Michael Porter (Harvard Business School) originally discussed the problem of “stuck in the middle.” He said that the profitability of firms depends on the firm’s position and competitive advantage in that industry. He argued that competitive advantage derives from one of two strategies: cost leadership or differentiation of products or services. The problem, Porter said, was in trying to do both and thus doing neither very well. He seemed to be saying, “find what you are good at and stick to it.
” Some examples:
Industry Differentiators Stuck in the middle Cost Leaders
Google Nokia Commodity Manufacturers
Banana Republic K-Mart,
JC Penny Walmart,
Emirates American Airlines Jet Blue,
I think that being stuck in the middle could be seen as:
“Oh no, we are heading in the wrong direction because we have no direction of what do we do, who is our customer and what is our vision”. In this case, you need to decide:
What your business is and isn’t.
Who your business will sell to and who it won’t.
What your business will sell and what it won’t.
If you don’t do anything, prepare to have your business suffer and possibly face extinction. OR
We are in the middle to discover possible new segments of demand. After all, demand can be defined on numerous dimensions, well beyond cost and difference, such as convenience, style, and location. Then too, there is the annoying problem that consumer demand keeps changing over time, which necessitates constant experimentation by firms to discover where the new demand is.
Today’s single-minded focus on cost or difference may be tomorrow’s business graveyard.