Internet Strategy Primer

Wed, Jul 13, 2005

Articles, Strategy + Marketing

Proposition: We have steadily integrated the Internet into our lives better than most businesses are integrating the web into overall strategy. The Internet is a channel that profoundly accelerated information and widened its access. The result is that the Internet is a great equalizer for businesses; fringe players can compete with the big boys. In turn, this underscores the importance of strategic positioning for both web based and more traditional businesses.

After years of insisting “I don’t want no damn Internet in my house”, even the most stubborn are now surfing. The Internet is where we start our search. The cell phone is rapidly morphing into a valuable Internet connection. I’m sure the speed with which early adopters can type messages on a phone key pad would amaze many. Passing notes under the desk in class is way too low tech these days. Many of us remember being forbidden to use our calculators in math class but now, colleges give away Internet appliances and/or digital content devices to incoming freshmen. The same technologies that baby boomers are gradually adopting are being demanded by the younger generations.

The new economy is getting old; the web is nearly transparent compared to the virtual panic it caused in the late 90’s. Even though the immediate business advantages were often overstated, the profound affect that ubiquitous mass information transfer will have on society is difficult – if not impossible – for us to fully grasp. Volumes are devoted to the study and we’ve only just begun.

One clear affect on business is an increase in competition; the Web broadens customer reach and makes substitutes easier to access. A rush for web revenue caused a temporary insanity among many business leaders early on. Confusing was how quickly the Internet changed the operational benchmark. It caused businesses to forget there was more to sound strategy than just doing what others do only better; the “me too” scheme. Strategies converged creating a hyper competitive – at times cannibalistic – business ethos.

Internet based businesses turned their focus on reach, price and delivery [operational efficiencies] but since efficiency gains are easily duplicated, there is no longer any other sustainable advantage to be had through simply improving business operations. The Internet, it seemed, had changed everything; price is king.

Luckily, that’s not entirely true, good sound business strategy is still reliable. Every business should use the Internet as part of an effective strategic position – the key word being “part” – integrating it as a tool. Allowing Internet channels to operate separately from conventional ones can dilute your strategy and/or cannibalize market share causing margins to drop or conflicts to develop.

Your integrated strategy should create a sustainable competitive advantage over your rivals. It’s still not entirely wise to compete based on price; the Internet screeched that point loudly in the late 90’s. Avoid it. Your industry’s “best practices” and differentiated positioning – combined – remains the cornerstone of good strategy. Likewise, anything that creates barriers that your competition must scale is a model strategy.

The Internet lowers entry barriers for competitors by reducing cost for sales and delivery channels, personnel, physical assets, and access to supply chains. Starting an Ebay business and grabbing your share of the revenue is an example of low entry cost. The key is to look for strategies that increase barriers for competition. I envision a movie chase scene where the chased continually throws things in the path of the chaser – not a bad business tactic.

Differentiate your value. Be specific. Resist the temptation of trying to capture a share of the entire market [an approach related to the “me too” scheme stated earlier]. Making trade-offs – sacrificing activities that fail to differentiate you from your rivals – helps you avoid strategic fuzziness. In turn, trade-offs and sacrifices create a higher differentiated value as perceived by your target customer, thus avoiding competition based solely on price. In the chase, think of taking a motorcycle through the narrow streets of London when your pursuer is driving a Hummer.

The moral: unique offerings, strong customer relationships, proprietary material, strong industry knowledge, continually relieving customer pain points and other long-established strengths fortify a strategic position whether you’re an Internet based business or not. The Internet has made it more critical to establish an integrated strategy that differentiates your position. Continuous improvement of operations is a given and no longer can be counted on to sustain meaningful advantages over your competition.

Branding, internet, marketing, strategy

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