In our book we have chapters on three ‘operations strategies’ – lean, agile and internationalisation. But we refer briefly to several others, such as mass customisation, servitisation, ubiquitisation, and low cost. So, in order to provide more detail, I have written a series of blogs that explore some of these strategies in more detail. And this week I am going to talk about the low cost strategy. But this got me thinking about strategies in general….
Strategy is mainly about choice – selecting one way of doing things in order to achieve competitive advantage (it’s also about implementation – doing these things successfully). So it is easy to think of these strategies I have referred to above as being more or less the same, or as alternatives to each other. But of course they are not…
- At least one strategy has become generic i.e. something that all operators could do, and should do – namely lean. It has become the norm to manage operations and organisations as leanly as possible. It’s like quality – why wouldn’t you do it this way?In many cases the same is true of agility, and hence it is likely that mass customisation will become the norm too (since it is a combination of lean and agile).
- Then there are two strategies that apply only in a specific context. Servitisation is by definition a strategy that only manufacturers can adopt. Whilst ubiquitisation is only relevant to service firms.
- Hence there are only three strategies that any operator could make a strategic choice about with regards how they will compete. One is innovation – firms vary in their willingness to innovate and hence their investment in this process. Then there is low cost – a strategy adopted deliberately to create a specific position in the market place. And finally internationalisation – the decision to expand the operation beyond national boundaries.
Which of course is why these strategies are not mutually exclusive. It is highly likely that a low cost operator will be lean, very lean. Service firms can grow their chain operations through ubiquitisation nationally, and internationally. And one of the ways a firm may be innovative is that it extremely agile too.