What kind of category is your strategy in?
With Dr. Virgilio A. Cordon
Basically, all the strategies are divided into four groups, ordered here from the least creative to the most creative.
- Adapting to successful strategies in your sector.
This model is based on copying successful strategies used by companies in the sector to avoid the learning curve and compete directly with them. An example is the clothing store Shein which copied the models of Zara and H&M but differed from them in that they launched 1,000 new items per week instead of releasing 500 models weekly. In addition, Shein does not have physical stores but sells through its app or website. As a result their market share increased from 18% to 40%.
- Import strategies from other sectors.
Executives and entrepreneurs rarely look beyond the boundaries of their industry. That’s a shame, because a strategy that helped seize an opportunity or neutralize a threat in another sector can often be a source of inspiration. Best Buy became Amazon’s showroom, as consumers used its stores as a source of information but bought products on Amazon, causing its revenue to drop dramatically. Best Buy was positioned as the only electronics retailer that rented space in its stores to companies such as Samsung, Microsoft, Hewlett-Packard, LG or Sony since they did not have their own stores, but needed space from them to display their products and interact with consumers. The “store within a store” is a model used in European stores long before.
“The demands of different categories are different. Adapting a known strategy only requires knowledge of one sector. To successfully import or combine strategies requires knowledge of contexts other than your own.
- Combine strategies from many different sectors.
In many cases, new strategies can also be created by incorporating additional elements extracted from other strategies into the existing strategy. It is a good example Spotify. Launched in 2008, it grew to surpass 500 million users in 2023, surpassing Apple Music by a factor of five. In addition to offering music on demand, the company enables users to connect with other users and artists who can see the music their friends are listening to or share playlists and follow artists. Spotify combined mainstream music streaming and social media into one service.
- Strategies created from scratch.
The three types of strategy described so far essentially import or combine existing strategic characteristics. The fourth and final category consists of novel strategies developed from first principles. As Elon Musk said: » reducing things to their basic truths and their causes instead of reasoning by analogy.”
This involves a three-step process: (1) challenging conventional thinking, (2) breaking problems down to their fundamental principles (ie their most basic elements or truths), and (3) developing new solutions. create from scratch. Musk used this process to create Space After breaking them down into their components, he realized that the cost of the materials was only two percent of the total price (step 2). So, he decided to buy materials (such as aluminum alloys, titanium, and carbon fiber) on the raw materials market and build his own rockets (step 3).
The model was also used by Airbnb, which revolutionized the hotel industry by allowing people to rent out their homes to others. The idea of hosts agreeing to rent out their homes to strangers and guests willing to stay in strangers’ homes was a game changer.
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What are the key categories of business strategies identified by Dr. Virgilio A. Cordon, and how can they help companies thrive in a competitive market?
Time.news Editor: Welcome to our interview series, Dr. Virgilio A. Cordon! Today, we’ll dive into your insightful categorization of business strategies. To get us started, could you explain the importance of understanding different categories of strategies in today’s competitive landscape?
Dr. Cordon: Thank you for having me! Understanding the different categories of strategies is crucial for businesses attempting to navigate a rapidly changing market. Each category represents a different level of creativity and innovation, which can significantly impact a company’s competitive edge. Organizations must recognize where they stand to tailor their approach effectively.
Time.news Editor: Interesting! You mentioned four strategy categories, starting with adapting successful strategies within a sector. Could you elaborate on why companies might gravitate toward this approach?
Dr. Cordon: Absolutely. Many companies prefer to adapt successful strategies from competitors within their industry to minimize risks. By following proven models, they can avoid the difficult learning curve associated with launching entirely new approaches. Take Shein, for example—it successfully emulated practices from Zara and H&M but innovated by dramatically increasing the frequency of new product launches. This method allowed them to capture a larger market share rapidly.
Time.news Editor: Shein’s approach is indeed fascinating! Moving to your second category, you discussed importing strategies from other sectors. What are the benefits of looking outside one’s own industry?
Dr. Cordon: Looking beyond industry boundaries can spark real innovation. Many executives tend to be insular in their thinking, but sometimes a strategy that worked well in another domain can be adapted or adopted effectively. Best Buy’s decision to become a showroom for Amazon is a prime example. They transformed a challenge into an opportunity by renting store space to companies that lacked physical locations, effectively creating a “store within a store” model that rejuvenated their business.
Time.news Editor: That’s a compelling strategy! The third category involves combining strategies from various sectors. Can you provide an example of a company that has successfully implemented this?
Dr. Cordon: Certainly! Spotify is a brilliant case here. By merging music streaming with social media elements, Spotify has significantly outpaced its competition, including Apple Music. It enables users not just to listen to music but also to connect and share their preferences with friends. This integration of services has not only expanded their user base but also created a community around their product, showcasing how combining strategies can lead to robust growth.
Time.news Editor: It’s clear that innovation through combination yields impressive results. What about the fourth and most creative category—would you mind elaborating on that?
Dr. Cordon: The fourth category involves creating entirely new strategies. This requires a unique blend of creativity, market insight, and the willingness to take risks. Companies that thrive here are not only responding to current trends but also anticipating future needs and crafting services and products that shape those future contexts. This is where we see disruptive ideas emerge, often leading to industry transformations.
Time.news Editor: So, it’s about thinking outside the box and challenging the norms! For someone looking to innovate in their field, what key advice would you give them?
Dr. Cordon: I would encourage them to broaden their perspective. Engage with industries outside of your own, study their strategies, and think about how they can be adapted or combined with your existing methods. Additionally, fostering a culture of creativity within your organization can empower employees to think beyond conventional limits and drive innovation from all levels.
Time.news Editor: Thank you, Dr. Cordon! Your insights into strategy categorization provide a valuable framework for businesses looking to innovate and adapt. It’s been a pleasure speaking with you!
Dr. Cordon: Thank you! I enjoyed our discussion and hope it inspires others to explore creative strategies in their own contexts.