If you run a piece of your firm’s value chain of activities, or as we like to call it, “managing a business within a business”, you are in competition with other people and businesses that can deliver the same or similar service that you do. We call this the “invisible competition.”
Senior management decides whether it is best for the business to incur costs involved in keeping your services in-house, or to buying them on the open market. Robert S. Kaplan and David P. Norton with Harvard Business Review estimate that there are only a small number of core competencies essential to the work of the business.
The rest of the workforce, around 80 percent or more, are in a supporting role. If you fall into this category, you have to be on your toes and develop deep insights and understanding of how to make a unique or differentiated contribution to the company. In a lot of ways, you have to wear a strategic hat and think like an entrepreneur about your piece of the value chain.
Every function serves an internal market with consumers, clients, sponsors, customers, and stakeholders. In some ways it can be even more complex than competing in the traditional external market. Also, internal markets can get pretty sticky with politics, responsibilities, boundaries, and turf wars. Successful strategic leaders learn how to navigate these waters and build sustainable function areas while continually reinventing their function and maintaining its relevancy to the business no matter what is happening in the broader business world.
How do these strategic leaders do it? How do they keep redefining their business model? How do they shape a strategy that wards off the competitive threats and pressures that stalk any function or unit? To answer these questions, we need to explore the nature of invisible competition. Then we’ll talk about ways you can manage this rather stealthy and deceptive form of adversary.
There are four areas to be mindful of when identifying potential invisible competition:
1. Technological Innovation. One of the most potent competitive forces that could render all, or part, of your function area obsolete is technical innovation. On the one hand, new technology can be your best friend in terms of adding value to your services and driving benefits for your internal customers. On the other hand it can present a huge challenge if you don’t get in front of it, harness it, and incorporate it into the way you do business.
2. Outsourcing. Talent exists and is accessible around the globe. Outsourcing has been all the rage for many firms. With virtual communication and collaboration capabilities improving every day, it is no longer necessary to keep every function in-house–or even in your country–and carry the costs of office space, supplies, and resources to get the job done. Senior management may find it is convenient, timely, and cost effective to outsource your service to someone in India, Brazil, China, or Finland–just to name a few examples.
3. New Alternatives, Solutions, or Suppliers. There are a multitude of service providers lurking out in the business world that could render you obsolete by providing your service better, faster, or cheaper.
4. Restructuring and Re-engineering. Senior management is always looking for ways to improve results. Your job is to discover not only best practices but “next” practices. By discovering and implementing next practices, you can combat obsolesce. Leaders must be willing to lead the way into new directions and innovations. If you don’t, your organization will do it for you by accessing the latest techniques or tools that yeild more benefits than your function is currently producing.
So, what are the best strategies you can use to beat your invisible competition?
Obviously, the first step is to identify and illuminate the various types of camouflaged competition that are out there. We have always maintained that; “What we are unaware of tends to control us.” In order to discover your competition, you need to gather intelligence. Observe your end-users/clients. Find out what drives their behavior and choices.
Open up a dialogue and pay attention to what they value and what benefits they are looking for. Identify shifts or changes on the horizon that you can prepare for and stay in the game. Learn what other options they have and why they prefer you as a provider over someone or something from the external market.
Another idea is to organize a strategic retreat with your key players where you can share information about potential competitive threats and opportunities. Invite your super users to talk with your team about the future direction of their internal customers. The point is that you have to be intimately aware of your customer and how you can participate and collaborate with them to increase their success.
Finally, it is important to challenge each department and each person inside your function to formulate ideas, concepts, and innovations that will keep you on the cutting edge. You have to discover and implement those new innovations that allow you to do more and do better.
You and your team have to be constantly vigilant about how to increase efficiency and reduce or manage costs; otherwise you are doomed and will most assuredly be at risk of extinction. This means continued coaching, feedback, and strategic accountability. Ultimately, it will be the people in your organization who drive strategic change that will equip you to survive the harsh realities of building a resilient business in the organization value chain.