The Strategies For Leadership Framework

Taken From Wharton’s Introduction To Marketing Course

Operational Excellence

Warby Parker’s Logo
  • Operational Excellence refers to how well a business is doing in terms of logistics, price, and costs. Typically, an operationally excellent business is one that offers products and services at a price lower than that of its competitors, minimizes overhead costs within the business, and aims to deliver its product to the customer at the least amount of inconvenience as possible. The problem with implementing Operational Excellence is that it may take a substantial amount of effort to change a company’s culture into one that focuses on Operational Excellence.
  • To understand how Operational Excellence has worked in different businesses, let’s go back to our example on Warby Parker. Warby Parker is a glasses company founded in 2010, that took the glasses market by storm, and is now valued at over a billion dollars. How did they do it? They recognized that the high prices of glasses were accredited to the fact that there were multiple middlemen between the manufacturer and the outlet that customers were buying the glasses from. After realizing this, Warby Parker aimed to remove the middlemen and sell their glasses directly through their website to the customer, thus making the prices of their glasses lower. Furthermore, Warby Parker recently created an app to let its users virtually try on glasses by taking advantage of recent AR (Augmented Reality) advances. In other words, Warby Parker focused strongly on Operational Excellence and it allowed them to maintain a sustainable competitive advantage in the glasses industry.

Customer Intimacy

Tesco’s Logo
  • Customer Intimacy revolves around providing customers with exactly what they want and need. Companies that focus on Customer Intimacy are very customer-centric and often specialize in their specific product or customize their product, to meet the needs of the customer. However, putting Customer Intimacy at the forefront can be incredibly expensive given the amount of data you’ll have to collect from customers.
  • A noteworthy example of Customer Intimacy can be seen in Tesco, which is a British grocery retail store currently valued at 26.9 billion dollars. The story of how Tesco came to become one of the most prominent grocery firms in the UK is almost directly attributed to their emphasis on Customer Intimacy. Way back in 1993, Tesco initiated their loyalty program called “Clubcard” where customers could earn discounts and purchasing points. However, while this program was running, Tesco kept track of each customer looking closely at the products they would purchase as well as how frequently they would buy products from their stores. The amazing part is that Tesco used the data that they collected to adjust the products in local stores near the customers to meet both their unmet and already met needs. This is what led to Tesco’s enormous success; it’s foregrounding of Customer Intimacy.

Performance Superiority

  • The last axis in the framework is Performance Superiority, which quantifies whether or not the product produced by the company is “state of the art” or the “latest and greatest”. A large downside to Performance Superiority is that the company has to constantly pump out creative ideas to make their products better. Furthermore, a considerable amount of investment is needed to finance R&D operations in these companies.
  • The most prominent example of a successful company that has implemented Performance Superiority, is none other than the tech giant, Apple. Back in 2001, Apple completely disrupted the music industry and revolutionized the way individuals listen to music by creating the “state of the art” iPod. Just six years later, Apple got rid of the need for an iPod and introduced the iPhone to the market which completely transformed the way we communicate with others, access information, and take pictures. Today, we have iPhones with three cameras and equipped with LiDAR capabilities. It’s this notion of creating innovative products and constantly adding new features to create the “latest and greatest” product that truly defines the heart of Performance Superiority. This is what has allowed Apple to secure a key position within their market.

Pros of the Strategies For Leadership Framework

  • It’s simple, and it provides a clear outline for short and long term goals for your business.
  • It assists in giving your business a direction in terms of what to focus on.

Cons of the Strategies For Leadership Framework

  • It doesn’t provide an answer about HOW to achieve the long and short-term goals that the framework highlighted.
  • It requires extra research to figure out the different challenges that a firm may face when implementing these strategies.

SWOT Analysis vs. The Strategies For Leadership Framework

  • A detailed SWOT analysis helps a company to figure out how to leverage its strengths to grasp opportunities and overcome threats and weaknesses within the market, which in turn, provides insight on how to beat the competition. However, the Strategies for Leadership Framework provides long and short-term goals to beat competitors and the best way to go about it. In short, the SWOT and Strategies for Leadership Framework focus on two different aspects of competitive strategy, however, using both of these frameworks on top of each other can help to determine goals as well as how to implement them.

The VRIO Framework vs. The Strategies For Leadership Framework

  • Another framework that you might hear about often is the VRIO framework, which provides a simple process to determine a sustainable competitive advantage. It does this by asking simple questions, consisting of whether your product is valuable, rare, hard to imitate, or if your firm has an organized structure. The problem with this framework is that it doesn’t tell you HOW to address the fact that you have a competitive disadvantage and HOW to overcome this challenge; it only tells you whether or not you have a sustainable competitive advantage. Unlike the VRIO framework, the Strategies for Leadership Framework can help you set short and long term goals to beat the competition within your niche. Using the framework, you can choose a particular strategy to focus on and meet fair value on the other strategies to beat the competition.

Key Takeaways

  • With the Strategies for Leadership Framework, there are three things you can focus on to maintain a sustainable competitive advantage: Operational Excellence, Customer Intimacy, and Performance Superiority.
  • The goal is to meet fair value on two of the strategies listed and be outstanding on one of the axes.
  • If your company has the time and resources to focus on two axes, the investment could be worthwhile, as it can further secure your position in the market.
  • Do not focus on all three axes.
  • This framework provides long and short-term objectives you can work towards to beat the competition.
  • To figure out the best way to go about meeting these objectives, you can apply a SWOT analysis

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