ETranzact founder canvasses good strategy formulation to birth globally competitive businesses
Serving customers’ need best competitive edge to success Says different ways to compete depending on market type
Using a good strategy formulation, which seeks to satisfy a clearly identified market segment or customer base, amid competing to be unique in one’s business area, constitutes the best options that Nigerian upcoming and existing businesses can adopt to birth globally competitive businesses, Valentine Obi, founder and group chief executive officer, eTranzact Global Limited, has laid out to participants at the African Leadership Development Centre (ALDC), Leadership Masterclass of Covenant University, Otta, Nigeria.
Speaking on “Business Strategy and Innovation,” Obi posited that the biggest mistake in business success strategy by a vast number of entrepreneurs, which should be avoided, is for the business owner not to look at business competition as the only way to think about success.
“The reason is simple, there is no best company (anywhere in the world). Being the best depends on who you’re trying to serve. It all depends, because there’s no one way to compete. The biggest mistake in strategy formulation, is to think that there’s only one way to compete in every industry. There are different ways to compete; and it is dependent on what customer and customer needs, you’re actually trying to meet,” Obi said.
“So, when you ask the question, What’s the best car, or the best car company; or the best insurance company? You can’t answer that because, being the best depends on who you are trying to serve. If you’re trying to serve the student community, being the best is different from if you’re trying to serve working class people with families, etc. There is no best way to compete.
“There are lots of good ways to compete, depending on who you’re trying to serve. So, we are not competing to be the best, we are competing to be unique,” he said.
Obi insisted that instead, what you want to think about is, how can my company be unique? How can I create unique value for the set of customers I choose to serve? According to him, “strategy is essentially about competing to be unique; it is about making choices. And the most fundamental choice is: who am I trying to serve?
He tore to shreds, many shades of processes and procedures that business owners often adopt in the name of strategy formulation.
In his submission, “One of the worst mistakes in strategy is to try to serve everybody. You can’t meet the need of every customer, you just can’t do it, it’s impossible. You can’t meet all the needs of every customer.
“Fundamentally, if you have a strategy, you’ve got to decide which needs, of which customers, you’re actually going to seek to meet,’’ he explained.
Another tremendous mistake in strategy is to get into a competition with your competitors on the same thing. “If your competitor is trying to be the lowest cost, it’s pretty unusual to win if you then try to chase them and be low costs,” he advised.
Obi said, the essence of strategy is to find a unique position in one’s business that delivers unique value to the customers one chooses to serve. Hence, to be truly successful, the strategy needed isn’t about just being the best, but a set of choices we make on a long term, to distinguish ourselves from competitors, he further said.
According to him, adopting the above strategy (of staying unique) “defines how we are going to compete differently. This also really articulates the competitive advantages that we will seek to create and use, in order to win.”
What strategy is not
CEO also explained to participants what strategy does not represent, stating: it is not operational effectiveness; it is not doing the same thing as your competitor, you don’t have a strategy; you’re just trying to do the same thing better, that’s not strategy, that is operational excellence.
Also, he dismissed things like: simply implementing best practices, buying the latest machine, using the internet to communicate with your customers. There are lots of things that managers do, to actually keep making the company more productive and more efficient. All those things are a necessity, but they’re not strategy. Strategy is not about doing the same thing better. “Just want to be number one or number two in your industry. Those are goals, those are aspirations, but not strategy.
According to him, strategy has to deal around choices that the business owner makes, versus the choices that his competitors are making. It is about finding that different place for the organization to deliver value.
Obi said what makes it challenging, however, is that you have to do both of these things at the same time. You have to keep adopting best practices, but at the same time having real clarity about what is going to make you different in the marketplace.
“Strategy is the unique positioning that allows you to get to whatever goal you set,” he stated.
Different from goal
Obi warned that business owners should not confuse strategy and the goal. “We can’t mix them up, we have to separate the goal we’re trying to achieve, and then the strategy is how we’re going to get there.
“Also, when we think about strategy, we also have to recognize that strategy is holistic. It’s not about any single action that you might want to take. It is not just one thing one steps. Strategy is not to go international, that’s not a strategy. Raising research and development (R&D) is not a strategy.
“Strategy is the whole set of choices that you make collectively in order to position the company for success, over time, in the marketplace. It’s not just, one step, it’s a set of steps. Strategy involves all the functions of the organisation. It includes marketing, production, finance, everything together to create that unique positioning,” Obi further explained.
Strategy to cope with competition
Obi said the sole purpose of engaging in business strategy is to cope with competition, a reality a business owner can never avoid in the marketplace.
“In the fight for market share, competitive forces exist that go well beyond the established players in a particular industry. Customers, suppliers, potential new entrants, and substitute products are all competitors that may be more or less prominent or active depending on the industry,” he posited.
The e-Transact group