When we talk about strategy, often, we are trying to answer two questions:
Where should we compete?
How shall we compete there?
Today, I will approach strategy from another angle, an attempt to see it through the different layers of competition. That’s to say, a business is made up of several layers and each of those layers presents a possible source of competition. Therefore, when one asks, ‘how shall I compete?’ they are able to answer that question through those layers.
Let’s imagine a beer brewing business. It’s made up of several layers. There’s the component of their raw materials (the barley, the water), there’s the packaging material (the glass, the crowns, the labels). There’s the engineering component that’s to say the packaging lines, the brewing equipment. There’s also the logistical component and finally the marketing, distribution, and sales. We can also then add the other components of finance and human resources.
All these are possible frontiers of competition. And by thinking strategically about each of these fronts, the brewery could be able to gain a competitive advantage. Take the layer of raw material sourcing. How does the brewery source its raw materials? Is it locally or globally? Does the brewery own the farms, or it has a consolidator? Is the consolidator on payment terms? Does it only pay for the material after using them? Who is responsible for the storage? What are the days of storage?
The same questions can be asked about the human resources? What kind of people do we need to deliver our strategy? Is our recruitment and selection process engineered to achieve this? How is our employee life cycle? Are we spending much time in the job market, trying to source human resources? How do we increase employee retention? And how do we achieve productivity on the right things?
The point of this is to disabuse the competition element as something that only happens at the marketing and distribution side. Competition happens on every aspect of the business and businesses that shift to this thinking will enjoy an advantage. A great business uses every weapon in its armory. A great business competes on every layer. That’s the thinking to say that great businesses compete with their value chain. That at any point of the value chain, there’s not a weakness. Because wherever that weakness results, that’s the potential source of failure of any strategy. To fool proof a strategy, is to optimize every constellation of the business, every layer, every front, every domain.
A Ugandan Perspective: The Constellations of Strategy
When we talk about strategy, often, we are trying to answer two questions:
Today, I will approach strategy from another angle, an attempt to see it through the different layers of competition. That’s to say, a business is made up of several layers and each of those layers presents a possible source of competition. Therefore, when one asks, ‘how shall I compete?’ they are able to answer that question through those layers.
Let’s imagine a beer brewing business. It’s made up of several layers. There’s the component of their raw materials (the barley, the water), there’s the packaging material (the glass, the crowns, the labels). There’s the engineering component that’s to say the packaging lines, the brewing equipment. There’s also the logistical component and finally the marketing, distribution, and sales. We can also then add the other components of finance and human resources.
All these are possible frontiers of competition. And by thinking strategically about each of these fronts, the brewery could be able to gain a competitive advantage. Take the layer of raw material sourcing. How does the brewery source its raw materials? Is it locally or globally? Does the brewery own the farms, or it has a consolidator? Is the consolidator on payment terms? Does it only pay for the material after using them? Who is responsible for the storage? What are the days of storage?
The same questions can be asked about the human resources? What kind of people do we need to deliver our strategy? Is our recruitment and selection process engineered to achieve this? How is our employee life cycle? Are we spending much time in the job market, trying to source human resources? How do we increase employee retention? And how do we achieve productivity on the right things?
The point of this is to disabuse the competition element as something that only happens at the marketing and distribution side. Competition happens on every aspect of the business and businesses that shift to this thinking will enjoy an advantage. A great business uses every weapon in its armory. A great business competes on every layer. That’s the thinking to say that great businesses compete with their value chain. That at any point of the value chain, there’s not a weakness. Because wherever that weakness results, that’s the potential source of failure of any strategy. To fool proof a strategy, is to optimize every constellation of the business, every layer, every front, every domain.
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