The classic foundations of Competitive Strategy are all focused the way a Company is organized and operates in a Market: specifically, what a Company does (and not does), the unique position the Company wants to pursue, how its activities fit together and self-reinforce within the Company.
This approach – absolutely consistent and full of good sense – gives the idea of a Company Centric approach, where the focus is on the Company “within a Market and against Competitors”.
Truth is that a Company works within an “ecosystem” where other Companies live, competing but also coexisting and – possibly – fitting together (and this way a Company behaves as any other living system).
This extended vision becomes extremely clear when thinking to the Customer needs, which are – in fact – not a single “need” but more “a set of needs which are necessary to fulfill a more articulated process”.
The Water Case
For instance, water is a commodity, meaning that it is widespread, is made of the same substance and is – de facto – not easy to be differentiated (the proof is that these days water differentiation is based on the saline content, that was a brilliant idea for five minutes, after which all the producers did the same reducing the differentiation to pure advertising presence and no more real content).
But if water is a commodity “per se”, the Customer set of needs might be richer. If you were a producer of water you might be willing to position your product as something to be served at high level restaurants. In this case, the bottle has to be beautiful; the logo clear, readable and easy to remember; the size appropriate to fit with any table. Maybe glasses might be sold either with the same brand; other producer’s forks and knives could be of an aesthetic which fits with the bottle; a special pouch to conserve water at an appropriate temperature could be part of the offering, possibly produced by others but with an exclusive design for that specific bottle of water; and so on…
If such an “ecosystem” of products, which are meant to recall each others, should establish on the Market, then for a competitor it might become difficult to enter into Top Restaurants Chains as it should not simply replace an object/need but also break a system that would surely be resilient to these attacks and for that reason more robust.
The Strategy focus – in this case – would reach a second level which is that of the Ecosystem, which is more subtle to be understood and governed. Successful Companies should focus at this level all the time.
This approach – absolutely consistent and full of good sense – gives the idea of a Company Centric approach, where the focus is on the Company “within a Market and against Competitors”.
Truth is that a Company works within an “ecosystem” where other Companies live, competing but also coexisting and – possibly – fitting together (and this way a Company behaves as any other living system).
This extended vision becomes extremely clear when thinking to the Customer needs, which are – in fact – not a single “need” but more “a set of needs which are necessary to fulfill a more articulated process”.
The Water Case
For instance, water is a commodity, meaning that it is widespread, is made of the same substance and is – de facto – not easy to be differentiated (the proof is that these days water differentiation is based on the saline content, that was a brilliant idea for five minutes, after which all the producers did the same reducing the differentiation to pure advertising presence and no more real content).
But if water is a commodity “per se”, the Customer set of needs might be richer. If you were a producer of water you might be willing to position your product as something to be served at high level restaurants. In this case, the bottle has to be beautiful; the logo clear, readable and easy to remember; the size appropriate to fit with any table. Maybe glasses might be sold either with the same brand; other producer’s forks and knives could be of an aesthetic which fits with the bottle; a special pouch to conserve water at an appropriate temperature could be part of the offering, possibly produced by others but with an exclusive design for that specific bottle of water; and so on…
If such an “ecosystem” of products, which are meant to recall each others, should establish on the Market, then for a competitor it might become difficult to enter into Top Restaurants Chains as it should not simply replace an object/need but also break a system that would surely be resilient to these attacks and for that reason more robust.
The Strategy focus – in this case – would reach a second level which is that of the Ecosystem, which is more subtle to be understood and governed. Successful Companies should focus at this level all the time.
