We hear it all the time – new startups competing with traditional businesses, if not replacing existing industries and categories altogether. Disruptive technologies like cloud computing and enterprise mobility have lowered the barrier to entry, if not totally eliminated it. Aspiring entrepreneurs need not worry about leasing an office space, hiring employees and investing in capital equipment. Those days are long gone. Now, it takes portable computing power (e.g. laptop), broadband access and a disruptive idea to launch a business. In short, socio-economic, technological advancements and market forces have brought forth a record-breaking increase in the number of startups globally, according to Forbes magazine.
Given the current state of startups and their incessant threat to incumbent businesses, what are business leaders to do? Even ignoring the threat of digital startups, business products and services are getting commoditized. It’s getting harder and harder to compete on price and features alone. Globalization and excesses in the supply chain have contributed to this problem of “sea of sameness.” Brands are becoming ubiquitous. Consumers have acquired a voice. They demand to be engaged in every media channel and at any time. More importantly, customers can now choose how they interact with brands. The balance of the buyer-seller dynamics have changed in favor of the consumers.
In the past, a regimented focus on competition have created growth models and have provided businesses stability in their respective markets. Given the chaos and complexity of today’s business, it is no longer enough to outwit the competition. In fact, additional investment in branding, pricing strategies and product feature set may not be yield a sustainable growth model. Rather, in this day and age of hyper change and disruption, business leaders must focus more on creation as opposed to competition.
One of my favorite athletes, Michael Jordan, the basketball player, is the epitome of creation. At the height of his career, he was not competing with anybody. Other players may have competed with him. But Michael never did. His performance was in the level of pure flow. He made plays and delivered basketball moves with grace and power. Wayne Gretsky, the hockey Hall of Famer, was another. Instead of competing with fellow players, he played his game differently. Whereas other hockey players would skate towards the puck, he always skated to where he thought the puck was going to be. He was at least a couple of steps ahead of the game.
Apple has always been a creator and innovator. Steve Jobs never really did care much about the competition. In fact, when designing products, he didn’t think much about what customers wanted now. He’s always set his goals on products that he thought customers would want. Before the iPod, there did not exist a service platform where consumers could be convinced to listen to music in a legitimate fashion (remember Napster?). Before the iPhone, consumers had no access to a device where they could listen to music, surf the Internet and make a phone call. Steve Jobs also didn’t care about cannibalizing his own business. The iPhone competed directly with the iPod and then the iTouch in regards to providing music services.
Hence, the goal is to focus on the customer and address their aspirational needs as opposed to engaging in competition – making incremental changes in features and benefits.
Here are ways to create value:
Deliver on Your Brand Promise
Your brand’s equity is composed of two things – the brand promise and the brand delivery. Most branding initiatives focus on the promise. Unfortunately, many businesses fail to deliver on that promise. In short, there is a disconnect between the promise and the delivery. The lackluster delivery or lack of thereof weakens the brand. Customers flee and loyalty goes out of the window.
Deliver the Customer Experience
On a minimum, products and services have to be good. This is where commoditization occurs. But where business leaders can make a difference is by shaping the customer experience. It is imperative the businesses are aware of the customer’s buying journey. A seamless and consistent omnichannel experience goes a long way towards building brand equity. Customer Experience (CX) is the new competitive advantage.
Deliver A Digital Business
Startups like Uber and Airbnb are successful because they’re pioneers in regard to addressing consumer pain points. Before Uber, we were at the mercy of traditional taxis and car services. In order to get a cab, we had to get out on the street and flag one. With car services, we never really know when they’re going to show up in spite of a specific pickup time request. These were present day pain points. Uber changed all that and delivered a service platform that was never heard of before. Uber leveraged disruptive technologies and designed a service platform without huge capital investments. Imagine – a car service company that does not own any cars!
These are exciting times for both traditional and startup businesses. The notion of engaging in business competition as a competitive advantage no longer holds true. The real strategic advantage these days is to delight the customers and anticipate their needs. A commitment to value creation, enables businesses to design sustainable growth platforms, define new business models and endear their brands with their customers.
Written by Ken Polotan