HOW KEY IS A COMPETITIVE STRATEGY FOR STARTUPS?
In order to succeed, startups need a competitive strategy. Not just to build on sales and growth, but also to be worthy adversaries in the business arena.
In their book The Discipline of Market Leaders, Michael Treacy and Fred Wiersema concluded, having researched market-leading companies across a wide range of sectors, that market leaders must choose and then achieve leadership in one of three disciplines, namely operations, product or customer intimacy, and then be at least acceptable in the other two. Companies in their early stages should understand this and develop their own competitive strategy.
So how can you develop a competitive strategy and set yourself apart? As a startup, your idea or product does not need to be unique but to establish a place in a competitive market, there are 3 main elements you need to evaluate.
Play to your strengths:
One of the first things you get taught in business is to carry out a SWOT analysis – Strengths, Weaknesses, Opportunities and Threats. Identifying and finding clarity in these four areas can help start-ups understand their positioning in the market and then maximise on their strengths.
If your USP is ethically sourced skincare or if your CSR strategy is at the forefront of your business, there is a real market for you to push your business strategy with that angle. Apple doesn’t necessarily offer the best tech on the market with Android consistently pushing for better functionality, but it is the leader in innovation, product design and the sensory experience in unboxing an iPhone, which is what its consumers relish in.
Seek out the competition:
In a competitive market, carrying out some reconnaissance on your competitors can be a useful way of identifying what to do and what not to do. As a startup, you have the agility and adaptability that larger companies don’t, so you can easily tweak business models.
The key differentiator between Amazon and Etsy or Not On The High Street is the speed of service that Prime offers consumers, with ‘Same Day’ deliveries or ‘Next Day’ options. As consumers get increasingly impatient and want their deliveries the next day, small businesses may struggle to offer that level of speed and operational logistics. However, if that is the main factor in creating an advantage for a small business, then this can be an easily adaptable tweak in strategy.
Remember the end game:
Most businesses create the perfect model, have an incredible strategy for marketing and sales and yet reach a point where their sales and value starts to decline – why? Because as businesses start to grow and scale, their focus tends to shift from their key stakeholder – their consumers. Who is your business for if not for your customers?
Vodafone, one of the biggest mobile networks in the UK, was rated the worst network in the Which? survey after only managing one-star ratings for customer service, value for money and technical support.
One in five Vodafone customers reported poor customer service, including handling of complaints and queries. Some 13 per cent said the firm’s technical support was poor and 19 per cent rated it as poor value for money.
As a start-up, you have the advantage of offering key customer service and really valuing your consumer with the products and services you offer.
A clear and carefully thought out competitive strategy can be the difference between a startup that succeeds or a startup that fails and can set you up for a business model that stands the test of time.