“Strategy formulation, then, is an ongoing requirement of good management. It is, to quote Michael Porter, ‘a process of perceiving new positions that woo customers from established positions or draw new customers into the market.’ This is a process you must permanently embed in your organisation.” – Harvard Business Review Blog Network
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On September 16, Apple Incorporated launched the new iPhone 7, a smartphone much more advanced than the previous model — the iPhone 6 released in September last year. It is waterproof and dust proof. The cameras have been improved and now have zooming capability. The phone now comes in more colour options and the internal hardware was upgraded. Since the first generation iPhone was released in 2007, Apple has been launching a new version every year. Its products are always ahead of other manufacturers and it keeps on improving them all the time. The executives at Cupertino, California, know that they have to be improving their products all the time in order to stay ahead in the market.
Your business must take a lesson from Apple. We are living in the most dynamic times ever, characterised by rapid change and chaos in the market place. Customers are more informed than ever due to easy communication and abundance of information. Consumers can easily find the products they want on the internet and through applications like WhatsApp on their mobile phones. The stiff competition is a challenge for business owners. You need to be constantly on your toes, finding out new trends and what your competitors are doing. You have to be relentlessly innovative.
Innovation is the art of creating new things, and changing or improving on the old. “Creative destruction”, a term that was introduced in 1942 by the economist Joseph Schumpeter — describes the process of industrial transformation that accompanies radical innovation. In Schumpeter’s vision of capitalism, innovative entry of entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power.
There are numerous types of innovations that can be applied by entrepreneurs:
New markets or products
New sources of raw materials and labour
New methods of organisation or management
New methods of transportation and communication
New methods of advertising and marketing
Local firms, shuddering under a harsh and hostile business environment, have no choice but to innovate, or they will find themselves blown by the headwinds.
Look at the banking sector. For years, only employed people could open commercial bank accounts. As the number of the employed dwindled due to company closures and downsizing, banks had no choice but to accommodate informally employed customers. The stringent requirements for opening accounts have been scrapped. Minimum balances and bank charges have been reduced to accommodate the majority, low-income customers. Innovative thinkers at Econet were the first in the market with their EcoCash system which had minimal conditions and low cost. Now we are seeing prestigious banks like CBZ and MBCA heavily advertising their low-cost accounts targeted at low-income consumers rather than well-paid employed people, and executives, who used to form their core customer base.
The same applies to credit offering stores like Edgars, which used to be associated with highly paid people. They now offer accounts to informally employed people and have lowered their prices as they find the market flooded with cheap imported clothes.
When did you last make an innovation in your business? Are you selling the same products to the same customers in the same way that you did 10 years ago? Beware of the headwinds.
Take time to hold strategic meetings with your team to think of how to innovate. Are there ways you can reduce costs to lower your prices and reach more customers, especially as now the majority of consumers have low incomes or are struggling to get cash? Can you offer more value so as to be ahead of your competitors? Can you think of new ways of marketing to reach more people in these times of social media dominance? Can you create new products or improve on your old products and offerings? Apple does not necessarily create new phones each time; they just add new features that are designed to please customers.
Keep your eyes on the competition. Find out what they are doing better than you are and do it even better. Talk to your customers and find out their current needs and concerns so as to meet and even exceed their expectations. Use your imagination. Do not spend most of your time in the office or factory. Go out there and see your clients. Know first-hand what is happening in the market. Meet other business people and get new ideas. Do not be caught by surprise, see change as it comes, be prepared and change course accordingly.
Remember you have to keep on innovating if you do not want to be left behind. Until next time, keep on accelerating your growth.
Phillip Chichoni is a consultant who helps SMEs and entrepreneurs build sustainable businesses. You may contact him by email, firstname.lastname@example.org. You can also visit http://smebusinesslink.wordpress.com