How to think competitively
A company can focus on three things:
- Performance superiority: Product differentiation taken to the next level. Product design, styling, technology; performance of stock. How well your product works.
- Operational excellence: Having innovative talent in your company. Customer service, reliability, cost considerations, delivery, etc. related to your industry. Determine this based on what your competitors offer and customers expect.
- Customer intimacy: Having a close trust relationship with clients, delivering what the customer wants and customizing your product.
You must be competent in two and superior in the third in order to differentiate yourself. A company cannot neglect one aspect and focus on the other two; you must meet the fair-trade value at minimum in all three or be rejected. This value changes over-time. For example, when you first release a better model of a phone, you are above fair value. When your competitors imitate your model and features, fair value has evolved, and people accept those improved features as standard.
Doing market research in order to determine fair-trade value of your industry; what customers expect when it comes to your product, services, and customer relations. Find out what your competitors are good at, what services they offer, what your target market is willing to pay and what the basic expectations of your customers are. Then you must determine where your company falls in comparison to the market.
Determine how well you and your competitors do on each of these aspects. Once you know where you stand in relation to competitors and the market perception of fair value, you can begin planning strategy. Plan both short- and long-term strategy! Be sure you meet fair value on two dimensions and be the best on one. A short-term strategy may be: since we are below fair value in customer intimacy, we will improve on that. A long-term strategy would be: we want to be the best in performance superiority, so we need to continually improve our product.
Remember, everything about this model is fluid. Fair-trade value changes with the market and your competitors will react to the steps you take and improvements you make.
Via Coursera.org and Wharton University