Clayton M. Christensen describes in his innovation book “Seeing What’s Next” IBM’s strategy of focusing on designing computing machines where they control and develop everything, going from processor, memory, hard drives, to the operating system and software. This gives IBM full control over the machine so they can heavily optimise all the components and software for maximum performance and reliability.
At the other side of the spectrum you have companies like Dell that disrupted the personal computer industry by bringing together commodity hardware and software and focus on the one thing that they were really good at. They basically outsourced all the commodity aspects of the product (the hardware and the software) and focused on what distinct them from the pack: their superior supply chain that allowed them to offer customised computers at a lower price than their competitors.
While there has been a trend to mimic Dell’s strategy, you see that certain companies are completely challenging the conventional business models and strategies, like the Spanish clothing retailer Zara. Their approach lays more in offering clothing that has a perceived exclusivity (limited stock) with a very high throughput. The shirt you’ve seen yesterday in the shop, might not be there next week, instead there’s a new model. This demands a highly efficient way of communication through all the layers of the supply chain, thus Zara baffled the whole fashion industry by owning and controlling the full supply chain, rather than outsourcing it.
Now, here’s the thing where I’d like to hear your views and comments: Clayton argues that a company should identify the commodity areas and outsource them and focus on the major high value-add areas that can distinct them from the rest. When you think about the example of Zara, one can wonder whether this still gives you the competitive advantage in 2010? Shouldn’t we be challenging much more existing and conventional business models? Could it be possible that by outsourcing the highly value-add expertise, you can still be leaps ahead of your competitors?
At Headshift we’re continuously challenging large knowledge-intensive organisations in the way they are working, communicating and collaborating (both internally in the firm, as well as with customers and business partners) and I’d like to invite you to share your view in the comments or even better join me in the discussion at the Social Business Summit in London: http://www.headshift.com/sbs