Sun Tzu on Leveraging Strength - Part 4 of 6
“The general who thoroughly understand the advantages that accompany variation of tactics knows how to handle his troops. The general who does not understand these, may be well acquainted with the configuration of the country, yet he will not be able to turn his knowledge to practical account.” - Sun Tzu, The Art of War
An Uphill Battle
We live in an increasingly competitive world, where the top 20% of businesses own 80% of the market. Are you in that top 20%? Probably not. So how do you protect your little business in a market full of giants? How does a local retailer compete with the likes of Wal-Mart? Kmart tried to compete with Wal-Mart’s low cost strategy and it ended in bankruptcy. If Kmart couldn’t beat Wal-Mart in a price war, how can you hope to? Well… you can’t.
Enter the Internet. Suddenly small businesses could reach consumers worldwide. No longer were they limited to a local market. A small business owner’s dream come true, right? Sadly, that knife cuts both ways. In his book, Clear Blogging: How People Blogging Are Changing the World and How You Can Join Them, Bob Walsh discusses this problem, which he calls the “Internet Price.” Sure, you can reach customers everywhere, but suddenly your local clients can access businesses everywhere. Now, rather than a few local competitors, your business is fighting thousands of other businesses worldwide. Businesses that offer the same product at a fraction of the price you might charge. Even service businesses are no longer safe. Software development, IT consulting, and even so-called “knowledge processes” like legal and marketing research are now being sent overseas. Worse yet, a Stanford study says they’ll work for $500/year.
Fighting the Internet Price
“If, on the other hand, in the midst of difficulties we are always ready to seize an advantage, we may extricate ourselves from misfortune.” - Sun Tzu, The Art of War
True, small businesses may be facing an increasingly competitive marketplace. True, mega corporations like Wal-Mart have a stranglehold on the cost leadership segment. So how do you fight back? How do you keep your business from failing like Kmart did? Again, Sun Tzu has the answer: “Carefully compare the opposing army with your own, so that you may know where strength is superabundant and where it is deficient.”
You can’t beat the Goliaths of the world on price, but you can leverage strengths where they are weak. Here’s how:
Differentiate Yourself
Make your product or service stand out from the crowd. Deliver at a quality that your competitors can’t match. Use eco-friendly materials and business practices. Whatever you do, make sure that your marketing focuses on these differences. If your product is better but your customers don’t know it, what good is that? Marketing alone can be a great form of differentiation - get creative! For god’s sake, if Pet Rocks made someone rich, surely your business can do the same.
Be Responsive
In working with a few large corporate clients, I’ve learned one thing: big businesses are SLOW. Once they decide they want to do something, they have to get the approval of 43 different corporate managers, run it by legal, justify it to their shareholders, put in a request for funding, and then justify the project to the new corporate managers because 30% of the original 43 have died of old age since the initial request was made.
In my business, if a client comes to me with a request, I turn my head slightly, run it by my partner, turn my head back, mull it over for a bit, and give my client a response. I can do this because small businesses aren’t shackled by bureaucracy. We can respond quickly and respond to their needs before old age takes them.
Cultivate Personal Relationships
This is a big one. As I’ve mentioned in the past, I hate dealing with customer service reps. I put it off for days or weeks if I can because I know that they’re going to put me on hold for an hour and then someone I can barely understand will ask me to hold again while he accesses my account history. Where’s the personal touch? Big businesses can’t afford it, but we can. I keep all my client data in my phone so when a client calls, I greet them by name. Little things like this make people feel important. Take the time to get to know your clients. Treat them like people rather than numbers. In an increasingly impersonal world, people are willing to pay extra for that personal touch.
From Survival to Success
Most small business owners start out just hoping to survive. Far too many fail because they never find a way to stand out. Their business is just another nameless, faceless company vying for consumers’ hard-earned money. It’s important to develop your business in such a way that it holds meaning for your customer.
Take your doctor, for instance. You might tell people “I go to Dr. ____ because my family has known him for years, he’s extremely capable, and he genuinely seems to care about my wellbeing.” You might recommend a specific tax consultant because he found all kinds of tax deductions and saved your business from an audit. What meaning does your business hold for your customers?
Big companies may own most of the market, but there’s still plenty of room for small businesses. The key to survival is to determine what aspects of their business leave the customer wanting more, and then structure your business to make it happen. Use your small size to outmaneuver your competition. Deliver exceptional service and tell your customer how your business is different.
Remember: avoid your competitor’s strengths and instead attack their weaknesses.
What’s next?
Sun Tzu on Adapting to Your Environment - Part 5 of 6
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April 6th, 2008 at 6:53 am
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Jason Rakowski
April 6th, 2008 at 7:06 am
[…] Sun Tzu on Leveraging Strength - Part 4 of 6 […]
April 6th, 2008 at 7:06 am
I came across your blog on Technorati. Nice site layout. I will stop by and read more soon.
Mike Harmon
April 6th, 2008 at 7:26 am
Jason, Mike - Thanks for stopping by. This blog is still fairly new, so I really appreciate the feedback. Hope to see you around!
Kyle
April 6th, 2008 at 4:22 pm
[…] Sun Tzu on Leveraging Strength - Part 4 of 6 […]
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