What do you choose to do better than anyone in your market to achieve a competitive advantage?
Customers want more of everything they value. If they value low cost they want it lower. If they value convenience they want it easier and faster. If they look for state of the art they want it first and want to push the envelope. If they need expert advice they want more time and dedicated effort and investment.
By raising the level of value that customers can expect from everyone, leading companies are driving the market and driving their competitors out of business, or at least into a malaise of mediocrity. So what do you do? Here are a few options:
Alter the industry structure to change the basis of competition. Reconfigure the value chain – retailers become wholesalers and suppliers, insurers takeover brokerages, banks move into insurance, etc.
Improve the position of the business within the industry by way of acquisitions and market share. Alter the playing field to achieve an enhanced scale of operations and competitive positioning.
Innovate and create new opportunities – new products, services, and markets.
Employ barriers to entry in terms of significant capital investment, proprietary technology, or in the magnitude of resources required to compete effectively.
Increase the dependence of customers for your products and services in terms of the total value for customers or higher costs of switching to alternates.
Change and enhance supplier relationships to obtain cost and quality improvements, reduced cycle times, and integrated processes.
Change the basis of competition by creating a service relationship and differentiation. Move away from price to service, software, and customer relationships.
Centralize into high volume, low cost, automated, ‘focused factories’, to achieve the lowest cost operations in support of customer value.
Decentralize into custom, low volume, flexible factories, quick to market, responsive, and able to customize products to specific customer requirements.
According to Michael Treacy and Fred Wiersema market leaders keep their edge by picking one discipline, and executing like crazy. Examples of the discipline of the leaders:
Winning through cost:
Focus on operational excellence to offer a combination of quality, price and ease of purchase that no one else in your market can match. Don’t worry about innovation, just execute extraordinarily well, guarantee low prices and hassle free services, standardize and simplify.
Winning through great products:
Innovate and develop products that push performance boundaries. Develop the capability of speed to market and be relentless in making your own products obsolete. Invent, develop, and market – fast.
Winning through customer intimacy:
Cultivate close and long term customer relationships and intimate knowledge of customer requirements. Create a dependency of customized service and support, and focus on customer retention and satisfaction.
So it’s a matter of choice – and you do have to make the choice to be a leader. And then it all boils down to executing like crazy – to be the best at what you choose to do. Anything in between is just muddling and mediocrity.