Few days ago, a colleague quipped and in an expressive manner told me that doing business in our environment has been like asking a camel to pass through the eye of a needle. Definitely, the environment is uncertain and things are, indeed, very tough. I offered some silver bullets for success.
I will share some of my views with you in this short article.
To drive an impactful performance and win in this very tough business environment, we must ditch the old thinking and with determination, go for new success models. Do not fall back on just polishing operational effectiveness. Stereotypes, no matter how refined and refreshed, would not solve the problem. Sharpening management tools and techniques, re-engineering and benchmarking, refocusing core competencies and time-based competition would not deliver the stability and superior profitability you desire.
Professor Michael Porter said “current business models will not do it even if we change our paradigm of competition, nurture core competences, adopt flexibility in order to respond rapidly to competitive and market changes, benchmark continuously for efficiency and change technologies.” He explained that even positioning which was once the heart of strategy is too static for today’s dynamic markets and changing technologies. Professor Porter noted that competition could easily and immediately copy any market position and competitive advantage.
Professor Porter’s solution (which I agree with), is what he called the Arithmetic of Superior Profitability. The arithmetic model uses operations of addition, subtraction, multiplication and division to carefully select strategic positioning with uniqueness and differentiation as fundamental platforms. It is the key to driving impactful performance through superior strategies.
He identified three key principles that underlie strategic positioning. First is the creation of unique and valuable position in driving a three-pronged positioning strategy that serves special and highly beneficial needs of “many” customers. You can also serve broad needs of few customers or serve the broad needs of many customers.
Secondly, making trade-offs and carefully choosing what to do and what not to do. Professor Porter’s third strategy of positioning is, “creating fit among company activities.”
An organisation may also choose to adopt the differentiated superior products model. This is underpinned by customer-focused innovation. This model position’s the organisation appropriately with consumers in the marketplace. The model enables you to create choices at all levels; tighten up choices to make your products or services stronger; and roll out choices that have the strength of superior value.
When businesses roll-out preferred products or services, the beneficial values must adequately and exceptionally meet the needs of customers with even some attractive “add-ons”. The beauty of this strategy is that it provides a wonderful “strategic fit” from the financial point of view and also grows the organisation’s innovative strength. It also enables organic growth. In order to achieve maximum benefits from this strategy, the organisation must “fully” understand the customer and make their lives better. There must also be precision in determining strategic customers and focus groups, both qualitatively and quantitatively.
Let me mention some few useful points on strategy. Strategy provides clear answers to identifying where we compete. That is, the competitive arenas and markets.
Through strategy, we decide the unique values that would enable us to win. There must be clarity about the reasons customers would prefer our products or services to those of competitors. Unique beneficial value is the cost of differentiation which includes organisation’s image and reliability. We must trust our resources and capabilities as well as the superior human capital and, of course, the process.
Winning through impactful strategies would definitely depend on our ability to always deliver unique values.
Let me dwell a little bit more on the ability to do better or, on a sustainable basis, be “superior.”
Core competency and the ability to evaluate it, is the game changer. The organisation’s core competency is what we do better than everybody else. People, culture and relationships are the sources of operations of competitive advantage and core competency. To get credible information about performance, we must frequently and vigorously evaluate our people and how they are effectively utilising resources and capabilities. Those carrying out the evaluation must also be evaluated.
As I said earlier, competitive advantage is a product of distinctive competency, our superior and dedicated human resources as well as technology. Our people must understand what the customers want and be regularly making as well as supplying and delivering them.
Let me conclude by pointing out that intelligent and compelling arguments, imagining possibilities and making contact with reality (essential ingredients of strategy), thrive on data management solutions. Even the business system dynamics. Data enable us to identify and anticipate trends and outcomes. We use data in this solution to provide actionable recommendations based on insights. I have discussed Business Continuum Analytics (this dependable and strategic data solution) in one of my articles. BCA is different from Business Intelligence (BI) which uses historical and current data to analyse what happened in the past and what is happening now. BCA identifies the problems, opportunities and recommend actions as well as serve as opportunity prompts.
Remember: strategy is not just competing to be the best but also competing to be unique.
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