8. Save or Quality? The choice of the Competitive Strategy
MAY 8, 2014, h.12:26
And I feel people’s depression. The Great C is enlarging its ranks: everyday there are more victims. From the ” real victims “( those who really don’t make it), to those who, being too depressed, don’t do anything to survive, and, in this way, they enlarge the ranks of The Great C, abandoning wonderful work projects , including startup projects.
In this environment it’s very hard to work on a startup. Last night, infact, during our weekly meeting of the startup, there was a dispute. The reason ? The choice of the strategic competitive advantage to pursue.
Savings or quality, how many times I have heard this phrase.
On TV, in commercials. Theoretically , knowingly or unknowingly, when you start your own business, you make a strategic choice of competitive advantage: focus on the quality of your product, and then point to the fact that customers are willing to pay a premium price for that “plus”, or supporting low-cost and offer the product to the market at a more competitive price than competitors ?
To these two basic competitive strategies, Michael Porter (in his “4 competitive strategies“) has added another variable: the choice of the range, how many customers compose your target? the entire market , a niche or even a niche within a niche?
To make you understand better, a few examples for the different competitive strategies :
– Differentiation strategy (quality, entire market): Apple with its iPhones ;
– Strategy of cost leadership (savings, entire market): Ikea;
– Strategy of focusing on differentiation (quality, niche): Ferrari;
– Strategy of focusing on cost leadership (savings, niche): (the begin) of McDonalds.
In fact there are those who say that the choice of a competitive advantage is not an important thing , and that, it consequently, it does not pay to be consistent.
Which is the best choice for a startup? You can’t answer this, the answer will vary from case to case, it is a very relative thing.
I believe that the future of our startup is a choice of competitive advantage – focusing on cost leadership (CLUE N.4), Tim thinks like me. The others don’t. And from here the fight. Unsolved.
Although there are those, like Instagram, who do not make a choice( before a certain determined time), and it’s successful.
It’s important not to stay in the middle of the road too long, because it is like being on one of those frail bridges in the Andes, suspended over a deep ravine, with the possibility to go from one part(quality) or the other (savings) .. but if you stay in the middle of the path too long, the ropes will be broken and the company goes bust.
And the same thing for Italy, a country that for history and capacity should strongly focus on quality, it is getting enchanted by the sirens of the low costs, and thus remains on the middle of the bridge, with the risk of falling.
While The Great C, at the foot of the ravine, waits. And every day there is, at least, one more victim.