Defensive Response To The Digital Economy

While offensive strategy in the digital economy is focused on achieving competitive advantage, defensive strategy is focused on fending off attacks from competitors. Defensive responses attempt to neutralize events that may harm the organization and reduce the likelihood of any negative impact. This means using your competitive advantage to.

Keep competitors at bay.

After all, it's important to protect your share of the market in order to safeguard your future. My name is Rob Lee Wellin and as you know, companies need people with the right capabilities to manage and lead transformation. As you know, orchestrating successful transformation isn't that easy, and I mean innovative transformation which creates a new future without the constraints of the past. Which is why I hope that what I share in this episode will help you get better equipped to perform at your best and as a manager, leader or consultant. If you want to learn more, go.

To studythrive.com Defensive responses can be used to fend off attacks from potential competitors in your market and can be seen as dealing with the digital economy threats as opposed to the opportunities. Defensive responses make a possible attack unattractive and discourage potential challengers from attacking incumbents. Try to shape the challenger's expectations about the industry's profitability and convince them that the return on their investment will be so low that it doesn't warrant making an investment in that industry. A defensive response attempts to neutralize digital disruption events that may harm the organization and reduce the likelihood of negative impact. This means holding on to what you have and using any competitive advantage you have to keep competitors at bay. After all, it's important to protect your share in the market in order to safeguard your future. It's important not to assume that the competitors that you can't see today won't come when you're least expecting them. It's like driving when we need to be regularly checking our rear view mirror and the blind spots. Companies must be prepared for when the unexpected arrives on the scene. Gillette never saw Harry's and the Dollar Shave Club coming, and yet these two startups wiped vast sums off the incumbents sales. Dollar Shave Club began selling razors in 2012 and has grown rapidly, acquiring billions of dollars of the shaving market. Companies that have become victims of digital disruption typically find themselves in a position of being able to do nothing else but to act defensively. When a competitor disrupts their market, they're caught napping and they're put on the back foot. Customers are delighted when they suddenly have access to value from disruptors that exceeds what has been previously provided to them by incumbents. This value could come from an existing company in the market or an entirely new player which takes the market by surprise. The natural reaction of customers is to start enjoying this new value, and so their previous supplier gets sidelined, which obviously impacts the profits of that supplier. So while leaders might be responsibly looking in their mirror for the obvious competition, the big question is who could be lurking in their blind spot? And how can you tackle the threat of competition from companies in other sectors or with very different business models when you're unprepared? Where are the startups that threaten your company's future and who might be funding them and why? What have the investors seen that will be so effective in the digital economy that is worthy of their money? Leaders need to know the answers to these and other questions. Defensive responses are sometimes aggressive, as their goal is to block competitors that are attempting to capture some of their market market share. When a company has been taken by surprise, there might be very little else that can be done in the short term other than aggressively defend what you're at risk of losing. But there are also more passive defences that can be taken. As in many sports games like chess and war, defensive strategies are vital for survival. Even our bodies have defensive responses ready to be triggered when they're threatened. I mentioned Gillette, Harry's and the dollar Shave Club. This is a very good example of an established incumbent having its market disrupted by startups. One of Gillette's defensive responses to the Dollar Shave Club was to take them to court. The 120-year-old shaving company owned by Procter and Gamble set out to sue dollar Shave Club for alleged infringement of patent. This was a clear attempt to hamper the startup's effort to establish itself in the market and take even more market share away from Gillette. To some, these tactics might seem a little dirty and therefore harmful to Gillette's reputation. But whether it was the right response or not, these were tactics that Gillette chose to adopt. But another defensive response that Gillette took was to copy the dollar Shave Club and set up its own online shaving club. If you've been involved in strategy, you'll already know that there are many labels that have been used to describe each type of defensive strategy. What matters in business is not what these approaches are called, but what they actually achie and how getting into the nuts and bolts of strategy is beyond the scope of this course. So I'll keep this lesson on defensive response strategy at a high level, although naturally there's far more to explore on the subject. Now I'll introduce a Number of Defensive Responses the first involves warning competitors not to enter the market without expecting a fight. This could involve announcing more attractive prices which competitors feel they're not able to compete with. You could create obstacles which discourage potential competitors from entering the market segment, such as frequently introducing new offerings. You might consider alarming the market by highlighting the risks that customers could face if they were to use a new offering that a competitor is about to launch or has launched. You could introduce a convenience that only you might be positioned to offer, such as personal visits to customers every week. You could launch a product or service that competes aggressively with that of your new competition. You could also consider withdrawing from the market segment to put a distance between you and the competition. These are examples of defensive responses that companies can consider when they find themselves under attack by disruptors. Some tactics, while effective, might only be short term. The ultimate long term defense is to offer incredible value to customers and serve customers even better. For this, you need to consider how you can provide more value to customers that are at risk of being tempted away by the competition. The big question is, how do you maximize the value you can offer customers? Questions for the executive team to consider carefully as part of their defensive response to market disruption are does our old business model have a future in the digital economy? Are we finally prepared to embrace the digital business transformation mindset or not? Should we sell part of our business if we're not prepared to invest in its future? Should we withdraw from a particular market segment and focus on a particular area? What can we learn from the companies disrupting our market? How can we block the competition, and how does our organization need to change to respond? What's happening in the market?

If you want to take your transformation capabilities and credentials to the next level, go to studythrive.com.