There is no way around change - there is only one way through it.
Change is the basis of all progress. To remain relevant in these times, you have to be able to unlearn and relearn. In recent years, the trend in the IT industry has been for large companies to significantly improve their ability to manage IT projects independently.
Recently I had the opportunity to talk to Hamarz Mehmanesh, CEO of mgm technology partners. When I expressed my concern that even in the large companies that are currently our customers, there is a trend towards self-sustaining teams, I asked him what we as a service-oriented company can do to remain relevant? "That's true," he said. "One must find a new position."
"Strategy is the development of a unique and valuable position through a series of different activities."
Strategic positioning within an industry is relative and nothing more than the path that a company as a whole chooses in order to stand out from its competitors and increase its own value. Michael Porter explains the search for a new position as follows: "Strategic competition can be seen as a process of perceiving new positions by wooing customers from existing positions or bringing new customers into the market. Strategic positions are therefore outward looking and can be based on customer needs, access to customers or a selection of products or services offered by the company.
Regardless of the basis chosen - whether it is product selection, needs, access or a combination of these three factors - positioning requires a tailored set of activities, as it is a result of differences in the activities of market participants. Nevertheless, it is not always a consequence of differences on the demand side. For example, selection and entry positioning are not based on differences on the demand side.
Finding a new position is fascinating: the search could lead to a lower price or to further differentiation in order to become a premium supplier. This could include the implementation of operational efficiencies, the development of new pricing models, the geographical distribution of employees to include countries with lower labour costs, new marketing plans and much more. But is it not too easy to imitate positioning? Can't another company simply adapt the pricing model that you have developed? In the course of the discussion, Hamarz pointed out that, although mgm's business strategy had changed little or not at all over time, the activities in the area of implementation and their interrelationships had constantly adapted. This is what gives our company an advantage.
That's very true. A new position alone is not enough. Every single activity that makes up the whole is important. But wait! Individual activities can also be imitated. It is therefore of greater importance how these activities interact. A series of intertwined activities therefore provides the basis for competitive advantage. This makes them not only unique, but also difficult to copy.
In order to achieve the perfect mix of activities, sustainability and advantage and to remain truly relevant, a company therefore needs
- a unique value proposition within the industry,
- a distinctive value chain that reflects the choices made for reasons of differentiation
- clear compromises and decisions on what not to do.
To understand these points, I have looked at how different companies deal with them. One of these examples is Airbnb.
I. A unique value proposition within the industry
Airbnbbs very eloquent slogan is "Belong Anywhere". It is brilliant and fits very well with the company's brand positioning strategy. The activities with which Airbnb brings its achievements to life are shown in the diagram:
Let us look at how these activities fit together in different ways:
- Consistency: All listed activities are aligned with the value proposition of the company and contribute incrementally to it. In the example of Airbnb, the search based on price, location, duration and property types supports the value proposition "easy online booking for price-conscious travellers".
- Combination: The activities reinforce each other and increase the value contribution. In the case of Airbnb, the stress-free verification for hosts and cashless payment reinforce each other and encourage other hosts to join Airbnb.
- Substitution: The exercise of one activity makes it possible to substitute another activity. However, the activities cannot be decoupled from each other, which makes the overall structure stronger. Customer satisfaction remains the same - regardless of whether customers decide to buy a whole apartment or a shared flat, as both serve the purpose for the given price. These activities cannot be separated.
II. a distinctive value chain that reflects the choices made for reasons of differentiation
At this point we have a list of activities that constitute a value chain. However, the way in which these activities are configured and interconnected and how closely they interact with each other brings out the competitive advantage.
If activities fit together, they create a strong position, because the whole is more important than the individual parts. A good integration increases the uniqueness of a position and reinforces the necessary compromises.
III. clear compromises and decisions on what not to do
With regard to sustainability, you need to know what you should not do. It is very important to know the compromises of a company. They secure and strengthen the position of the company. Compromises are helpful. They avoid any kind of confusion that could arise, for example, between customers and employees when a company tries to offer two or more incompatible things at the same time.
To stay with Airbnb, we look at the clever compromises the company has made.
Airbnb does not own any real estate. They have chosen not to own any, although this could potentially create some uncertainty for the business.
After a one-hour discussion with Hamarz, we agreed that relevance is a moving target. Someone who perfected a skill yesterday was therefore only relevant yesterday. To remain relevant, continuous improvement should become an integral part of the corporate culture.
- "What is Strategy" by Michael Porter, HBR 1996
- Picture source: https://unsplash.com/
- "FROM STRATEGIC PLANNING TO STRATEGIC POSITIONING", 2015 Conservation Impact and Nonprofit Impact
- Be the Best at What Matters Most: The Only Strategy You Will Ever Need by Joe Calloway