This risk is particularly acute in f irms that rely o

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Unformatted text preview: acco rding to o peratio nal ef f ectiveness rather than strategic po sitio ning. Operat ional ef f ect iveness ref ers to perf o rming the same tasks better than rivals perf o rm them. Everyo ne wants to be better, but the danger in o peratio nal ef f ectiveness is “sameness.” This risk is particularly acute in f irms that rely o n techno lo gy f o r co mpetitiveness. Af ter all, techno lo gy can be easily acquired. Buy the same stuf f as yo ur rivals, hire students f ro m the same scho o ls, co py the lo o k and f eel o f co mpetito r Web sites, reverse engineer their pro ducts, and yo u can match them. The f ast f ollower problem exists when savvy rivals watch a pio neer’s ef f o rts, learn f ro m their successes and missteps, then enter the market quickly with a co mparable o r superio r pro duct at a lo wer co st. Since tech can be co pied so quickly, f o llo wers can be f ast, indeed. Several years ago while studying the Web po rtal industry (Yaho o ! and its co mpetito rs), a co lleague and I f o und that when a f irm intro duced an inno vative f eature, at least o ne o f its three majo r rivals wo uld match that f eature in, o n average, o nly o ne and a half mo nths.J. Gallaugher and C. Do wning, “P o rtal Co mbat: An Empirical Study o f Co mpetitio n in the Web P o rtal Industry,” Jo urnal o f Info rmatio n Techno lo gy Management 11, no . 1—2 (2000): 13—24. Gro upo n CEO Andrew Maso n claimed the daily deal service had spawned 500 imitato rs within two years o f launch.B. Weiss, “Gro upo n’s $ 6 Billio n Gambler,” The Wall Street Jo urnal, December 20, 2010. When techno lo gy can be matched so quickly, it is rarely a so urce o f co mpetitive advantage. And this pheno meno n isn’t limited to the W e b. Co nsider TiVo . At f irst blush, it lo o ks like this f irst mo ver sho uld be a winner since it seems to have established a leading brand; TiVo is no w a verb f o r digitally reco rding TV bro adcasts. But despite this, TiVo has largely been a mo ney lo ser, go ing years witho ut po sting an annual pro f it. By the time 1.5 millio n TiVo s had been so ld, there were o ver thirty millio n digital video reco rders (DVRs) in use.N. DiMeo , “TiVo ’s Go al with New DVR: Beco me the Go o gle o f TV,” Mo rning Editio n, Natio nal P ublic Radio , April 7, 2010. Rival devices o f f ered by cable and satellite co mpanies appear the same to co nsumers and are o f f ered alo ng with pay televisio n subscriptio ns—a critical distributio n channel f o r reaching custo mers that TiVo do esn’t co ntro l. The Flip video camera is ano ther example o f techno lo gy alo ne o f f ering little durable advantage. The po cket-sized video reco rders used f lash memo ry instead o f magnetic sto rage. Flip cameras grew so po pular that Cisco bo ught Flip parent P ure Digital, f o r $ 590 millio n. The pro blem was digital video f eatures were easy to co py, and co nstantly f alling techno lo gy co sts (see Chapter 5 "Mo o re’s Law: Fast, Cheap Co mputing and What It Means f o r the Manager") allo wed rivals to embed video into their pro ducts. Later that same year Apple (and o ther f irms) began including video capture as a f eature in their music players and pho nes. Why carry a Flip when o ne po cket device can do everything? The Flip business barely lasted two years, and by spring 2011 Cisco had killed the divisio n, taking a mo re than half -billio n-do llar spanking in the pro cess.E. Rusli, “Cisco Shutters Flip, Two Years Af ter Acquisitio n,” New Yo rk Times, April 12, 2011. Operatio nal ef f ectiveness is critical. Firms must invest in techniques to impro ve quality, lo wer co st, and design ef f icient custo mer experiences. But f o r the mo st part, these ef f o rts can be matched. Because o f this, o peratio nal ef f ectiveness is usually no t suf f icient eno ugh to yield sustainable do minance o ver the co mpetitio n. In co ntrast to o peratio nal ef f ectiveness, st rat egic posit ioning ref ers to perf o rming dif f erent activities f ro m tho se o f rivals, o r the same activities in a dif f erent way. Techno lo gy itself is o f ten very easy to replicate, and tho se assuming advantage lies in techno lo gy alo ne may f ind themselves in a pro f it-ero ding arms race with rivals able to match their mo ves step by step. But while techno lo gy can be co pied, techno lo gy can also play a critical ro le in creating and strengthening strategic differences—advantages that rivals will struggle to match. Different Is Good: FreshDirect Redefines the NYC Grocery Landscape Fo r an example o f the relatio nship between techno lo gy and strategic po sitio ning, co nsider FreshDirect. The New Yo rk City–based gro cery f irm f o cused o n the two mo st pressing pro blems f o r Big Apple sho ppers: selectio n is limited and prices are high. Bo th o f these pro blems are a f unctio n o f the high co st o f real estate in New Yo rk. The so lutio n? Use techno lo gy to craf t...
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