Staying competitive: A long, winding and steep road

Bruno Schenk, January 2022

The quest for competitiveness in the business world is never ending. Whether you’re a leader or a follower, your position is not assured unless you remain competitive. To give an example, look at the top 10 global companies by revenue in 1985 – go forward 20 years, and only five remain in that list. As of last year, the top 10 now only have one company that was there in 1985 – Walmart – while all the others are new entrants. Many of these new leaders are serving necessities such as service and platform providers or energy and transportation, but even these giant multinationals have experienced tough competition that has forced them to adapt – often rapidly – to stay ahead of the chasing pack.

Thoughtful agility

Becoming and staying competitive is the sum of many parts and one of the first key pillars is agility. It is a word that is often used in the context of business, but its meaning is nuanced and dependent on where within the organization it is uttered. Agility can become shorthand for several attributes: How quickly you can adapt products or bring new lines to market to meet customer demand? Are you able to rapidly retool your production lines to meet challenges such as component shortages or supplier disruption? How quickly can you fulfil orders, or scale output?

Even though it encompasses many areas, agility is not an absolute function: It is relative to your competition, and there are historic reminders of what happens when a business fails to adapt quickly to change.

Without wanting to kick such a great brand, Kodak is unfortunately the poster child for missing out on agility. As the leader in photographic film and cameras, Kodak failed to adapt to the rise of digital photography. Its decline is well chronicled elsewhere, but its failure to see the changing market, new technology and – critically – its leadership’s ability to enact change, was detrimental to the business.

Yet agility needs to be tempered by an appreciation of the inherent value within the business and the fundamental requirement of the customer. Consider the luxury watch market. In simple terms, you can argue that a Rolex, Montblanc, Hublot, Tissot – or whatever your preferred brand – is just about telling the time. Simple logic might say that, just like the Kodak with its analogue film and camera, a digital timepiece is simply better! However, the precision engineered luxury watch could be considered art, heirloom, or status symbol. Its value to loyal customers goes far beyond its function, and the value of the respective brands surpasses the ability to accurately tell time.

Consequently, the luxury watch market is still worth more than the digital equivalent. And even though a few years back some were predicting the end of classic watches, it hasn’t materialized yet. Instead, many luxury watchmakers have made a smart move in turning to hybrid watches. These are not fully digital, much cheaper and still stylish (one can argue about that). Compared to their fully analogue counterparts, hybrid watches tend to be bought by younger people. Then, once you’re hooked on the brand, you may eventually fancy a luxury watch – after all, less is often more on the wrist.

Timing matters

Alongside agility we need to consider the notion of being first to market. This is often considered a great strength – and it is – but soundbites such as “Always be a leader not a follower!” or “If you are not first, you’re last!” are misleading in the real world.

When it comes to internet browsers, mobile device operating systems and web searches, Google is the clear, undisputed market leader. However, the tech giant was not first to market in any of these areas. When it launched Android in 2008, there had been a dozen or so mobile operating systems during the preceding 15 years from rivals including Microsoft, Nokia, Palm and Apple. As it had done with its other products, the innovation was in its business model. It created a ‘free’ market enabler for eager third-party manufacturers keen to break into an emerging market that would ultimately build an ecosystem to support its core advertising-led revenue streams.

Being first is not always essential for competitiveness. Being able to capitalize on your core strength and purpose, however, is vital. Whether its luxury watches or smart operating systems, understanding why your customers choose you rather than a competitor is essential.

Strategy over tactic

And this brings us to the third entry in our list, strategy, which can also be described as “mission” or “vision”. For a business to be successful it needs to understand its purpose and strategy, and its ability to create value-adding products and services. That is not to say that strategy can’t adapt over time because of a rival or technological change – but the core of it should be almost timeless.

For too long, Kodak’s strategy centered around helping its customers use photographic film, rather than helping its customers get access to photography. Google’s mission statement is to “[…] organize the world's information and make it universally accessible and useful.” Atos Switzerland’s vision and mission statement revolves around “[…] Accelerating digital journeys, putting sustainability, value & experience creation at the heart, or in short designing the future of the information space” and “[…]to be a recognized leader on the Swiss Market with all the core offerings”

Having a strategy, vision and overarching mission makes it easier to align disparate business activities and stay competitive. One of the key parts of this way of thinking is being critical of yourself and recognizing where you have strengths, weaknesses, and where partnerships can help you to align with your overall goal.

Unbiased analysis of yourself and your business can be a painful process. We all like to think of ourselves as perfect (wink!), but critical thinking is vital. If your Net Promoter scores are declining – find out why! If a rival is using a different manufacturing process, what are the benefits? If staff turnover is rising, what is the underlying reason? These critical thinking examples are all tactics to carry out, but the goal should align with helping you deliver against your strategy.

There are obviously more areas than just agility, timing and strategy, and these three pillars are weighted depending on where you are within your respective markets. Just remember; staying competitive is a continual journey of self-improvement. You don’t always have to be the pioneer, but you do need to understand what your inherent value is to your customers – and have a suitable strategy to help guide you along the road.

What are some key takeaways from your own business experience? Please feel free to share and discuss in the comments below!