As companies plan for the upcoming year of business, there is a great deal of discussion around the idea of competition.
With increasing competitiveness from worldwide markets, it is a definite challenge, and with the advent of technology to its current level, it affects every business – from large corporations to small businesses.
At the same time, it gives companies a chance to develop their competitive edge as never before.
In Competitive Strategy, Michael E. Porter boils it down to three simple strategies: lowest cost, differentiation, and focus.
Competing in terms of lowest cost is increasingly a challenge in global markets. This advantage is often reserved for the largest companies which, by virtue of size, have the ability to negotiate costs to a significantly lower level. The downside to this model is that, in order to operate on this basis, a level of service is often sacrificed. This means customer service will likely be automated and less accessible. It brings in concepts like self-service, and self-checkout, and, increasingly, relies on artificial intelligence for job functions across the board.
This is essentially premium quality, speed, or innovation at a premium price. When the iPhone made its initial debut, it hit all three markers for differentiation. What appeared to be an overnight success was actually the result of years of development and demand for a very high quality product. Steve Jobs was not focused on lowest cost strategy. He was focused on making a difference. And indeed, he has.
Fast forward to the latest editions of the new iPhone. The new iPhone’s are coming in at a price that is more premium than ever. Yet this time, they are not flying off the shelves at previous levels. In fact, there is a great deal of internet chatter about the high cost.
Why is this?
The elements of differentiation are just not there. It has become more and more like its competitors. The quality is in question due to issues with a swollen battery.
Where the first iPhone brought a whole new line of innovation that has literally changed the world, the latest renditions do not offer that level of differentiation and innovation.
As an avid iPhone fan, I would caution the leaders of the company to either increase the differentiators to a level we have come to expect or else hit a lower price point that is closer to the $295.44 it costs to build each device.
The value of a team comes into play in the Differentiation model. Bringing in more innovators and quality control personnel – or empowering those already in place – could prove to be a wise move for many companies. Seeking leaders who think out of the box creates strong Differentiation-based companies.
This final strategy is available to any company, regardless of size and resources. This is the element of focused, personalized attention, usually applied within a certain niche. The focus can be on a unique service your company offers, or on a unique clientele to which you offer varied services. Either way, it is very focused, specialized, and impactful to customers and clients. It is the one element that can hold its own in a world of low-cost automation.
As such, having a team of specialists that works together to serve customers and clients in a very focused manner could be your strongest asset.
Think about your business.
Is it sizeable enough to compete in a world-wide market?
If so, then you have the ability to operate with a Lowest Cost strategy (low cost, high volume).
Is it different enough to compete on terms of innovation, quality, and speed?
This gives you the ability to charge a premium price (premium price, premium product or service).
Do you lead a small to mid-level business?
This doesn’t mean you can’t compete. It simply means you must compete where others can’t – to the level of focus and personalized attention – and that you will need to clearly define your niche.
Business strategy is not a “one-size fits all” approach. It is a matter of choosing the strategy that best fits for where you are and applying it to the highest degree possible.
As the CEO of Strength Leader Development, Deb Ingino is a highly sought-after international executive mentor, coach, trainer and speaker. Deb is well versed in global business operations and helps business leaders and their teams to discover and leverage their strengths, so they can create highly collaborative teams that deliver great results. With a refreshingly direct style, Deb helps leaders and their teams to deliver profitable results. Connect with Deb to learn more about her mentorship and coaching programs to equip you with advanced strategies to elevate your results.
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