Have you ever wondered how some companies achieve sustainable growth while others struggle to keep up? You have to position your company for big growth like big companies. W. Chan Kim and Renée Mauborgne stated in an article from the Harvard Business Review, Value Innovation, "In a five-year study of high-growth companies and their less successful competitors, we found that the answer lay in the way each group approached strategy". The authors go on to explain that the conventional way of thinking, "beating the competition", wasn't the type of strategy that high-growth organizations adopted but rather the strategic process of making the competition irrelevant. The article explained in detail that it didn't matter what size the organization was but how they logically approached strategy that impacted growth the most.
In fact, expert strategist LaCosta Lolly of GrowthSmart Consulting, recommends that small businesses start thinking strategically from the start. She explained, "Most start-ups or small businesses completely miss the mark when planning for growth. Creating a sustainable competitive advantage can be obtainable especially for small businesses because they are more nibble. The challenge is they don't realize that strategy and planning is what can help them grow better, smarter and faster - making their competition irrelevant."
What can we learn from this as small business owners? The lesson is that we actually have an opportunity to capture more clients than we think. We, the small business owner, are more flexible, more agile, and more creative and we have less bureaucracy. That is precisely why entrepreneurs still have a chance to create successful businesses even in the most uncertain economic or political times.
Let's take it a step further and talk more about the elements of value innovation. To create value you have to skillfully integrate an idea, competitiveness and emotional value for consumers. Ask yourself these questions:
- What do you stand for (value proposition)?
- What makes you stand out (marketability)?
- What makes you compelling (brand story)?
To consider each of the strategies surrounding your value proposition look at:
- Core Capabilities - Look at what value you have to offer your clients. Are you capitalizing on your strengths? Each of the following strategies will strengthen your core capabilities making you more marketable to your clients.
- Partner Network - Develop partnerships and alliances so that you can win more accounts. Think outside-of-the box. Remember, the goal is to make the competition irrelevant if you want to master value innovation. Bring in more partners and alliances and you will build your core capabilities for a unique client experience.
- Customer Relationship Management - How will you manage your clients? What unique value do you offer over the competition? Start by knowing the competition and defining how your CRM strategy will differ.
- Distribution Channel - Distributing your product or service is one of the most important strategies to consider. Think about the many products and services you can offer to build your core but more importantly determine how accessible they are to your clients.
- Target Customer - The idea is to have a niche market. Define a small or narrow target - it's much easier to offer them precisely what they need. Again, you may have several target customers if you have a variety of core capabilities but the idea is to identify each segment skillfully.
- Cost Structure - Determining your cost structure will contribute to your competitive advantage. If you are a small business you have less overhead than larger companies and can add more value at the same time. Never price yourself out of the market or below. Investigate pricing strategies that will work for your clients.
- Revenue Streams - Consider multiple revenue streams and structures. Think about funneling buyers through the buying process. First you have to build awareness, then interest and ultimately trial (A.I.T.). So, if you think about your revenue strategies you might want to think about different packages you can offer your client to augment your business. Start with a small package to build trust and win them over for repeat business in the future.
An Example of Value Innovation:
As described by experts, Amazon's business model or value model combines an idea, competitive pricing and an emotional experience for the customer:
- Shopping convenience
- Ease of purchase
- Decision-enabling information
- A wide selection
- Discounted pricing
- Reliability of order fulfillment
It's the integration of all these processes and emotional benefits that makes Amazon a great value to consumers. Your business can do this too! You just have to plan to strategically position your company and products. Understanding that high-growth companies approach strategy differently can help new companies create a sustainable model from the beginning.