STRATEGY. There is confusion when distinguishing between Operational Effectiveness and Strategy. OPERATIONAL EFFECTIVENESS Performing similar activities than rivals but using practices allowing the company to better utilize its inputs,
There is confusion when distinguishing between Operational Effectiveness and Strategy
Because the rapid diffusion of best practices allows competitors to quickly imitate techniques, technology etc.
OEMs cynically and publicly benchmark competitors at BID time, sharing competitor offerings and improvements amongst all bidders thus making everybody a generic bidder. The common offering then becomes a homogeneous commodity at the lowest possible price.
' CONTINUOUS IMPROVEMENT ' programs by OEMs draw companies toward imitation and homogeneity.
As we imitate one another, competition becomes a race down identical paths that no one can win.
No improvement for anyone. The gains are captured by customers !!
Competition based on PRICE alone is mutually destructive, leading to wars that can only be arrested by limiting competition: try to buy up the rival.
RESULT: zero-sum competition, declining rates and pressure on costs prevent companies from investing in the business.
The process of perceiving unique positions that would attract customers from established positions and/or draw new customers.
DIFFERENTIATION IS THE essence of strategy, the prime source of competitive advantage by being different from your competitors in a manner that lets you serve your core customers better and more profitably.
Operational Effectiveness (Lowest Cost) MUST BE A GIVEN.
What do our core customers see as our key sources of competitive differentiation?
How do we know?
Are these sources becoming more or less robust?
A systematic approach to understanding our sources of differentiation is key to rectifying our situation. It enables us to have a meaningful discussion of what distinguishes each business unit from competitors and what we can build on.
We may use these criteria while analyzing the individual business models:
Are our differentiators
(1) truly distinctive?
(2) measurable against competitors?
(3) relevant to what we deliver to our core customers?
(4) mutually reinforcing?
This distillation process should lead us to the magic phrase (Strategic Principle) that drives consistent strategic action individually at the business unit level and throughout the organization, while attracting customer’s preference:
America Online Consumer connectivity first – anytime, anywhere
Dell Be direct
Southwest Airlines Meet customers short haul travel needs at fares competitive with the cost of automobile travel
Wall-Mart Low prices, every day
AXIS One rate per VIN, end-to-end
Logistics so visible that you’ll be promoted
Best Business Unit Strategic Principle
Best definition of AXIS Strategic Principle
Prizes will be awarded during our Follow-Up Strategy and Budget Meeting Scheduled for
January 18-19, 2012.
Entries will be received until January 17th.
The goal is to create a fully integrated marketing ecosystem that endlessly conveys the strategy to the desired customer audience. A fully integrated Customer Interaction set of programs: Consistent Sales Coverage + B2B web based programs + Market Intelligence.
These programs will facilitate collaboration between the marketing, technology and sales teamsand will also provide data that will allow the effective management and operation of the whole business and its units.
Data gathered will provide customer insight and intelligence that will help accurate and effective marketing and re-direction of strategy decision processes.
December 7-8, 2011