Unauthorised copying prohibited.
The Knowledge Organisation competes in two markets: for Customers and for Personnel. We therefore need to develop two strategies: one for attracting and keeping customers and one for attracting and keeping key people. They are closely linked and it is detrimental to success if the two do not match.
Customer strategies can be generalised into seeking advantages along two dimensions: volume and complexity.
Volume is to aim at high volume dominance or a small volume niche. High volume companies can spread their investments in Knowhow and Corporate Image over a larger volume, because there exists a positive economy-of-scope in intangible investments. Big companies are more visible and can therefore add Image more easily. They can also spread their investments in corporate knowhow over a larger volume.
Complexity is to aim at either demanding customers with challenging, risky projects or at less risky "body shopping" projects.
Companies aiming at high volume strategies must be good at attracting and keeping personnel and be very good in matching teams and customers. They must be prepared to fight also with price in order to win most projects available on the market. The reason why niche players can be a successful strategy despite the lower economy-of-scope is that there exists a negative economy-of-scale in creative production. First of all, it is easier to manage a small operation. There are also many competent key people who prefer to work in small units with good chemistry and individual treatment.
Companies with complex project strategies must be good at attracting and keeping the most demanding key people and the most demanding customers. They must therefore guard their Corporate Image very carefully and invest in Knowhow and Competence of their personnel.
The "Dominator" strategy is difficult because it demands very skilled managers, large markets and time to develop but for those who succeed it is probably the most profitable. The niche strategy is less risky but the smaller resources make finance a strain.
The "Defender" strategy is very difficult, since the defender can neither make use of the positive economy-of-scope nor the negative economy-of-scale by being a small highly competent niche player.
The worst strategy is usually to try everything, to be a "Mädchen für Alles", because this inevitably means that the company gets "stuck in the middle".
Most markets allow all strategies. The simulation model mirrors all four generic strategies.
Next Chapter.
Previous Chapter.
Return to Knowledge Management Home Page.