“Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances.” —Sun Tzu 490 BC, Chinese military strategist
sme’s chat with phillip chichoni
Technology giant Apple last week became the first company ever to reach a market valuation of $800 billion. To understand this number, a person who bought a single Apple share when it listed in 1980 is now a millionaire. Imagine those who bought a dozen or those who bought hundreds or thousands.
The consistent growth of Apple was led by its highly innovative founders, Steve Wozniak and the late Steve Jobs. Successive leaders of the company continued with that spirit of innovation, ensuring the company stayed ahead of its competitors, churning out new and amazing products year after year. Their innovativeness kept them ahead of new competitors like Samsung and numerous others who entered the computer and mobile phone business. Apple simply had and continues to have an unbeatable competitive advantage.
In any industry that you may decide to enter today, there will always be competition. I have seen some emerging entrepreneurs stating in their business plans that they have no competitors. That is totally untrue. In the wild, predators like leopards, lions and hyenas are always competing for the available game. Even grass eating herbivores compete for the freshest grazing lands and watering holes.
The same is true for business in a free market, except that the competition is not about killing each other or breaking bones. In business, it is about competing for space in the customer’s mind. You see, customers buy products that they think are the best at a reasonable price. People’s minds are very difficult to understand.
Look at how people buy bread. Lobels, Bakers Inn and Proton today have shelves in most major retailers, with prettily dressed merchandisers trying to persuade customers to buy their brand. The prices are exactly the same and the loaves are made from the same ingredients. However, you will notice customers buying their favourite brands every time. It is hard to persuade a customer to shift brands. I have my own preferred brand of bread and sometimes feel disappointed if a child buys the wrong one.
In order for your product to be the most preferred, it must be distinct from others. This means having an unbeatable competitive advantage that makes your product stand out from the rest.
Of course, in a commodity market like the bread industry, it is difficult to really stand out, but you can create an unbeatable competitive advantage by working on some strategies that I describe below.
A successful business is about creating value for its customers. You should be able to create more value than competitors do. This process involves matching your business’s resources and capabilities with the opportunities and challenges of the marketplace. A successful business strategy matches the firm’s strengths (resources and capabilities) with market opportunities to create a sustainable competitive advantage by providing more value for its customers than competitors.
What is real value?
Value is in the customer’s mind. Customers have different needs. Value comes by satisfying customers’ real needs. In this fast-paced world, time is more valuable than money. If you can develop the ability to deliver a product or service faster than anyone else, they will be perceived to be more valuable, and therefore more desirable, than those of your competitors. There is also a perception that if a person can do something faster, he must have better knowledge than others and is therefore regarded as an expert in his field. Your products are thought to be of higher quality as well. Speed gives you an edge over your competition in almost every area.
No-one wants to waste money. That is the reason most people are driven to buy by lower prices. In these difficult times, everyone wants to save money. You will create a competitive advantage by producing a product of the same quality as your competitors and selling it at a lower price. This does not mean cutting corners but rather cutting your costs. Improve efficiency in your business to reduce wastage. Train your people to be always improving on efficiency.
A third way to build an unbeatable competitive advantage is by looking for ways to add more value all the time. Your company will stand out if you are adding more to whatever you are doing so that your customer perceives you and your offering as being superior to that of your competitors. You can add value to a product or service by improving the design so that it is easier to use. You can increase its value by simplifying its method of operation. Apple Computers did both at the same time. They transformed the personal computer industry by making them easy to use for the unsophisticated person.
What other ways can you think of building a competitive advantage? Seriously explore and try them, you never know what will work.
Until next time, keep on accelerating your growth.
Phillip Chichoni is a business development consultant who works with SMEs and entrepreneurs. His new book Business Survival and Growth Amidst Turbulence is now available. You may contact him by email, firstname.lastname@example.org. You can also visit his blog http://chichonip.wordpress.com