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Most successful companies have an outspoken price, quality, delivery or flexibility orientation. By focusing on one, or perhaps a combination of two of these types of value creation in their offerings, they manage to differentiate themselves from others and create a flourishing business. In two earlier articles I summarized these four strategies and wrote about how to succeed with a price-oriented strategy. In this article I continue this series and explain what it takes to succeed with a quality-oriented strategy.
Like with price orientation, there are a four major areas to pay attention to when following a quality-oriented strategy: 1. a consistent value proposition, that is 2. aligned with your market, 3. aligned with your operations and 4. aligned with the structural environment of your organization.
Requirement 1: A Consistent Quality-Oriented Value Proposition
Having a quality-oriented value proposition means that, more than on any other feature of your offerings, you compete on quality. So, even though price, delivery and flexibility could be relevant aspects of your offerings too, quality is what your customers should be buying your products or services for. Simply put, they buy them because they are the best products in the market.
Competing on price is relatively straightforward. There are different ways of filling in what price actually means (I’ll come back to this in a later post), but at the bottomline it refers to the amount of money you spend. Competing on quality, though, is far less straightforward. Because what is quality? While I will also go deeper into that question in a later post, quality refers to some value added feature of the product or service itself. This could be, for example, durability, precision, or design, but also less tangible features such as coolness, brand or fun.
Whatever the quality aspect is that you are competing on, the key requirement is that you do it consistently and vigorously. This first means that you offer what you say you offer. If you say, for example, that your products last longer than others, then they also should last longer. So, deliver as promised. Or at least don’t overpromise too much.
It also means that you make sure customers perceive that you offer a high-quality product or service. This means that your value proposition should be internally consistent. If you compete on quality, for example, it is inconsistent to also try and be the cheapest in the market. Customers don’t buy this, both literally and figuratively. We’re wired to think that something cheap can’t be good, and something good can’t be cheap. So, make sure your value proposition forms a coherent package that people can understand and believe.
Requirement 2: A Matching Quality-Oriented Market
A second requirement for being successful with a quality-oriented strategy is that your offerings fit the market. This means that they help address a particular segment of the market that is not already oversupplied by others competing on the same aspect of quality as you do.
The key challenge here is to find a way to stand out. The trick to realize this, is to pick one quality aspect and make sure that your offering performs best on that aspect. So, rather than offering an okayish or good overall quality you pick one quality aspect – durability, precision, fun, etc. – on which you are going to be the top choice in the market. This allows you to communicate clearly that your product is the most durable, precise or fun product in the market. This implies you shoot for a particular niche and excite that niche rather than that you aim broadly at a large and heterogeneous market. So, be the best in something for someone rather than good in everything for everyone.
This doesn’t mean you are limited to serving small niches. A company like Adidas is using this strategy pretty successful, for example. With their Superstar sneakers, they manage to compete very successfully on “coolness” as quality aspect.
Requirement 3: Focused Quality-Oriented Operations
To be able to effectively and profitably offer a quality-oriented value proposition, the third requirement is that your operations are completely focusing on delivering that particular quality. If your aspect of “best” is durability, then your resources and competencies, as well as your supply chain, should be lined up to create a durable product. And if you “best” is a seamless user interface, then that is what your operations should be focusing on.
So, focus is key. Of course, you still need to keep an eye on other quality aspects and also on price, delivery and flexibility. There are minimum threshold levels of all of them that you need to match. But given that the competition is usually tough, you can only stand out if you focus on your quality aspect of choice and really go for it.
This also means that you make sure your revenue model (how you charge customers) and costs are aligned with offering that kind of quality as well. You want to make sure that all costs you make are relevant and contribute to offering that quality. Again, if your “best” is durability, then you want to make sure that you spend your money on that, and less on other aspects. With such focus, you increase your chances of delivering your offerings in a profitable way.
Requirement 4: A Fitting Quality-Oriented Environment
When you just look at it from a business model perspective, the previous three requirements seem enough: you offer a product or service that matches a particular group of customers and you have aligned your operations in such a way that you can offer it effectively and profitably.
But there is more. Your organization is not just a business model. It is a real organization with a particular culture, norms and values and you operate in a bigger environment that has a profound influence on that organization. Usually, these more structural characteristics are notoriously hard to change. This means that you need to make sure that your business model is aligned with these more structural characteristics of your organization and environment.
This means taking care that your quality-oriented offering matches the values and goals of the company, its organizational climate and the trends around you. If the overall attitude in the company, for example is to cut costs and go for the cheapest solution, competing on quality is an almost guaranteed failure. And if the economy is going down and people generally have less to spend, you might have a challenge too when selling on quality. So, pay careful attention to the more structural features of your business and adapt.
Like with a price-oriented strategy, the key to succeeding with a quality-oriented strategy is alignment. Requirement 1 focuses on value proposition alignment, Requirement 2 on market alignment, Requirement 3 on operational alignment and Requirement 4 on structural alignment. All four types of alignment need to be in place. Always. This means that, in a changing environment, your key challenge becomes to keep them aligned on a continuous basis.
March 5, 2019 at 02:48AM
Forbes – Entrepreneurs