The old definition of insanity was “Doing the same thing and expecting a different result”. The new definition of insanity is “Doing the same thing and expecting the same result”.
Taxi companies are doing the same thing they have always done, but Uber changed their industry overnight. Will driverless cars be the next big disrupter?
The motel/hotel industry is fiercely competitive now AirBnB has arrived.
Bricks and mortar retail and shopping malls world-wide are under threat from online shopping.
What about your industry? Where are the threats to your business coming from? And more importantly – what can you do about it? How can you create and maintain a competitive advantage?
It is all about technology
The common disrupter is the technology which allows automation and connects people and businesses globally, often at no or minimal cost. As a result, your main business competition may not be local, regional or even national – it maybe offshore or global, and coming from the blindside.
What is your value discipline?
If you run a transactional business it must be operationally excellent and price competitive for the model to be sustainable. Transactional businesses need scale and volume, which usually requires a significant up-front investment in systems and technology.
Product leadership is usually for the big boys as the required research and development is outside the budget of most small and medium sized businesses. Indeed, some commentators believe that now the internet is established there will be few ‘garage based tech start-ups’ able to succeed on a global scale in the future. This is due to lack of resources available to start ups and the head start / reach of established global tech companies.
Which leaves customer intimacy and personalised solutions as the business model of choice for most small and medium sized businesses. This is where a SME can compete effectively, as customers still want to do business with people they know, like and trust. For customer intimacy to work you must deeply understand your target market, what they want and will pay for.
Personal goodwill v Business goodwill
If you personally “own” the customer relationships then you have created personal goodwill rather than business goodwill. Personal goodwill generally cannot be easily transferred, whereas business goodwill can.
Every business owner should aim to develop business goodwill which is what makes a business valuable and saleable. Customer intimacy and personalised solutions should be designed to create brand loyalty by clearly communicating “this is our ‘why’ and the way we do it here”. Consistent service/product delivery through superior processes and staff training/engagement is the key to competitive advantage.
The importance of efficiency
If customer intimacy and customer relationships are your secret weapon, you still need to be smart and tech savvy. Personalised solutions are great for the customer, but the cost of creating personalised and unique solutions can dramatically reduce margins.
Effective use of technology allows SMEs to automate some aspects of maintaining customer relationships, while standardising core components of the service or product delivery. The routine, back room administration and production processes should be streamlined and ultra-efficient. The all-important front-end delivery must be consistent with your brand’s promise and your ‘why’.
Summary
What is your value discipline? Who is your target market? What is your brand promise? Are you using technology to make your business smarter and more efficient? Do you have a business plan and what is your ‘why’? Do you have a sustainable competitive advantage?
Q2 Ltd believes every SME business should have a clearly defined business plan and be able to answer those questions clearly and concisely. If you do not have a business plan, or cannot answer all those questions, then give Q2 Ltd a call to arrange a complimentary meeting to discuss.