Success Informs Success
Their high levels of business acumen enabled them to continuously provide constructive critique as well as clear focus and direction.
Strategy involves committing to undertake one set of actions rather than another and, in the process, creating a unique and valuable position that allows the company to perform better than its competition. They have avoided trying to be the best at everything they do and instead focused on being different. “Best”, encourages companies to compete in the same way as competitors, leading to reduced differentiation, pressure on price, raised costs and reduced profit. Working with SMEs who are fast growing affords some interesting observations about the trade-offs the most successful ones choose:
Focus before mass – it’s often better to participate in a defined market segment – a niche with growth potential – compared to a large, homogeneous market with overlapping customer segments and established incumbents with economies of scale and scope advantage. Focusing on under-served and over-served customers is often an ideal.
Better before cheaper – it’s often better to compete on points of differentiation that are meaningful and valued by the target customer than it is to compete on price. Incumbents are able to react quickly and aggressively when competing on price.
Intimacy before supplier – it’s often better to invest in higher levels of intimacy with fewer customers than it is to be just a supplier to many customers. Intimacy leads to a reduced cost-to-acquire and cost-to-serve model through partnership and the ability to shape the customer solution so it works for both parties.
Revenue before cost – it’s often better to prioritise increasing revenue over reducing costs because this involves selling to more customers in more ways and more frequently – an ideal growth platform.
Unique before best – it’s often better to focus on being unique than trying to be the best. Being the best leads to competition on the same axis as the incumbents. Whilst head-to-head competition when companies and the value they offer customers are too similar, usually hurts everyone.
In partnership, we help our clients think-through their choices so they focus on the key issues and allocate finite resources in ways that support strategy implementation.