I've gotten a lot of questions about drilling down, so I'm going to outline some of my favorite techniques for doing it.
As stated before, "drilling down" is a term I use for picking apart parts of the strategy framework. I'm assuming you are using simplified strategic planning as your basic strategic planning model. If not, be sure that your planning process has the following information outlined WELL before you attempt this technique. (I say this because most strategic planning processes are written by people who don't do that much actual planning, so the important chunks may be missing):
1. A good outline of your own capabilities. If you've done a standard "SWOT" analysis, you are probably fine, but avoid focusing on the weaknesses and be wary of BS.
2. A good outline of the capabilities of your 3-5 key competitors. NOT 20 competitors...just 3-5 that really bug you.
3. A good analysis of customer behavior in your markets, in particular, needs, preferences and specialty/commodity tendencies.
4. A good understanding of your operations, current technology, and supplier markets.
If you have all of these, "drilling down" simply involves picking ONE element - such as your supplier markets - and closely examining how they affect the strategic dynamics inherent in the information provided above. For example, in one retailing client, when we first looked at supplier markets, we assumed they wouldn't have much impact on our strategy, because everyone was in the same boat vis the different suppliers. Drilling down led us to ask whether a differentiated supplier market position was possible. We looked at 4 key supplier markets:
1. Capital/real estate
2. Labor/key skills
3. Merchandise/raw materials
What immediately became clear in our discussion was a firm belief that our larger competitors would quickly copy any strategic move we made in most of these markets - and beat us squarely. In key skills, however, we identified that the size of our competitors would make them reluctant to radically change their human resource practices, so we opted to examine possibilities relating to those. The "drill down" involved a very detailed, almost tactical look at opportunities and operational changes required to change our ability to attract and retain people with key skills. We specifically rated each idea for 2 characteristics:
(1) How easily would/could our competitors copy this change?
(2) How well does this change fit our strengths?
Ultimately, this helped us choose a combination of initiatives (including training and recruiting) which yielded a significant advantage in this area. In the following year, the company increased market share by 10% in a large and mature market while maintaining premium prices.