Ninety-five percent of businesses in any given industry are stuck achieving average to below average results. Working harder or putting in longer hours usually doesn’t change that.
However, the top 5% of performers in your industry are able to earn above-average margins with the same or oftentimes less effort.
Here’s how they do it:
- They don’t copy their competitors–that would make their product or service more of a commodity and then force them to compete on price.
- They segment their market one level lower than their nearest competitor— they know that specialists can charge more than generalists.
- They don’t focus on growth for growth’s sake— they focus on getting even better at what they already do better than anyone else.
- They don’t get distracted by shiny things— new opportunities or markets or product ideas that don’t fit their strategy are quickly dismissed.
- Every activity directly supports their strategy–the activities that don’t are either outsourced or are eliminated.
- They execute brilliantly–they live and breathe their strategic plan.
Great strategies are measured by their ability to give you the right to charge more and/or earn higher average margins than your competitors. And great strategies start with discovering what you can do better than anyone else–its choosing to be different in a way that is highly valued by your customers.
But the key is to be honest with yourself. A recent survey found that 80% of companies felt that they were already highly differentiated yet only 10% of their customers agreed. My guess is that most felt that their differentiation was their “people”, or high quality or, my favorite, “we partner with our customers”– all of which are important but are fundamental requirements for being in business. They are not a strategy.
So, what makes your company stand out from crowd?
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Be sure to try my new Big Strategy Assessment. It only takes five minutes and you might learn a thing or two.