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New Academic Research Helps SME Owners

There are many benefits in being an ‘independent’ consultant.  One of the disadvantages is professional loneliness.  Belonging is such a strong need and in London these recent weeks I’ve been trying to find a bit of nourishment.  In my search I took a bit of an interest in the Cranfield Business School website and found it to be the source of much interesting debate and information.

As a ‘small’ business owner myself – and having run businesses of between twenty to sixty people over the years – and advised many more I’m aware of how important your ‘strategic mindset’ is.  In particular whether you are emotionally committed to looking farther afield for opportunity or more focused on the relative competitive position of your own business.   For many years the work of Michael Porter in competition theory some twenty five years ago dominated the debate, in particular the ‘Five Forces’ pretty gave a strong framework to any serious discussion about competition.   Basically the idea was that it was critical to continually work on your own competitive position in order to win.     This idea gained wide acceptance.

Recently this  consensus on the competitive framework was rocked by the book ‘Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant’ Of course if you don’t have to worry about the competition then there’s hardly any point in having a competitive strategy that seeks to beat them!   Like many new ideas this one had fierce advocates for the end of  competition as we know it.

So if you were an SME owner working hard to beat your competition – and putting most of your resources into this – it became very tempting to stop that rather tedious work and pursue new pastures.   As this debate unfolded I had always felt a bit uncomfortable it seemed a bit too glib.  But then again – in the age of Facebook  – who would be brave enough to argue?  I can tell you – this actually gave me a lot to think about over the years.

So – as I scrolled through the Cranfield site I was delighted to come across a couple of links and a video interview with an academic Professor Andrew Burke who as you can see here: just completed – joint research on this very topic.

Like so many things the research shows that both sides have merit.  This research indicates that it is true that pursuing blue ocean has potentially great benefits – but there’s a catch!   First mover advantage in this space is a risky position to be in.  It is suggested that second or third arrivals do better.   Similarly, in terms of improving your business through innovation and strengthening your competitive position – this is still a very coherent strategy.  The adoption of new ideas and approaches in an industry takes quite a long time – fifteen years or so – and hence there is a lot to be gained by chipping away at improving your business.  Your competition will take some time to catch you up you can still ‘win’ for a while.

What’s really interesting is that “Blue Ocean” is not unimportant either.   I remember my early days in IT where – unbelievably in today’s paradigm – we were the only firm that understood and were selling and supporting a mail product.  In this case ccmail.   I can remember a senior government executive (some 1,500 people in his team over a dozen locations) telling me that “email??  We’ve looked at it and well, to be honest we would simply have no need for it!”.    Oddly enough he did have a PhD.   So the market was not only uncontested it was pretty difficult to whip up interest.   However, the knowledge that we gained in selling and implementing that product became the engine for our business two years later – and a bridge to our entry into ‘Advanced Systems’ (as we then rather grandly called ‘`Networks’ at that time.     Blue Ocean thinking paid off for us.

Maybe this research is just combines the number one rule of investment – ‘don’t have all your eggs in one basket’  with ‘Go West Young Man!”.

Categories: Miscellaneous
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