How to grow without groaking

When I was growing up my older brothers and I used to finish our meals as quickly as possible in the hope of getting some of the food from my younger brother’s plate. Once we had eaten our dinner we would intently watch him eat every mouthful, silently willing him to put down his cutlery and finish his meal. Whenever he did leave some food we would collectively pounce on his plate and fight for the scraps that remained.

There is a word for our behaviour of silently and longingly staring at someone else’s food in order to be offered it: it’s called groaking. And it’s not only greedy, adolescent schoolboys who groak. Many business executives look longingly at their competitors, wanting what they have. In particular, they look to copy the market leader in a bid to enjoy a bit of their meal.

Corporate groaking (you might call it competitive benchmarking) results in competitors becoming pale imitations of the #1 player. In the low-fare airline market, for example, Ryanair and easyjet were quickly followed by Jet2, Flybe, bmibaby, and Go among others. Similarly, UK chains including Café Nero, Costa, Eat, Coffee Republic, Coffee Primo, Café Ritazza and other local cafes have been established in the hope of enjoying some of Starbucks’ success.

The problem for the challengers is that in most markets it is only the leading players that make meaningful returns. It is the leaders that occupy the biggest share of buyers’ attention and spend. Unless something dramatically different comes along that is clearly better than their current provider potential customers will be unlikely to notice ‘me-too’ suppliers.

By seeking to copy the leaders, these challengers end up fighting over scraps in much the same way as I did with my brothers. It is unsurprising that many of the players in the low-fare airline and coffee shop markets have either performed poorly or even ceased to trade.

Real business success and profitable growth is based on creating a set of distinctive advantages. This is how Ryanair and Starbucks first became successful; not by copying the market leader but by offering something of real value in the market.

There are therefore two tests of your customer proposition and business model you should undertake to understand whether you are equipped to grow profitably:

  1. Are you distinctive? Do you offer something that is dramatically different to other players in the market? Is there something unique and compelling about your proposition or business model that potential customers will notice? For example, Dell offers fairly standard PC’s and laptops, but provides customers with low prices, customised specifications and delivery direct to home (or the office).
  2. Are you advantaged? Are you able to turn this distinctiveness into superior performance? Can you create a system to deliver your proposition that others will find difficult to copy? Over time Dell has built and refined a business model that is completely aligned with its source of distinctiveness and which has created and sustained its advantage over its competitors. For example, building-to-order has allowed Dell to align its suppliers into a ‘just-in-time’ supply and manufacturing system, significantly reducing the company’s working capital, improving its cash-flow and increasing its return on investment.

As a recent example of these principles in action, it was reported last week that Apple had overtaken WalMart as the world’s biggest seller of music. They achieved this not by ‘groaking’ but by creating a distinctive customer proposition and then exploiting and developing capabilities to support the proposition and establish profitable advantages.

The bottom line

Are you spending to much time and effort ‘groaking’, and hoping to be allowed some scraps off the plate of the market leader? Benchmark your business not by how competitive it is, but by how distinctive it is and by the level to which you have turned your distinctiveness into profitable advantages.

 

To find out more contact Stuart by clicking here or call +44-(0)1636-526111.