A Competitive Strategy is a decision companies make, and embrace, to achieve market leadership by raising expectations in a given area of expertise based on their specific customer needs and company strengths.
Based on the definitions Treacy and Wiersema identified in their book, The Discipline of Market Leaders, competitive strategies fall within one of these three categories:
* Operational Excellence – focus on providing cost effective, systematic on-time delivery and highest quality products and services
* Customer Intimacy – emphasis on providing customized approaches to meet your specific customers’ individualized needs
* Product Leadership – commitment to being first on the market with new innovative products
So why is it so important to do this?
#1 – Different strategies require different modes of operation:
- Decision Making/Levels of Autonomy:
- Does your competitive strategy require more emphasis on standardized processes, authority to customize or creative license?
- How are decisions currently made in your company?
- Talent Management:
- What types of people competencies are required for your competitive strategy’s success?
- Do you look for people who are planful, systematic and detailed, have excellent soft skills or possess a geek-like focus?
- Do you give more importance to processes and procedures, teamwork and relationships, or “anything goes as long as you get the job done?”
- How do your cultural mores support your competitive strategy?
- Capital Expenditures:
- Which is most important to your strategy – tracking costs and logistics, analyzing customer intelligence or seeking out novel research?
- Where do you spend your resources?
#2 – Your Competitive Strategy drives your Market Leadership position, which in turn drives company strategy and goals:
- No matter which competitive strategy you choose, it defines who you are, what you base your market success on and how to prioritize your goals.
- This enables you to better articulate your Company Strategy and align your employees to what is important.
Obviously this can be taken as, and is, an over-simplification of the Competitive Strategy Model;
However mid-sized companies who start thinking about their competitive strategy while they are small can strengthen their model as they grow.
The important thing is to have the discussion, focus your energy on your unique position to raise your customer expectations and start building upon that concept!
What is your Company’s Competitive Strategy?