Operational
Excellence
The aim of the companies that opt for
this strategy is to lead its market in price and efficiency. Therefore, they
are tireless when it comes to finding new ways to reduce costs, eliminate
inefficient production processes, etc. They focus on producing and delivering their
products at competitive prices with the fewest number of incidents.
There are many examples of companies
focused on operational excellence. Perhaps the best known internationally is
Dell Computers and its revolutionary vision of the concept of distribution.
Another great example of implementing this strategic model is Graco.
Customer
intimacy
This strategy is focused on providing
products and services tailored to their customers needs. These kind of
companies seek to build a long term trust relationship. This means that they
are ready to accept some losses in a particular transaction in exchange for
full satisfaction and customer loyalty.
Many of the luxury sector companies
apply this strategic model.
Product
Leadership
Companies that opt for this strategy are
focused on constant innovation of their products and services. Their proposal
is consistently the most novel and innovative. These organizations are looking
for creative new ideas all the time to add to their business portfolio. They
are extremely careful with the quality of their products and very quick in the
time-to-market process. The clearest example of this model is Apple.
Success lies
in being the best in the strategic model that suits your abilities and your
customers
To become a leader in the industry, each
firm must choose the model that best fits their skills and culture, also
assessing the most relevant features and aspects of its competitors. But make
no mistake: the most important challenge is to keep up this model over time, which
must guide every strategic and operational decision, and be able to generate
the changes needed to go forward bringing coherence and consistency. It is very
important to understand that by focusing on one of these models you are also
choosing the type of client you are going to have: for example, the typical
"customer intimacy model client" will accept to pay more but at the
same time will require a lot of flexibility.
But the challenge does not end here.
According to our friends at Harvard, for a company to be successful it must be
the best in the strategic model chosen and be at least average in the industry in the other two remaining. Taking Dell as an
example again, we’ll see that their main strategy has been and remains
operational excellence. But everybody also accepts that their level of
adaptation to customer requirements and product innovation is at least the
industry average.
And is this also true for SMEs (Small and Medium-Sized Enterprises)?
Of course. I think it is essential that
any small business owner reflect on the strategic model and the real position
of his/her business. Certainly at the start they may come to the conclusion
that SMEs are focused on ensuring the best price through efficient execution, fully
adapted to the needs of their customers and at the same time offering the most
innovative product. Then they may think: "So why am I not a leader? Why aren’t my sales taking
off? Why can’t I get to the customer
easily? "
It will help a lot to look in two
directions: your customers and your competitors. Regarding the first , the key
questions that should be asked are: "What kind of clients do I have?, What
do they want from me? and what I can offer really? ". Regarding
competitors, it is revealing to carry out the same exercise and try to figure
out what strategic model is being followed.
How can we do it?
An SME is willing to add more value to
customers and advance their competitive position by choosing the right model
for their circumstances. To do this, you
must follow four steps:
1. Diagnose: Analyze the strategy followed
so far and your competitive position (what you do better than your
competitors).
2. Decide: Choose the strategic model that
better fits to your company abilities and your clients. Remember you have to be
the best in the application of this model, so your level of ambition must be
very important.
3. Be consistent and make sure that every
strategic and operational decision to take is aligned with the model you have
chosen.
4. Check at least a couple of times a
year, review your action plan to ensure that
there are no significant deviations.
Without
doubt, stopping to think about these questions is a very healthy exercise for
any organization, but it is especially recommended for those SMEs that are
interested in focusing more and better their business. Having a clear strategy
helps very much when you have to make decisions and take risks without losing
sight of the real objectives of the company.
(Versión en español, aquí)
