Leading the Way in Midmarket Enterprises: A Perspective on Competitive Strategy
Competitive strategy has been the subject of many scholarly researches in later half of 20th century. Across industries, businesses create and deliver value for customers. These studies have dissected and investigated the question of where and how in this supply chain of value can an organization find its source of competitive advantage. Organizations within the same industry produce varying results. Some of them outperform the industry while others see their financials go south. Such variances in economic performance have been explained through several theoretical frameworks. In the 80s, Porter came up with his market forces model which looked at a firm’s position in the industry respective to certain external dimensions. Later he went on to develop a matrix for competitive advantage which said that to sustain one’s competitive position, products or services need to be either differentiated or produced at a lower cost than the competition.
While this is how organizations which excelled, drove competitive advantage in the past but if the recipe was so simple, why do 70% organization do not survive their 10th year of operation? (What percentage of small businesses fail – Georgia McIntyre). Among other things, there are numerous internal pre-requisites which are either overlooked or if considered, are not adequately developed to enable the envisioned competitive strategy. Evaluating current organizational design can help uncover these gaps. For instance, McKinsey 7-S framework explains 6 internal dimensions with their interdependence on each other as well as to the organizational goals & objectives. In addition to this and particularly for small and mid-sized businesses it becomes increasingly difficult due to limited capital, smaller network of customers & high number of intermediaries across their supply chain. All of these translate into higher costs, some are financial while others are in shape of missed opportunities.
However midmarket enterprises have some clear advantages which if capitalized well can leapfrog them well against incumbent players. Internal resources and readiness, ability to monitor & control (visibility) the organization and agility to adjust course of action on the go (real-time, insightful decision making) are three basic pre-requisites for that. For years technology has been seen as a support function and at best as an enabler for organizational functions. Today, technology has proven itself to be a mandatory cross-functional affair rather than being the jam of a CIO/CTO suited up in a neat cubical. End-to-end visibility is only achieved when technology is de-siloed across functions and one system seamlessly incorporates the entire organization. This amounts to driving a vision whereby technology is ‘the core function’. As a result, decisions can be made, and courses can be adjusted on the fly rather after-the-fact firefighting driven by enormous internal lead times. Midmarket organizations are best positioned to drive such vision primarily because of their leaner structures, relatively adhocratic processes and agile decision making. In other words, such low corporate inertia coupled with an intelligent technology strategy becomes an unbeatable combination allowing firms to combat incumbent players.
Technology as ‘the core function’ needs to be done right – One size does not fit all, and key success factors may be very different even for organizations of similar scale and business. The idea is not to have fancy technologies for the sake of having them. To that end, groupthink usually drives decision makers to choose technology with hazy understanding of how it maps to their business goals. Therefore, it is imperative to align technology strategy with goals and objectives first and then execute at a pace with which the organization can keep up. While this is easier said than done, trends prevalent within the midmarket segment can help set some direction
Cloud Enabled Business: Organizations have become increasingly more data-centric and therefore want to leverage all data sources into actionable insights. Real time visibility into business and quick data access have become critical to driving a sustainable competitive advantage. Adoption of cloud is enabling ‘anytime and anywhere’ access as well as supporting new digital growth avenues (the new battlegrounds for firms to compete in). Moreover, cloud computing has historically been known for its positive impact on cost structures and return on assets. The flexibility it brings is extremely valuable for growing organizations because it enables them to scale up. In a survey conducted by IDC seeking reasons why managers choose cloud, 42% said they went to cloud to enable anywhere/anytime data access whereas 37% said they did so because of flexibility it offers.
Data Accuracy: Given that data-driven insights are guiding decision making, unreliable data therefore can be extremely costly to an organization. Many have invested in building a quality data organization. While cutting edge technologies such as artificial intelligence and machine learning have improved over the years, not many organizations have adopted them due to lack of trust. In addition to driving need-based, structured data collection & validation of the sources, ensuring data compliance is another key priority.
Single Source of Truth: As opposed to standalone information systems weakly integrated with each other, organizations have moved to a single source of truth enabled by seamless integration of functions. This has reduced complexity, made integration frictionless and increased staff productivity. With availability of data management tools as a service, organizations can now focus more on business-critical tasks.
Goal-Centric Business Intelligence: BI uncovers new opportunities in the core business as well as in the non-core, new areas. Therefore, IT departments have moved from developing in-house BI systems to implementing off-the-shelf ones. This allows them to be worry-free of managing storage, transfers, permissions, and compliances. Moreover, it allows greater adoption of BI solutions across the organization through boosting data literacy.
Real-time Finance & Accounts: Most pressing issues of organizations these days are answered through numbers. Ability to see and share real-time financial data is the first step towards a data-driven enterprise. Internal financial reporting has transformed into visualization and slice & dice based dynamic dashboards. Organizations do not wait for a formal year end or even a quarter end. Financial statements are live (updated in real time) across sub-sections of the organization and the trend is moving away from post-financial close analysis to active analysis and decision making.
Real-time sales: Organizations are driving motivation and driving constructive competition through allowing real time visibility of KPIs. This is similar to how tools have evolved for finance and accounts; next generation tools allow multi-dimensional analysis and comparisons along with a rich, visual experience. Modern day sales cloud offerings which midmarket organizations particularly in retail/wholesale and distribution business implement are holistic, providing seamless integration among all components such as CRM, marketing, service, and commerce etc. This also allows deeper and more tailored customer engagements
Friction-less experience: Yesterday’s good-to-haves are today’s must-haves. Customers have benchmarked their experience to the likes of uber, ebay and amazon – they expect nothing less. New bars are set everyday by industry disruptors through mastering customer journeys which are powerfully simplified and omnichannel. Across all engagement platforms, customers expect a unified and coherent experience. As businesses move to more digital and alternate channels, front-end systems (which are virtually boundary-less with the back-ends) drive alike experience for the customers.
Enablers of competitive strategy are as critical as the strategy itself if not more. Midmarket businesses cannot simply sustain a competitive position without focusing on what will allow them to drive a faster speed to market and time to value. Producing or serving customers more efficiently and uniquely has gotten us where we are today. However, as businesses reach their terminal pace while customers’ expectations continue to grow, midmarket enterprises can only lead the way by building next generation capabilities.
Take your first step towards a technology-led competitive strategy today and explore