Nov
30
2007
(21801) Ram Charan says:
Positioning is the central idea of your business. Leaders with know-how learn how to position and then regularly reposition their enterprises where they can make money. If you don’t get this right, the foundation of your business can fade away into irrelevance.
Correct Positioning Makes Money
It’s actually quite easy to determine whether or not you have your positioning right. If people like what your business has to offer and you can sell things at a profit, you’ve probably got things right. If people are confused about what you do and therefore reluctant to buy, you probably have your positioning wrong. Over timee, you have to keep adding different things and deleting others to keep your positioning relevant to the changing and evolving marketplace.
Take the example of the newspaper industry:
For many years, the way to make money in this business was simple and straightforward–run as many ads as possible combined with information that people will pay to read.
Then along came the Internet and search engines like Google that in effect allowed the customer to personalize their information gathering activities. As more consumers have turned to the Internet for information, the amount of money advertisers have allocated to print rather than electronic media has steadily declined.
To respond to these new competitive changllenges, newspaper can’t retain their past positioning. Instead, they need to figure out where the new sources of revenue will be, what the new cost structures are likely to be and what they need to do differently to make money. This is difficult because it requires looking at the marketplace in a broader context.
Newspapers may make available news and information that is continuously updated and then broadcast to an iPod or other handheld device. The market may fragment into a much larger number of smaller segments, each of which will need a different approach to packaging and delivering news and information. Successful leaders with know-how engage in this kind of mental gymnastics and develop viable positioning alternatives all the time.
Positioning Is an Ongoing Battle
Positioning is very much an ongoing battle rather than a one-off activity. And just to make the positioning challenge even more interesting, different players in the same industry will adopt radically different market positions. Moves by any individual player will also have flowon effects on the positioning other competitors can reasonably adopt.
When should positioning be modified?
So how can you tell when your positioning will need to be updated or modified? There are various leading indicators to watch for:
When an entirely new market niche emerges and grows
Whenever new competitors start to enter your industry and make nonconventional offerings
When a key competitor radically changes their own positioning
When new technologies come along that dramatically alter consumption patterns
When it becomes clear customers are defecting away from your offerings towards others
When new customers enter the marketplace
When you suffer a significant loss of market share
Whenever new business models or management models take root within your industry
When there is greater-than-normal pressure on your profit margins
When you suffer an unexpected declinein operational cash flows
When there is an obvioius decline in customer satisfaction.2 keys to positioniing know-howMany of these early warning signs for the need to change your positioning will be small in magnitude and easy to miss. You need to search for the right sources of information to pick up on these signals.The two key elements of positioning know-how are generally the mentality to dissect the market and find the spots where the best money can be made and the psychological inclination to confront reality and act sooner rather than later.
Know-How
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