Review your Performance to Create Competitive Advantages
As the economy gradually finds its feet again nimble and creative SMEs are looking for the ways to develop competitive advantages in a growing marketplace. Sometimes opportunities land on your doorstep but more often than not success relies on hard work and a full understanding of your business and your customers.
Looking beyond the short term it is only by creating and maintaining competitive advantages that you can increase your business’ share of the market and generate better returns on the many hours you have invested in your success.
There are four main groups that competitive advantages fall into:
- Cost leadership – is your product or service the better value for money than you competitors?
- Differentiation – do you provide different products, services or combinations of thereof?
- Innovation – are your products or services disrupting the existing market place in your favour?
- Operational effectiveness – does your company function better than your competitors’?
If you want to create a competitive advantage you need to really think about your business and think about your direct competitors.
Key to improving performance is understanding what you do better than your competitors and, of course, where you find yourself lagging behind the competition. How does your overall strategy reflect your market position and compliment your strengths and how does it acknowledge and address your weaknesses?
These aren’t easy questions to answer, but one way of approaching them and starting to address which areas of your business performance need most improvement is to break your business down into a value chain.
In each segment you draw up your strengths and weaknesses and consider where you believe your competitors are stronger or weaker in comparison to your business.
What does the value chain look like for your business and where do you add the most value for your customers? Are there places where you are struggling or potentially failing? A value chain can prompt a number of important questions and can prompt action to resolve issues or galvanise strengths were previously difficult to identify.
The value chain enables you to drill into and really consider what attributes of your business are most important to the needs of your customers and where performance improvement strategies need to be focussed.
The previous value chain was a very simplistic take on what can be a much more detailed, but much more valuable, performance analysis.
For example a value chain can be more segmented and can consider the value added to each segment by resource, as a way of identifying needs and overspends and opportunities. To visualise:
It can be difficult to find the time, but by utilising strategic and operational tools you are in a better position to create and underpin one or more of your competitive advantages, enabling your business to prosper against its competitors.
At Fisher Performance Improvement, this is just one of a number of tools and techniques that we use to unlock the potential of our clients’ businesses.
If you are finding that time is too scarce to undertake a strategic and operational performance improvement review or you feel that you are too close to the business clearly map out your way ahead then Fisher Performance Improvement is here to help.