Essence of making smart decisions

22 Jan, 2023 - 00:01 0 Views
Essence of making smart decisions

The Sunday Mail

Stephene Chikozho

In global and African marketplaces alike, strategy is simply efficient and effective resource allocation.

Strategy means making smart decisions on how to compete.

Perhaps, when one looks at most African economies, with the level of uncertainty we see today, more people are asking: How can I develop a strategy on a continent that keeps changing so fast?

Picture this: In the 19th Century, if the very first car inventor had asked people what they wanted to facilitate movement from one place to another, perhaps, if they were fascinated with speed, they would have said they needed faster horses. Yet, if other people needed to carry large quantities of goods over challenging terrain, they would have said they needed resilient camels.

What if their concern was reliability? They would have preferred dependable donkeys!

And for some folk, if walking was the only option, comfortable sandals or shoes would have been preferable.

Who would have thought of an engine-powered vehicle? It takes a disruptive mindset and a winning pioneering strategy to think beyond the product, service or norm that already exists in the market. How about some reflection on a successful global business icon, Henry Ford, who pioneered one of the most resilient car manufacturing brands?

He can help many people discover the essence of a winning pioneering strategy.

Business logic often dictates that we hold back, let someone else go first, incur the costs and make mistakes. But there are many examples of significant advantages for pioneering companies. A company that leads the way into a new market gains a competitive advantage, which might enable it to dominate over the long term.

Henry Ford did not invent the automobile, but he developed one of the first affordable cars for middle-class Americans at the beginning of the 20th Century. Most people during that period had never aspired to owning a car because they were seen as a luxury item for the wealthy, and, as Ford said at the time, most people would have been happier with “a faster horse”.

Ford succeeded because of a technical edge. His idea was that of mass production, using a moving assembly line to reduce production costs. By 1918, his company was the clear leader in the United States automobile market.

To this day, Henry Ford’s company is still one of the most resilient brands on the African and global market.

Moving ahead of others in a market involves risk. By taking the initiative with an innovative product, new technology, lower prices, better distribution, promotional offers or forceful advertising campaigns, a company creates an opportunity to seize the leadership position.

First-mover advantage

Being first to the market gives a company first-mover advantage, which can be long-lasting or short-lived.

Long-term advantage brings resilient benefits, either by creating an entirely new market, or by improving a company’s market share over a long period. Companies that succeed in building long-term advantage often dominate their product categories for many years. In the 1970s to this day, in Africa, a number of products were so successful in their market sectors that their brand names became generic terms.

What would one say if they needed a soft drink, toothpaste, washing powder and a few other products?

On the other hand, the short-term advantage typically occurs because it is based on new technology. Today, innovation is exceptionally fast in many sectors, with increasingly shorter gaps between new introductions and superior products. A radio cassette is one example of a technology that led the market for around 20 years, until competition from new technology arrived.

Changing habits and lifestyles

In 1979, a Walkman was introduced, the first portable music listening device. Just as Henry Ford had changed the way people travelled, the Walkman changed music-listening habits and lifestyles. Its launch coincided with the aerobics craze, and millions used the Walkman to add music to their workout routines.

Between 1987 and 1997, the height of the Walkman’s popularity, the number of people starting to walk as an exercise increased by 30 percent, according to “Time” magazine. The manufacturer of the Walkman sold over 200 million of their portable cassette players.

The Walkman evolved from cassette to compact disc (CD) technology, and consumers were happy with their portable music players until 2001, when Steve Jobs, introducing his product, said the coolest thing about the iPod is that your whole music library fits in your pocket.

So began a new industry, based on portable digital music, and dominated by a new market leader Steve Jobs founded; a business which has since morphed into a global behemoth.

Many scholars contend that, as long as a product remains the only one of its kind available, the company that is first to market has a monopoly position; this means it can set the price, establish loyalty, and build a reputation before competitors catch up.

When competition does arrive, the first-mover still has the advantage, because it has established itself. This is generally the case even when subsequent products are better than the first.

Various business professionals argue that the customer’s perception of where a product or service sits in the market is of utmost importance, it is better to be first than it is to be better.

It is easier to get into the consumers’ minds first than to dislodge a product or service from their minds and convince them that your company has a better product.

Currently, Africa is a trending destination for entrepreneurs mainly because of the endless opportunities it offers.

The major tech companies of the world are heavily investing in different sectors of the African economy.

There are plenty of sectors in Africa where a business could be first or better but the highly profitable industries to do business are among others, technology, finance, retail, supply chain, waste management, mining, agriculture real estate and construction.

In these and other sectors, either being the first to offer a type of product or service can give the business a head-start over those coming in later.

On the other hand, offering a better product or service as compared to competitors can also be a winning strategy.

Later entrants enter a recognized market and know what mistakes to avoid. They stand to benefit most in a rapidly changing market, in which technological innovation is advanced.

As such, in order to gain an edge, either be first, or be better.

In both cases, you need to analyse the market and make good of your winning strategy.

Strategy entails concentrating on what is important, on those few objectives that can give the business a competitive advantage.

More importantly, designing a winning strategy in the complex African and global markets involves asking questions, experimenting and then constantly renewing the thinking process by questioning the answers.

No matter how good today’s strategy is, one must always keep reimagining and reinventing it tomorrow.

Stephene Chikozho is an avid entrepreneur, Managing Partner and Principal Consultant for Urbane Create Agency, a strategy, marketing and advertising agency. He writes in his personal capacity. You can follow him on social media (Instagram, Facebook, Twitter, LinkedIn) WhatsApp +263772409651 or email [email protected]

 

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