The activities like Product development, selling, innovation, and delivering a product or service are the basic aspects of competitive advantage.
Operational effectiveness is carrying out these activities better— that is, quicker, or with less efforts and flaws—than competitors. Businesses can get huge advantages from operational effectiveness, but from a competitive viewpoint, the problem with operational effectiveness is that best practices are easily rivaled.
All the competitors in your industry implement them, the productivity leading edge —the supreme value an enterprise can provide at a given cost, given the best accessible technology, skills, and management methods—shifts outward, lowering costs and improving value at the same time. Such competition produces absolute improvement in operational effectiveness. And the more benchmarking that businesses do, the more competitive convergence they have—that is, the more indistinguishable companies are from one another.
Strategic positioning is to achieve a sustainable competitive advantage by stabilizing what is unique about a company. It means performing different activities from competitors or performing similar activities in different ways.
Three key principles underlie strategic positioning.
1. Strategy is the creation of a unique and valuable position, involving a different set of activities. Strategic position emerges from three distinct sources:
1. serving few needs of many customers
2. serving broad needs of few customers
3. serving broad needs of many customers in a narrow market
2. Strategy requires you to make trade-offs in competing—to choose what not to do.
Some competitive activities are incompatible thus, gains in one area can be achieved only at the expense of another area
3. Strategy involves creating “fit” among a company’s activities.
Fit has to do with the ways a company’s activities interact and reinforce one another. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them.
Employees need guidance about how to deepen a strategic position rather than broaden or compromise it. About how to extend the company’s uniqueness while strengthening the fit among its activities. This work of deciding which target group of customers and needs to serve requires discipline, the ability to set limits, and forthright communication. Clearly, strategy and leadership are inextricably linked.
Thanks for reading!
#saisathish #businessstrategist
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About Sai:
Sai Sathish is a business strategist. He helps enterprises assessing goals, determining actions to achieve them, and mobilizing resources to execute and grow incrementally.
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