March 5, 2012
being "stuck in the middle" is not an option
In many businesses I have had the opportunity to work with and work for there is seldom one ideal strategic position. Often the latent struggle is should onebe a cost leader or a value leader? Should we buy from a cost leader or a value leader?
In many businesses the solutions or services sold are “experienced goods” meaning the quality of the solutions and services can be assessed only after the customer has purchased and used it for a while. In any ways companies are “stuck on the middle” to coin a phrasefrom Michael Porter, meaning when a company pursues elements of cost leadership and value leadership at the same time and in the process fails to achieve either a cost advantage nor a value advantage. The stuck in the middle, typically leads to much less profitability because ofa generic strategy than competitors who have set a clear direction.
Leaders who decide not to be “stuck on the middle” will deliver better profitability to their organizations by answering two important questions.
- Are we a cost leader or value leader solution for our customers?
- Should we buy from a cost leader or value leader when investing in technology?
Stuck on the middle is not an option, look at the successful companies of todayWal-Mart, Mercedes Benz, Apple Computer, or Sears. You tell me whichcompany is a cost leader or value leader, and who is stuck in the middle.