Have you ever played a sport? If so then you know that there can only be one winner. I do not care much for the people who say “We are all winners guys!”, because that is simply not true. It is a competition, and in competition there is only one winner. However, is that always true? According to Michael Porter, and I agree with him, it is not.
In the world of business, competition takes on a completely different meaning. Sure there is still an opponent, however that opponent does not have to either beat you nor lose to you. You can both coexist. A novel idea, however what does this look like? I want to take this perspective into action in my own business venture.
My wife and I are in the process of building a wedding venue. Now we know that there are other wedding venues in the area, however that does not mean we should not do it. That would be a “be the best” mentality, which is not really how competition works in business. The wedding venues in our area were buildings that were reconfigured into wedding venues and they offer various options for customers.
What this means for our venue is that we need to create our own competitive advantage. We need to go look at what they offer, and we need to offer something different of our own. If we were to go in and build the exact same wedding venue as someone else because they are successful, then we would be competing directly with them and that would add no value to our customers, along with put us in a win lose situation. With the venue, we need to have a strategy to bring something new to the table. The venues in our area are not easily handicap accessible, or elderly friendly. Since wedding usually have older family members, that is one of our strategies to create value.
Building our venue from the ground up allows for us to shape it how we want to and build it perfectly for this purpose. All of the other venues are pre-established buildings that have difficulties in the structure in which it does not allow for the optimal wedding to occur. We can craft ours however we want and however we see customers trending towards in order to create that competitive advantage for ourselves.
These are only a few of our ideas in which we can create a competitive advantage. There are things that the other venues have, such as history, and rustic appeal, that we simply can not, and do not need to recreate. We will have our section of the market and they can have theirs. There is no need for us to have 100% of the entire market. That is how Michael Porter defines competition and the way in which we should strategize. Creating a competitive advantage so that we share the market and create value for consumers to be able to choose which one they want.
- Magretta, Joan. Understanding Michael Porter: the Essential Guide to Competition and Strategy. Harvard Business, 2012