What you don't know might help you - magazine article

It is no secret that companies are always looking for some sort of competitive advantage over their opposing firms in their market sector. For many companies, this means stripping away their cost structures and supply chain to such a fine level that it puts them into a low-margin territory where their competitors fear to go, and so the low-cost firm has it all to themselves, so they think.



This type of competitive advantage is a little bit like whales feeding. Whales need to take in massive volumes for water just to filter out the small amounts of food. Whales have evolved to such a state that this type of food source is not suitable to other creatures, so they have it all to themselves. The same situation exists for firms where they evolve into a form such that many other firms can no longer compete, nor would want to compete. These firms then need to bring in massive volumes of print, just to filter out a profit from the low margins.



Low not always the way to go



A low-cost supply strategy is a legitimate strategy for a competitive advantage, but it isn't the only one. The trouble with a low-cost strategy is that it can result in the firm lacking additional resources at some time in the future that could be used for strengthening the firm if it needs to respond quickly to market changes. This being the case, a low-cost strategy suits larger firms that have long term market positions that are not likely to see dramatic shifts in customers and suppliers. Smaller firms will benefit in the short term with a low-cost strategy but, in the long term, they lose the advantage of fleet-footed market manoeuvers where they need to chase and hold customers and find and adapt to new suppliers.



For the small- to mid-sized firm, a good strategy is one based on causal ambiguity. This is where, for many companies, the gaining or losing of customers seems to occur for no logical reason. It seems that one day you have a customer and the next day you find they have gone down the street to another printer for their work. That printer loses another customer that you pick up. Many of us would put this down to a lack of loyalty that customers have with their print suppliers, but the important point is that things always happen for a reason. The cause of a customer shifting from one firm to another is ambiguous; causal ambiguity.


A firm which can master the characteristics that are described by causal ambiguity has the advantage over many of its competitors. That is, they have characteristics that are difficult to imitate. One of the most important features of any organisation's primary strategy is that other organisations should have some difficulty in copying a firm's successful strategy. In other words, a firm needs to put itself in a position that other firms can't occupy. As a result, the market no longer has to be shared, which is difficult to do but not impossible.



Who are the champions?


One of the key characteristics of causal ambiguity is the innate knowledge that a firm's employees have in the firm's production processes, products and services. We can often see this in successful firms where one employee is a central contact for customers to call if they have a question about absolutely anything. Sometimes these people are referred to as champions of the firm. The trouble is, in most situations, they are not planned for or created; they just happen. These are the people whom other firms try to entice but, in general, their success is not easily transferred from one firm to other. So they become an ambiguous cause of the success of a firm.


A successful strategy therefore for small firms is one where individuals who can be champions within the business need to be encouraged at all costs. As a general rule, it is not that these individuals have a greater knowledge of technology or production, but rather they have a greater ability to communicate openly with whoever needs the information. A small firm that can foster a number of champions to cover a number of areas of the business has an advantage that no other firm can imitate.



The trouble that many small business owners have is that they believe they are that person. The result is that they want to have the maximum exposure to the customer and the supplier. However, there may well be someone in the firm much better equipped for the role. If there is another person in the firm who can be the champion then the owner/manager should make sure this individual receives a wide variety of training across many skills so that they become the conduit for the success of the firm. Other firms cannot copy this quality; they need to cultivate their own champions. Stealing another firm's champion is risky and it doesn't always work.

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