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Effective Competing The Art, Science, and Practice |
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by Vadim Kotelnikov & Ten3 East-West
"Everyone has a talent. What is rare is the courage to nurture it in solitude and to follow the talent to the dark places where it leads" - Erica Jong
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The Essence of Competition Competition is all about value: creating it and capturing it. A fundamental rule in crafting a competitive strategy is to view competition from the other player's viewpoints. Todays' Era of Hypercompetition Hypercompetition is a key feature of a new economy.Not only is there more competition, there is also tougher and smarter competition. "Hypercompetition"5 is a state in which the rate of change in the competitive rules of the game are in such flux that only the most adaptive, fleet, and nimble organizations will survive. New customers want it quicker, cheaper, and they want it their way. The fundamental quantitative and qualitative shift in competition requires organizational change on an unprecedented scale. In this new economy, competitive advantages must constantly be reinvented, and organization becomes the fundamental source of distinctive capabilities. Your Differentiation Strategy "What this new competition is often able to exploit is the fact that buying behavior isn't just about people and income, it's also about how dissatisfied consumers are with present alternatives."6 Choosing among multiple options is always based on differences, implicit or explicit, so you ought to differentiate in order to give the customer a reason to chose your product or service. Thus, "differentiation is one of the most important strategic and tactical activities in which companies must constantly engage. It is not discretionary."6 The concept of being unique or different is far more important today than it was ten years ago. The key to successful competing is differentiation...More 80/20 Law of Competition 80/20 Principle helps you to direct your attention where the real threat of competition exists. According to the 80/20 Principle2, over time, 80% of the market will tend to be supplied by 20% of the suppliers. But the world wouldn't rest long in the 80/20 equilibrium. There are always changes to market structure caused by competitors' innovations. The 80/20 Theory of the Firm can also be used to break you business down into competitive segments in order to examine its profitability. A competitive segment is a part of your business where you face a different competitor, or different relative competitive positions. "Thinking about competitive segments lobs you straight at the most important way to split and think about your business".2 The most profitable segments where your company is also well positioned, and that are also attractive markets - they are growing, have high barriers to entry for new competitors, have more demand than capacity, face no threat from competing technologies, and have high bargaining power vis-a-vis customers and suppliers, - need to be grown most aggressively. Competition Through Innovation With the enormous competition markets today are driven by choice: your targeted customers have too many choices, all of which can be fulfilled instantly. Competition through innovation, supported by your differentiation strategy, is thus more important than price competition. If your enterprise allows itself to lag behind in the race to generate new or improved goods and services, and better ways to produce and run them, you are putting your future on the line. Competitive Strategy To be successful today, your company must become competitor-oriented. You must pursue the right competitive strategy - avoid strengths of your competitors and look for week points in their positions and then launch marketing attacks against those weak points4...More |
Bibliography:
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"Competitive Manufacturing Management", John M. Nicholas, 1998
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"The 80/20 Principle", Richard Koch, 1998
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"Extreme Management", Mark Stevens, 2001
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"The Power of Simplicity", Jack Trout, 1999
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"Hypercompetition", Richard D'Aveni, 1994
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"Differentiate or Die", Jack Trout with Steve Rivkin, 2000
