Competition strategy: Become a Technology Company

How to compete in the ever-toughing market as a service-based company?

Service-based companies are the backbone of the current economy, accounting for up to 70% of GDP in developed countries. The competition is fierce, and by any projections, it will only intensify—the question of how to stand out is more pressing than ever.?

A blue ocean strategy is one of the most commonly recommended strategies for winning the competition game, especially at the early stage.?

Scale down to a very narrow and specific niche and dominate it. Although this is very attractive in theory, the reality is a hard-to-estimate trade-off:?

Will you have enough customers to support your business??

Not to mention that growth is practically only possible with a completely new company positioning, similar to starting the business in many aspects.?

Another option—lowering service prices- is considered a de facto "desperate" move rather than a strategy, driving many businesses to survive barely.?

Let's use the systems approach to dissect the problem, starting from the top down.?

How would you describe the company that will come and disrupt your niche? The answer is obvious but often surprising for many - it will be something other than a service company but a technology company.?

There is an existing market expectation that technology companies will do better once they enter the niche (it's not easy to live up to that expectation, but this is a different story). And the strategy is to capitalize on that expectation.?

The market expects technology companies to be more advanced, innovative, and capable of disrupting niches that service-based companies struggle to penetrate.

It's been 15 years since I heard the last time someone said that a computer would never replace the travel agent in the corner because she knows you, your family, your kids, and your family's preferences and needs.?

Since then, they have?been replaced?by "technology agents"—Expedia, Booking, and many others. Surprisingly, because of the exact opposite reason - people see human interaction as an unpredictable and inefficient step in the process.?

Before you start thinking, what would it take to replace everyone in your company with a computer and a very smart program that automates all services you provide...

Why does everyone automatically think that Expedia is a technology company, even though Expedia has over 17,000 employees, Booking.com over 21,000, and Trip.com over 45,000?

No human interaction, general availability, easy-to-understand process, and expected results—these are what we expect from the technology company as customers and consider?a competitive advantage.?

In conclusion, you do not need to make a massive technology shift to start positioning your business as a technology company. But you must start seeing and managing your business as such.?

Security Spotlight

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UnitedHealth Lacked Cyber Insurance, Paid $22 Million Ransom. The CEO confirmed the company was “self-insured,” indicating that UnitedHealth lacked cyber insurance. Read more about what that means after a cyber attack.

Learn about the biggest ransomware syndicates and how they work. Read more

Stay tuned for more insights in our next edition of "Technology For Business Growth - Tech Report."