Are you ready for your competition
A market on the up-swing can bring your company profit and, if that’s what you want, growth as well. This opportunity for profit and growth needs to be managed, to make it sustainable through the inevitable down-swing that sooner or later will follow. It needs to be protected against attacks from competitors. You need a competitive advantage to make sure that you are in front of the pack.
We are lucky in Australia. Despite the global financial crisis that continues its entrenchment elsewhere the economy is strengthening here. It’s being driven by an expansion in resource activity more than anything else and more demand for resource production means business and employment opportunities galore: a sweet result for those getting the sales, but a sour result for those needing staff. More people are being employed in this sector – which means that less people are available to work elsewhere. Companies not in the resources sector may find it harder to recruit staff to take advantage of the strengthening economy. They may even find it hard to retain the personnel they already have. This is an issue.
In a growing market competition doesn’t lessen, it changes. You are less likely to engage in bloody price wars with direct competitors, but you are more likely to go head to head in battles to wrest human resources from anyone trying to grab them from you, whether a direct competitor or not. Here’s a little human resources secret that too many companies ignore. Not only do your employees have a natural desire to win, they also feel and function better if they can identify with clear company objectives and strategy. Putting these in place means you can retain and attract the people you want, to build the competitive advantage you need to succeed.
However, as Harvard Business School’s David Collis and Michael Rukstad point out, “most executives cannot articulate the objective, scope, and advantage of their business in a simple statement”. Worse still, asking members of a company to write down a simple statement like this often shows up worrying contradictions between the individual versions.
So what should you do? Your company needs unequivocal definitions in the basic building blocks of:
- Company strategy and objectives – expressed in terms of the specific results required and when they are to be achieved.
- Competitive advantage – what your company can do that is valued by customers and that your competitors cannot do, and that will fuel progress towards your objectives
Getting people in the company to participate in defining its strategy, objectives and competitive advantage is crucial too. Business history is littered with cases of organisations that succumbed to competitors because of an internal ‘not invented here’ syndrome. But history also shows that bringing staff into the decision making process engages their emotions and makes them much more likely to act in a way that supports the company: they have made an emotional investment so they want the company to succeed.
So what do you do now?
Your first moves are to get your business strategy, objectives and competitive advantage crystal clear as follows:
- Define them (with members of your company)
- Share them (with all members of your company)
- Do them (with management setting an example daily)
- Check up on them
‘Check up on them’ means regularly checking that the company objectives, strategy and competitive advantage continue to be understood and acted on at all levels. The simplest way is to ask different people, external and internal to your business, to tell you how they understand them, and renew your internal publicity as often as necessary for the right message to get though and to stick in your people’s minds.
How do you define your company strategy, objectives and competitive advantage? The answer lies in looking at the specific features of your company compared to what your customers want. Unlike mission statements which are often suspiciously similar between companies, your objectives don’t have to be the same as your competitors’, and your strategy and competitive advantage probably won’t be.
George Stalk and Rob Lachenauer of Boston Consulting Group cite striking examples of different competitive advantage. They include Toyota’s superior manufacturing flexibility; Wal-Mart’s ruthlessly efficient logistics and SouthWest Airlines’ ‘alternative’ flight network. Competitive advantage can be complex and sophisticated, or elegantly simple as Pepsi demonstrated when its competitor Coca-Cola set up its first nationwide network of vending machines. Pepsi waited till Coca-Cola had made a sufficiently large investment in completely standardised machines that were practically impossible to modify. It then set up its own network of vending machines selling its own drinks, but in bigger bottles to win over more customers.
A word if you’re thinking of developing a new or modified competitive advantage. Be aware that you will need to actively invest time and effort in the process. It is essential that the competitive advantage is the cornerstone of your company’s activities. Oliver Wyman explains that the tighter the fit between the four fundamental building blocks of a company (its activities, its people, its structure and its culture), the better its performance. And that’s the goal- Better Performance. But any significant change, including a change in competitive advantage, can loosen that fit. Knowing this you can make sure that you have strong change management controls in place. Do this and you will see your competition weep with frustration as you power ahead.
Are competitive advantages like the ones above enough to beat your competition? No. They’re necessary, but not sufficient. You’ll still have to pay attention to the basics like cash flow and containing costs. Like everyone else, you’ll still be at risk from a ‘double dip’ in the global financial crisis: your currently expanding sector may get sucked into the whirlwind just like the others. But because you have taken heed and honed your competitive advantage, and made sure that your company strategies and your staff actions align with it, you’ll have a much better chance of weathering the storm. Sure, price pressure will come if economic conditions get difficult, but if you are providing something that your customers value, and that they can’t get elsewhere, you’ll resist better as well. By continuing to maintain and develop your competitive advantage in bad times as well as good, you can stop worrying about basic survival and start figuring out how far ahead of your rivals you can get by the time any crisis is over.
So make the plunge today and review your strategies and operations. Are they creating and supporting a strong competitive advantage? If not take immediate action and leave your competitors behind.
Start as you plan to continue – contact me to discuss how it can be done.
Jennifer is a strategy implementation coach who helps leaders turn their strategies into results.
She assists executives and business owners to achieve goals without delay regardless of whether those goals are increases in profit, productivity, leadership skills or something else. Her services are Business and Executive Coaching, Group Facilitation, Strategic Planning, and advising on Board Governance.
To find out how she can help you, call +61 439 520 182 or email.