- A Sweet Spot
- Agile, Disciplined, and Focused
- Managing the Tension
- In Summary
This chapter is from the book
This chapter is from the book
This chapter is from the book
Agile, Disciplined, and Focused
Finding and exploiting a sweet spot means combining low cost and differentiation in striking packages that bring together exceptional value. But companies that achieve sustained competitive advantage do not just occupy sweet spots. Three other attributes are necessary for companies to be long-term winners. They must be agile, disciplined, and focused. They combine position, movement, hard-to-imitate capabilities, and concentration in hard-to-imitate packages. Agility brings these companies to sweet spots, discipline allows them to protect and defend these spots, and focus enables them to exploit the spots.
The companies that miss the mark, in contrast, migrate to or are stuck in contested or sour spots. These companies are rigid about not abandoning these spots, inept in defending and protecting them, and too diffuse to fully exploit them (see Table 1.2).
Table 1.2 The Four Secrets of Long-Term Business Success and Failure
|
Attribute |
Advantage |
Disadvantage |
|
1. Position |
Sweet spot—Being in an uncontested space |
Sour spot—Being in a contested space |
|
2. Movement |
Agility—Getting to an uncontested space |
Rigidity—Not getting to an uncontested space |
|
3. Hard-to-imitate capabilities |
Discipline—Protecting an uncontested space |
Ineptness—Inability to protect an uncontested space |
|
4. Concentration |
Focus—Exploiting an uncontested space |
Diffuseness—Inability to exploit an uncontested space |
Sweet spots attract swarms of competitors. Other firms quickly move in and try to occupy the same ground. If you are in such a position, you have to have the discipline to protect it.
You must be agile to compete, but agility by itself is not enough. You must be in a position you can defend. Andy Grove recommends that companies must be "agile giants."7 They have to have the agility to move quickly to new competitive ground, but once they occupy that ground, they must be giants who are capable of defending it. They must be able to take on all comers. A classic example of a firm unable to protect the position it occupied was Netscape.8 In 1997, at the height of the browser wars, this company had close to 90 percent of the market. One year later, its market share was down to less than 50 percent. At first, Microsoft more or less ignored Netscape. But in December 1995, Bill Gates proclaimed that Microsoft was going to be "hard core" about the Internet. Gates was determined to break Netscape. Netscape’s executives taunted Microsoft and were not prepared for Microsoft’s resolve. They moved into a sweet spot but could not defend it.
Successful firms not only have an uncanny ability to move into attractive spaces, but also the discipline to protect these spots. As Porter has written, "The corporate strategist’s goal is to find a position in the industry where his or her company can best defend itself."9 Without an adequate defense, occupying a position does you little good. Movement for movement’s sake gets you anywhere. You have to move to a spot you can defend.
Winning is not about achieving one-time gains. It is too demanding and difficult for this. It also does not involve digging in and defending a position against all odds. A stagnant and defensive stance where your sole aim is to protect the spot you occupy also has its limits. After you have identified, occupied, and fortified a position, you must take full advantage of it. You have to really focus on it. Of course, that takes discipline, but it is about more than discipline. You have to reap all the benefits that the spot you occupy has to offer. Focus is the ability to extend the scope and breadth of a sweet spot and reap all the benefits it has to offer. Winning companies are uniquely focused in comparison to losers. Losers never seem to find something upon which to center their attention.
This book shows you that the way to be a big winner is to identify a sweet spot with value to customers that no one else exactly provides, to move into it (be agile), to protect it (be disciplined), and to extend it (be focused).
A firm must possess all these qualities. (See Figure 1.3.) It must be agile—not entirely bound by the past, but free to reinvent itself for an uncertain future by moving into new territory. It must have the discipline to cultivate the strengths and competencies it needs to protect the space it occupies. Also, it must have the focus to define and expand that space. To achieve sustained competitive advantage, you must be more than agile. You have to have momentum to keep moving, and you must defend where you are at. You also must be expansive and be able to deepen and expand the space you inhabit.
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Figure 1.3 Big winners hit the mark.
To be a big winner, you must understand what you stand for; otherwise, you’ll fall for everything. Say yes to some possibilities and no to others. Winning firms do not deviate from what they do best. They choose an area where they have comparative advantage and stick to it. They take full advantage of it. They have the agility to find a sweet spot, the discipline to protect it, and the focus to exploit it. Losing firms have the opposite characteristics—rigidity that leaves them in a contested or "sour spot," ineptness, and diffuseness.
These traits are complicated to develop in a single company. They contradict one another. They must be woven into patterns that are hard to copy and especially valuable because they are complex and distinctive. The characteristic patterns of the winners and losers are explored in subsequent chapters. Appendix D, "Patterns of Winning and Losing Companies," is a summary of these distinctive patterns. This book will help you understand how your company measures up. What are its strengths and weaknesses? Is it in a sweet spot? Does it have agility, discipline, and focus? If it is in a sour spot and is rigid, inept, or diffuse, what can it do to improve?