A two-stage framework for crafting strategy
When crafting a business strategy, don’t focus on competitors only.
Business Strategy aims to achieve and maintain a favourable posture for the company by influencing the equilibrium between the elements that shape the competing market landscape.
There are four pivotal elements and these are: (a) the company (us), (b) the targeted customer, (c) the competitors, and (d) the environment
All four elements should receive our attention, and not just a single one, something many strategy writings don’t do by their single focus on competitors. Competitors play a big role especially in large volume-advantage industries where market share and leadership are critically important. But we can cite many other cases where the customer, and not the competitor, is central.
Many DTCs (Direct To Consumer) start by creating communities building trust and listening to consumers’ concerns and ideas. In other words, they focus on what is needed by the consumers and subsequently, they work to turn these consumers into customers.
In fragmented markets, it makes no sense to imply that you will watch the numerous competitors. There is no single competitor to watch and start-ups come in the market offering the best they can in terms of consumer wants.
In specialized or blue ocean markets where the game is won by thought innovators, the emphasis is on what different is needed by consumers and less on specific competitors.
In the course of time, competitors make moves, which not only should not escape our attention, but should be made part of the strategy formulation picture. By lowering prices, for example, a competitor could be implementing his strategy to gain market share and subsequently reduce costs. A competitor who starts building capacity should not fall outside the company’s radar and his actions be examined as [...]