Wednesday, June 23, 2021

Strategic Differentiators

As today’s digital business environment is unprecedentedly dynamic, complex and uncertain, differentiation is not the end game, value creation, and forward vision are.

We are living in a complex world where inventions, developments, and conflicts are continuously changing and that makes it impossible to have a complete knowledge and understanding of many issues facing us today. With frequent disruptions and fierce competition, if you are not different, you are a commodity.

 Organizations are different, they have different cultures, different structures, they compete in different markets, they have a different scale, and they are at different stages of the business maturity cycle. The purpose of strategic differentiation is not about separating and siloing these changes but how to best link them together - across focusing on core activities and through continuous improvement to accelerate business performance.

In differentiation, it is probably more to do with the maintenance of brand, features, and quality: Digital businesses are becoming complex and uncertain, to survive and thrive, the real strategic differentiation is to create true value, look forward, not backward, and present the advanced uniqueness to shine through. In fact, strategic differentiation is the foundation on which brands are built. In specific, business differentiation is an effect accomplished by having a sustainable organizational competitive advantage to the market, rooted in operational excellence which makes it difficult or even impossible for competitors to imitate.

Assuming the company has great products or services, creating meaningful, relevant, and compelling differentiation in the mind of customers is the challenge, it’s part of the organizational branding and long term strategy. So, rather than “keeping the lights on” only, high mature organizations spend significant time on creating strategic differentiations, building and maintaining a strong brand and continuously delivering quality products and services. The real strategic differentiation is to create true value, look forward, not backward, and present the advanced uniqueness to shine through.

Innovation is what leads to differentiation: Innovation involves new ways of bringing together ideas and resources to create something novel and differentiate the organization from competitors. Business innovation is a process that can be managed. Structural innovation management requires laying out different thought processes, structures, or cultures for bringing ideas into full fruity. The bulk of data, methods, and approaches involved as well as the complexity of processes encountered speaks in favor of the scientific approach and engineering practices for innovation management.

A disruptive product over time weakens as it moves towards the eventual commodity status. To develop differentiated business advantages, companies have to keep searching for new opportunities to disrupt, rather than being disrupted. Therefore, innovation is not only externally oriented (relative to markets, customers, etc.) but can also be focused on the operations side within a firm as well as industry structure. The ultimate innovation isn't what you do; it's what you deliver for results to delight customers, and how being innovative becomes the state of mind and core differentiator of the business.

Core capabilities is a competitive differentiator: A set of differentiated capabilities enable the business to shape strategic differences. A business capability is core because it offers a competitive advantage in delivering better products/services/processes to customers than competitors, and it supports the strategic direction of the organization. It’s critical to identify capability patterns of the company and the risk profile of the enterprise performance deficiencies, assess the management view of the condition/suitability/differentiation of capability to support the intended future operating model and business strategy.

Organizational capability management identifies, models, develops, integrates, and optimizes a set of cohesive capabilities to achieve business goals at both strategic and operational level. Capability optimization should move from base or competitive level to differentiated level, evolving and moving between categories based on the technology evolution, information refinement, business driver, business model evolution etc. It happens when an organization decides to differentiate by taking an existing capability to the next level. What matters is capability maturity, the high-mature set of business capabilities can make organizations more adaptable to fulfill their strategy, and become the key business differentiator to build a strong organizational brand.

Information Technology is a competitive differentiator: The exponential growth of information and continuous disruptions often led by emerging technologies can push you out of business if you are not agile enough to change your business model. Due to fierce competition, the differentiation provided by innovative technology usually is more long-lived than differentiation provided by marketing actions that can be copied easier. Business management evolves Information Technology to deal with investigations of innovative business solutions to crucial problems that could have big business impact and create significant business value. It accelerates the speed and makes a difference via leveraging the emergent digital trends and exploring the new way to do things, besides exploitation of the existing methods and technologies.

Information Technology critically, many times, is a determining factor of success for the business strategy to build differentiated capabilities and achieve the fast growth and long-term sustainability of large organizations. High performance businesses integrate Information Technology as a value-added component of innovative solutions that meet customers’ needs, while reducing cost to market, without the sacrifice of strategic goals and strategies invoked on it by its business partners.

Culture is a competitive differentiator: Culture is the business differentiator, differentiation may be facilitated by a culture encouraging innovation, individuality, and risk taking. Cultural competency arises in the manifestation of the company’s differentiated advantage both internally and in the final analysis in the market environment. If the internal is not properly addressed the external will also suffer. Corporate culture will therefore have an impact on the type of service or product finally created. Extrinsic reflection of culture is your business brand. Unique culture perhaps cultivates a creative environment for the company to develop innovative products/services.

Organizational differentiation can be facilitated by a culture encouraging innovation individually and collectively. Culture can powerfully reinforce the competitive advantage a generic strategy seeks to achieve. Some companies have taken a proactive approach to purposely creating a defined corporate culture with the competitive difference. At the core of culture, it’s about business leadership substance, enterprise strategy perception, talent management philosophy, and organization brand and reputation.

As today’s digital business environment is unprecedentedly dynamic, complex and uncertain, differentiation is not the end game, value creation, and forward vision are. There are always players starting with different resources and competitive positions; and there are always different complexities at a different time. Strategic differentiation occurs when all parts of the choir sing their respective parts in harmony to achieve a higher purpose and drive transformative changes.


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