Once the problem has been defined, the next thing is to decide on the strategic choices – do you compete on price i.e. low-cost producer and sell at the lowest price.
In which case, your source of competitive advantage is affordable pricing? Or do you focus on being differentiated by making products and offering services that your customers adore, in which case they are willing to pay any price?
To do so, you must understand your market or customer segments, their incomes and offer products that are highly differentiated and appropriate for each segment. For example, Apple’s iPhone may be having fewer buyers compared to Samsung’s S Notes, but Apple continues to win because it knows what the customers want and is willing to offer it. For example, when you buy an iPhone, it becomes difficult to churn or stop using the iPhone since you get an iTunes account that helps you create your digital assets and online payments to enjoy things like music, apps, and cloud backup.
It is difficult to run away from the company’s products. That is who the ecosystem works. Apple decided to win by differentiation.
But that was not enough.
They went ahead to decide how to win within differentiation.
What strategic possibilities do we have? To win, you must define possible ways of winning within the planning period within your overall ‘differentiation’ choice. Once you agree to win by differentiating, carefully explore your business to define how to win within differentiation. You could come up with several possibilities:
- Offer create an ecosystem to empower people to succeed in their career with our products and services, thereby creating lifestyle products and services
- Continue with our current strategy of offering only hardware and no software
With the above two possibilities, leaders can go ahead to break each down to decide the best strategy. For example, some companies have decided to do option b) only. They focus on making hardware and using other company’s operating systems or an open-source operating system like Linux to run. That is their chosen model.
For companies like Apple, for example, they focus on design hardware solutions for mobile, computers, and television and making the operating system to power such hardware. They do not stop there. They invest in entertainment and more solutions to make the user experience exceptional.
To understand this, you look at where they have come from. Initially, they had narrowly defined their business and were only involved in making hardware and software, the iOS. But today, they have focused on powering the customer to stay a step ahead of the rest.
When someone sees another person using an iPhone. Such people are automatically respected and seen to be of a different and higher social class than counterparts using other tools. That is the power of a strategy.
So, what is your strategy?
Now is the time to go to the drawing table to review your current strategy in light of the pandemic. If you want so fresh air, contact us for a strategy facilitation exercise. Your team will thank you for having called Summit Consulting Ltd.
Read Part One Here
Copyright Mustapha B Mugisa, 2020. All rights reserved.