Finding the Strategic Sweet Spot
In the HBR article, “Can You Say What Your Strategy Is?”, the author talks about a “Strategic Sweet Spot” which he defines as the ability of a company to meet its customers’ needs “in a way that rivals can’t, given the context in which it competes”. Many companies are unable to find this ‘sweet spot’, however, because of a failure to differentiate themselves from the competitors, or an ill-conceived strategy. If you look at most of the really successful companies in the world today, they have all found a way to uniquely satisfy their customers’ needs by utilizing their core competencies to the fullest advantage. So what is the key for a company to find its “sweet spot”?
An interesting article* I came across provides three simple questions that a business should ask itself in order to identify its strategic “sweet spot”.
- What is our company best at?
- What do our customers want/need the most?
- Where do our competitors struggle?
Many companies try to put themselves into a niche based on an apparent need in the marketplace rather than actually finding their “sweet spot”. A niche and a “sweet spot” are not the same thing, finding a niche is based only on external market factors, while a “sweet spot” is based on both internal factors(e.g. core competencies and talents) and external factors(e.g. market need, competitors capabilities).
A great example of a company who was able to find a strategic “sweet spot” is Oracle. In the 1990’s the company shifted its focus from its database business towards building web applications. At the time, SAP was the clear leader in enterprise applications and many thought it was unwise to challenge them. Oracle’s CEO knew that the internet was the future of computing, and wisely invested the majority of the company’s resources into building applications that ran on the cloud. Oracle launched its E-business suite in 2000 and it was very successful.
Oracle was able to do find its “sweet spot” because they utilized their core development strengths, were able to forecast a market need for web-based enterprise applications, and saw that their main competitor in the field, SAP, was focused on traditional client-server enterprise applications rather than the cloud.