If the prime aim of businesses were to beat competitors, the word strategy and its concept would have been very appropriate. But is it? Is a business declared prime goal to beat competitors or is it to win customers?
Strategy comes from the Greek word ‘strategos’ who was the army commander in battles against enemies. The Greeks in the Salamis naval battle against the Persians employed a strategy to win and destroy the enemy’s forces. They tricked the Persians into conducting the fight in the narrow straits of Salamis making it impossible for the Persians to deploy their full strength thus neutralizing their supremacy in the much greater number of ships. At the same time, this choice of position favored the Greeks to exploit and magnify their own advantage that came from their flexible and nimble ships against the enemy’s bigger, unwieldy ships. The strategy rendered victory to the Greeks with the Persian fleet defeated and largely destroyed.
From the above example of strategy three conceptual limitations come out when we think of strategy in business:
- Strategy must have as its aim to defeat an opponent
- It is a two-party game
- It is not a continuous process but is confined in applicability to one or more separate episodes
In business, the concern to beat competitors is largely applicable to the bigger companies (most belong to the corporate level) which have to strategize and make choices; which products to carry, which markets to enter, where to establish divisions, which type of venture to employ for entering selected markets, where to be first comers or when to work against competitors to maintain market control.
Most companies, however, have no concerns of that kind. The vast majority (over 98% in some countries) are Small to Medium Enterprises, and most carry one-line of products, do not physically go abroad and their main focus is not on attacking the competitors but winning customers.
These companies, furthermore, do not fight who they want to win (customers). Nor are there in their game only two parties involved as in an army battle. There are three parties; the company, the customers and the competitors. And they don’t necessarily aim to destroy the competitors. Their aim is to win customers, and in many cases in the context of coexistence with their competitors.
They realize their aims by making new products and enlarging the market, or by finding the means to make existing things more efficiently. And this they do by listening to the needs of the customers and adjusting their position of production.
The whole thing is not a fight where a strategy must be employed but rather a fit of how to better connect with the consumers. It is the arduous task for a company to align its products and competencies with the consumer likes and wants as for example in terms of quality, features, speed or means of distribution, and then sustain the fit by continuous improvements ahead of competitors.
We got used to name whatever is important strategy. But this lose usage allows companies to conceptualize strategy differently and may be irrelevantly, and does not give them a practical framework to put in use to win customers. By contrast, the concept of ‘fit’ stems from the economy’s circular-flow-diagram model and gives businesses a practical framework of how to win customers and stay close to their needs.
More specifically, the fit concept would give companies the following advantages:
- It is appropriate for winning customers without annihilating the competitors
- It is not unsettled by the three-party context of the business
- It is a continuous process that can incorporate adjustments and improvements
- Competitive advantage and market segmentation are compatible to the fit concept as both may lead to a greater fit
- The fit process may help to sensitize the company to market discontinuities
And most importantly, unlike strategy, the concept of ‘Fit’ can give these businesses, in their struggle to win customers, a practical working framework.
About the author: Panikos Sardos is the Managing Director of P&E Sardos Business Solutions Int., a management consulting firm that offers advisory services, coaching and training. You are welcome to communicate with us by email: email@example.com or telephone: +357 99640912, +357 24400884, or visit us at www.sardossolutions.com