A competitive strategy often creates a new unchallenged with higher value market. Good examples include Amazon, Apple’s iPhone, Uber, and Tesla. Disrupting markets isn’t what I’m talking about.
Everything has a life cycle. Examples are ideas, inventions, products, machines, technologies, processes, or systems. Analog cycles were longer and digital cycles are shorter. The sequence is:
Invention > Extension > Evolution > Demise
I’ll use inkjet to illustrate. It’s the digital disruption of analog printing processes whether offset, flexographic, or screen printing.
• INVENTION is the innovation phase. This is the ideation and creation stage as a possible replacement to existing technology. It starts with the theoretical being proposed, experimented, and refined. It’s noncommercial and is based on scientific principles. The invention cannot work by itself. Inkjet was first developed in the lab by Ichiro Endo at Canon in Japan in the 1950s.
• EXTENSION is the development of infrastructure and associated support, which is necessary to commercialize the invention. Inkjet is worthless without the ink, heads, software, circuit boards, controllers, pumps, and hardware to drive data and translate to drops of ink.
• EVOLUTION are the future iterations of the invention and the infrastructure. In the beginning, ink jet was only aqueous ink. The heads, inks, and curing evolved to solvent, latex, UV and other more technical jetable materials for laser sintering and 3D printing. Inkjet has evolved beyond color and graphics to functional production.
• DEMISE is the end of life of the invention. Here the core technology driving the invention and the associated infrastructure are no longer economically viable. It is conceivable one day there will be no need for printed graphic communications. Examples are electronic graphic LED displays and ePaper. The end of graphic inkjet is inevitable at some point.
The most common competitive strategies tend to focus on product or service extensions. This is nothing more than offering more of the same, in a different size, shape, time frame, speed, or level of service.
This temporary advantage may last a few hours, days, or weeks. A new offering might be something new or different from a supplier or a catalog your competitors also have access to. As soon as they see what you’re offering, they do their own R&D (ripoff and duplicate.)
This is nothing more than increasing market share incrementally with new products, services, or features. Faster, better, and cheaper are the most common ways. The gain is temporary and must be repeated over and over to stay ahead. This is referred to as a transactional solution. These are the quick wins focusing on the present conditions and have limited future value.
The Problem with Competitive Strategy
Competitive strategy was beating the competition. It’s the old school “I win, You lose” approach that’s been taught for decades. It’s easy to implement but inefficient. This is a brute force approach and has a great deal of frictional resistance from both competitors and skeptical customers. Lower price is the primary method and it forces profit to zero in order to “win” the work. Is it really winning?
It takes energy, resources, and time for limited gain. You attack the market with a set price. Your prospect and the competition respond by pushing back with an even lower price to counter. You apply resources pushing back in a protracted time-consuming negotiation with the goal of beating the opponent (the customer) and knocking out the competition.
Here is a different way to approach the competitive strategy. The goal is to avoid head-on conflict. This has no resistance. Create a more complete offer the competition cannot understand or compete against. Instead of countering with a lower price, amplify your advantage with an enhanced offer.
How to Build a Competitive Strategy
A competitive strategy is not necessarily tech innovation. This is the most common and obvious. A competitive strategy is a fundamental shift in thinking. The core concept is a better offering for the customer. Increased customer value happens in many different ways and on many different levels. It brings together products, people, technology, and business outcome to create value in a new way.
Competitive Strategy Characteristics
A modern competitive strategy has four key components that create a lasting market advantage for the business. They will be introduced here and elaborated on in Part 2 of this article in the next issue.
• AN UNCONTESTED MARKET: This is the foundation of the approach. It involves finding the hidden opportunities within the existing way of doing business. Think finding the camouflaged hunter hiding in the brush. This can come from up to 24 different possibilities. When you identify the opportunity, it’s hiding in plain sight and is absolutely obvious to the customer. The reaction is, “Wow, I never would have thought of that, but it makes perfect sense.”
• COMPETITION BECOMES IRRELEVANT: A new edge has to be a better way of solving a problem. As the graphic industry consolidates, the inclusion of additional services like frictionless self-serve workflow and integrated kitting and fulfillment lock out competition until they can match your offer.
• CREATE NEW DEMAND: There are four main parts to creating new demand. The first is the significant added value. This means the customer is willing to pay more for the offer and is happy to do so.
The second part is the certainty of being able to deliver your offer. Often promises are made that can’t be delivered. Avoid this at all costs. It will kill your credibility.
The third and fourth parts are speed to deliver the offer and the friction to deliver. When developing your new competitive advantages, strive for zero time for fast and easy. Customers love speed.
• BRING NEW VALUE: New value means your customers are happily willing to pay more for what you are offering. This requires thinking about the result you deliver and not what you do and how you do it. There is a big difference.
The Benefits
A successful strategy builds a barrier to entry. The time it takes your competition to figure out what you’re doing is “competitive durability.” Once they figure it out, they have to copy it and develop their own solution. Patents and trademarks were a way to protect and extend the life of an advantage. This is called “competitive longevity.”
The old strategy textbooks call competitive longevity a moat that must be crossed before the competition can storm your castle. In the next issue of Big Picture, I’ll continue with Part 2 on how to implement a competitive strategy.