as a result. We check whether the selected usage format creates additional dependencies or whether existing dependencies can be reduced.
  • Identifiable risks: Identifiable risks from usage formats arise, for example, from problems in successfully implementing these usage formats or maintaining them in the long term, i.e. resource problems. Further risks can be identified if, for example, usage formats can be leveled out in competition.
  • Resource requirements: we evaluate the resource requirements from the selected usage format and compare them to the expected benefits.

Summary assessment of the content of the strategy component usage formats: The usage formats define social media structures and must therefore be chosen with particular care. Later corrections are risky and very costly. If the usage formats of a strategy do not contribute to a competitive advantage and do not comprehensively use the existing social media potential, a revision of at least this strategy component is highly recommended.

Evaluation Contents Strategy Component CorporateBenefit
  • Exploitation of the potential of social media for the company: Proportion of the potential corporate benefit that is realized through the strategy. We therefore evaluate which part of the company benefit possible through social media is tapped by the content of this strategy component. If the content of the strategy component falls short of its potential, the social media strategy will contribute significantly less than possible to the company’s success due to its design.
  • Support of business model and corporate objecitves: Benefit of the respective strategy design for the individual modules of the business model and corporate objecitves. Here we identify in detail to what extent the content of the strategy component supports the success of the business model or the corporate objectives. We gain this insight by comparing the performance potential of social media for the individual modules of the business model with what the strategy component realizes.
  • Options and dependencies: we assess whether the respective company benefit increases the company’s dependency on third parties and whether future options change positively with the company benefit.
  • Resource requirements for the intended business benefit: we assess the resource requirements for the respective business benefit in order to be able to compare the economic impact of (comparable) strategy versions. On the other hand, we can draw conclusions from this as to how far social media can support the company’s success more economically than possible other alternatives.

Summary assessment of the content of the strategy component CompanyBenefits: Up front, we rarely accomplish more with a social media strategy than we intended. If our strategy intentionally falls short of what is possible, this should be well justified. A recognizably higher resource requirement due to a higher company benefit can be justified more readily. So make sure that the company benefit is not low without necessity. If, for reasons that can be influenced, the expected corporate benefit is below what social media can contribute to the success of the business model and corporate objecitves, a revision of this content would be advisable.

Evaluation of content of strategy component Participation
  • Exploiting the potential of social media for the company: Exploiting the performance potential for participation through strategy content. We assess the extent to which the strategy version exploits the potential of participation opportunities. If a strategy version falls short of the possibilities here, this reduces the quality of the strategy and opens up possible options for the competition that can be detrimental to the competitive situation of our company.
  • Competitive effect: we evaluate the quality of the competitive effect and possible competitive advantages from the participation offers. Do we generate competitive advantages via the strategy component or is this not the case in the respective strategy version.
  • Impact of business model and corporate objecitves: we assess – based on the options for action for participation and their impact on the business model and corporate objecitves – the extent to which the respective strategy version exploits this potential.
  • Options and dependencies: we assess which additional future options may arise from the content of the strategy component Participation and which dependencies we enter into with the realization of this content.
  • identifiable risks: we assess any identifiable risks arising from the content of the participation strategy component. Identifiable risks exist, for example, in requirements from the content for which the company does not yet have competence or resources.
  • Resource needs: we assess resource needs from the content of the Participation strategy component. From this, we can see whether resource requirements arise for the company from this strategy component, the securing of which is problematic. It is critical to rely on the content of a strategy whose feasibility is not assured.

Summary evaluation of the content of the strategy component Participation: we evaluate here not only the above-mentioned effects of the content of this strategy component but also its interaction with the strategy components UserBenefit and Motivation. At the same time, we assess the extent to which the content of this strategy component is suitable for leveraging the social media resources contained in the themes of our strategy.

Evaluation Contents Strategy Component Motivation
  • Exploiting the potential of social media for the company: we use the options for action for motivation to assess the extent to which the respective strategy version takes account of the existing potential.
  • Competitive impact: we examine the extent to which the content of the strategy component motivation contributes to the success of the strategy – and here in particular to supporting user benefits and participation as the strategy’s driver and success lever. If we use the potential of motivation in social media only partially or even insufficiently, this is to the detriment of the quality and impact of the strategy and at the same time opens up space for the competition to use social media more successfully.
  • Impact of business model and corporate objecitves: here we evaluate to what extent functions / modules of the business model or corporate objecitves are directly supported via the strategy component of motivation. In assessing the impact, we are guided by the potential for motivating the topics from the business model and corporate objecitves on the basis of the options for action.
  • Options and dependencies: we check whether the contents of the strategy component reduce the future options for action and whether dependencies arise from them or are reduced.
  • Identifiable risks: we examine identifiable risks arising from the content of the strategy component Motivation to determine the extent to which they could jeopardize the quality of the strategy or its success.
  • Resource requirements: we review the resource requirements of the strategy component content to determine how appropriate and feasible it is.

Summary assessment of the content of the strategy component Motivation:

Evaluation Content Strategy Component Social Media Channels

We use this assessment to compare different contents / options of a strategy or to compare between two comparable strategy designs.

  • Exploiting the potential of social media for the company: we assess the exploitation of the potential of social media in the channels used on the basis of the performance quality of the channels for the social media strategy – in other words, the extent to which the channels perform as required for the strategy.
  • Competitive effect: we evaluate the competitive effect of the social media channels used by the extent to which a competitive advantage can be realized from the use of the channels.
  • Impact of business model and corporate objectives: we evaluate the impact of social media channels on the business model and corporate objectives according to whether or to what extent the channels contribute directly to the success of the business model and corporate objectives on the basis of their function. This is the case, for example, when the social media channels used are directly linked to corporate processes.
  • Options and dependencies: we evaluate the social media channels in the draft strategy according to whether the use of these channels results in a positive or negative change in future options for action and how this results in dependency on third parties (such as external social media channels).
  • identifiable risks: we assess identifiable risks from the content of the strategy component channels, such as risks from changes in the performance profile of the channels used.
  • Resource requirements: we assess the need for resources to use the social media channels of the draft strategy.

Performance potential of social media and competitive positions

Reminder: Competitive positions are contents with which we believe that we can achieve or secure a certain position in the competition.

When asking what scope or share of social media’s performance potential a particular strategy uses for a company, we should also pay attention to what part of social media’s performance potential that strategy – for whatever reason – does not use.

Explanation: If we leave open competitive positions in a strategy that are more powerful than those used by our strategy, a competitor can exploit advantages over our strategy by securing these competitive positions for itself. We should check whether this risk is present in a strategy / strategy version before recommending this strategy to management as the best solution.

Method: we test a strategy for this risk by comparing the chosen content with the best possible courses of action for the strategy component and checking whether one of these best possible courses of action is more powerful, i.e. the content envisaged in our strategy.