Wednesday, April 24, 2013

Leaders differentiate themselves in a subtle way

This week’s lecture talks about how the Internal Organization helps a company succeed, through changing times and competition. While external factors have a significant impact on what should be an organization’s strategy, internal organization will help the organization implement the strategy effectively.

I had a look at few of the respectable companies who maintained a leadership position through years, and what was so special about them that their competitors did not have or could not replicate. They are not all big, but leaders (or highly respectable) in the market they operate in. Starting with technology space, Google is one good example of how internal organization helps company maintain its position and follow its strategy. One of the Google’s main asset, apart from their search algorithm, is its people. Google puts a lot of effort in recruiting its workforce. They make sure they attract the best talent and explain their potential candidates on what to expect with the interviews and how to prepare for it, so they don't fail because lack of awareness of the interview. Once they hire the people they keep them motivated with innovative projects, perks and allowing people to work on their personal  interest[1]. This helped Google build a great brand, attract great talent and create a very strong and huge team of professionals from across the world. This is something no new company can replicate easily.

Starbucks is another example where it differentiates itself with its employees and customer service. In case of Starbucks I feel these two are inter-linked. In retail industry, where employees face customers directly it is very important to keep employees motivated and satisfied because this translates in to customer service that these employees provide. Starbucks understood this pretty early in the cycle and implemented this pretty well, by giving full-time employee benefits even to a contract employee[2]

On the other hand there are cases where companies did not pursue their competency and master it. Groupon in one good example for this. Groupon was very from it's initial days, so much so that Google offered around $6 billion to buy the company at a time when Groupon has less users and less revenue than it has today. They didn't accept the offer and decided to grow its business on its own given they are the leaders of the market. They failed to see the competition in the market around discount coupons, especially when the entry barrier is so low. Groupon's competitors like LivingSocial are not only backed by leading retail companies like Amazon but provide pretty much what Groupon has to offer.


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