All three simultaneously

What if a company decides to attempt to provide all three generic strategies—low prices, great customer service, and great products? Can a company excel by doing this?

This was the situation we described at the beginning of this chapter, the one that many business owners feel compelled to pursue. After all, doesn’t the customer want all three? Why can’t you be the one to give them all three?

There are significant barriers in attempting to practice all three generic strategies, because each of them requires that the firm exhibit specific characteristics, many of which are “mutually exclusive.” That is, the characteristics required to excel in one of the strategies may be highly disadvantageous for another of the strategies.

For example, firms that are differentiated by their products excel because of a cadre of managers and staff who embrace change, are willing to take risks, and are constantly looking to do things differently than before. This is in stark contrast to the low-cost firms that revere routine, work hard to eliminate risks, and abhor custom work or doing things differently than they have done yesterday or last month.

Similarly, the staff and management at a customer-focused company are constantly thinking of ways to delight their customers, and these customers are, by definition, folks who value highly the attention they receive. Thus, the company spends time and money on new and innovative ways to bring specific benefits to these customers. This again is in contrast to low-cost firms who hire managers and staff who are focused on value-oriented customers who are willing to forego fancy service in order to save money.

Despite their inherent differences, however, there are basic levels of competence firms must possess in all three generic strategies. The product-differentiated company must still operate efficiently or it won’t make a profit, and the low-cost company must still have reasonably good products or customers won’t buy them. And both of these firms must have an acceptable level of customer service.

The message here is that to truly excel, firms must choose and perfect one of the three generic strategies. To do otherwise is to invite operational conflict, managerial schizophrenia, employee confusion, and low profits. In other words, you’ll be just another average company or worse.