Fo x interview with freshdirect co fo under jaso n

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Unformatted text preview: n 2.0,” Fo rtune, No vember 25, 2002; P . Fo x, “Interview with FreshDirect Co -Fo under Jaso n Ackerman,” Blo o mberg Televisio n, June 17, 2009. To day, FreshDirect serves a base o f so me 600,000 paying custo mers. That’s a po pulatio n ro ughly the size o f metro -Bo sto n, serviced by a single gro cer with no physical sto re. The privately held f irm has been so lidly pro f itable f o r several years. Even in recessio n-plagued 2009, the f irm’s CEO described 2009 earnings as “pretty spectacular,”P . Fo x, “Interview with FreshDirect Co -Fo under Jaso n Ackerman,” Blo o mberg Televisio n, June 17, 2009. while 2010 revenues were estimated at ro ughly $ 300 millio n.R. M. Schneiderman, “FreshDirect Go es to Greenwich,” Wall Street Jo urnal, April 6, 2010. Techno lo gy is critical to the FreshDirect mo del, but it’s the co llective impact o f the f irm’s dif f erences when co mpared to rivals, this tech-enabled strategic po sitio ning, that delivers success. Operating f o r mo re than half a decade, the f irm has also built up a set o f strategic assets that no t o nly address specif ic needs o f a market but are no w extremely dif f icult f o r any upstart to co mpete against. Traditio nal gro cers can’t f ully co py the f irm’s delivery business because this wo uld leave them st raddling two markets (lo w-margin sto ref ro nt and high-margin delivery), unable to gain o ptimal benef its f ro m either. Entry co sts f o r wo uld-be co mpetito rs are also high (the f irm spent o ver $ 75 millio n building inf rastructure bef o re it co uld serve a single custo mer), and the f irm’s co mplex and highly custo mized so f tware, which handles everything f ro m delivery scheduling to o rchestrating the preparatio n o f tho usands o f recipes, co ntinues to be ref ined and impro ved each year.C. Valerio , “Interview with FreshDirect Co -Fo under Jaso n Ackerman,” Venture, Blo o mberg Televisio n, September 18, 2009. On to p o f all this co mes years o f custo mer data used to f urther ref ine pro cesses, speed reo rders, and make helpf ul reco mmendatio ns. Co mpeting against a f irm with such a stro ng and to ugh-to -match strategic po sitio n can be brutal. Just f ive years af ter launch there were o ne-third f ewer supermarkets in New Yo rk City than when FreshDirect f irst o pened f o r business.R. Shulman, “Gro ceries Gro w Elusive f o r Many in New Yo rk City,” Washingto n P o st, February 19, 2008. But What Kinds of Differences? The principles o f o peratio nal ef f ectiveness and strategic po sitio ning are deceptively simple. But while P o rter claims strategy is “f undamentally abo ut being dif f erent,”M. P o rter, “What Is Strategy?” Harv ard Business Rev iew 74, no . 6 (No vember–December 1996): 61–78. ho w can yo u reco gnize whether yo ur f irm’s dif f erences are special eno ugh to yield sustainable co mpetitive advantage? An appro ach kno wn as the resource­based view of compet it ive advant age can help. The idea here is that if a f irm is to maintain sustainable co mpetitive advantage, it must co ntro l a set o f explo itable reso urces that have f o ur critical characteristics. These reso urces must be (1) v aluable, (2) rare, (3) imperfectly imitable (to ugh to imitate), and (4) no nsubstitutable. Having all f o ur characteristics is key. Miss value and no o ne cares what yo u’ve go t. Witho ut rareness, yo u do n’t have so mething unique. If o thers can co py what yo u have, o r o thers can replace it with a substitute, then any seemingly advantageo us dif f erences will be undercut. Strategy isn’t just abo ut reco gnizing o ppo rtunity and meeting demand. Reso urce-based thinking can help yo u avo id the trap o f carelessly entering markets simply because gro wth is spo tted. The teleco mmunicatio ns industry learned this lesso n in a very hard and painf ul way. With the explo sio n o f the Internet it was easy to see that demand to transpo rt Web pages, e-mails, MP 3s, video , and everything else yo u can turn into o nes and zero s, was skyro cketing. Mo st o f what travels o ver the Internet is transf erred o ver lo ng-haul f iber-o ptic cables, so teleco m f irms began digging up the gro und and laying webs o f f iberglass to meet the gro wing demand. P ro blems resulted because f irms laying lo ng-haul f iber didn’t f ully appreciate that their rivals and new upstart f irms were do ing the exact same thing. By o ne estimate there was eno ugh f iber laid to stretch f ro m the Earth to the mo o n so me 280 times!L. Kahney, “Net Speed Ain’t Seen No thin’ Yet,” Wired New s, March 21, 2000. On to p o f that, a techno lo gy called dense wave division mult iplexing (DWDM) enabled existing f iber to carry mo re transmissio ns than ever bef o re. The end result—these new assets weren’t rare and each day they seemed to be less valuable. Fo r so me f irms, the transmissio n prices they charged o n newly laid cable co llapsed by o ver 90 percent. Established f irms struggled,...
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This document was uploaded on 01/31/2014.

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