25 May 2024, 18:05
By Dr Casey Loo Apr 01, 2014

What is your edge?

Every business needs an edge, says Dr Casey Loo – but which is best suited to yours?

Unlike glamorous industries such as fashion, banking and perhaps IT, the furniture trade has often been considered a declining, or ‘sunset’ business by many.

As director and judge of the prestigious Furniture Leadership Awards programme (FLA), I have been reminded again and again that this perception is erroneous. Despite unpredictable market conditions and never-ending competition – situations faced by most sectors, admittedly – far from being ‘sunset’, furniture is actually an evergreen trade. Furniture is something we’ve not been able to live without since civilisation began. We use furniture night and day. Would you categorise a sector that supplies necessities as ‘sunset’?

But what makes a successful furniture company, and what do great furniture companies have in common? Having sat through five editions of the leadership awards, our judging panel has met and evaluated more than 300 international applicant companies, many ranking in the who’s who of various national and international markets.

In addition to passionate business owners and strong fundamentals, my fellow judges and I observed three distinctive strategies that were prevalent amongst all of our award winners – cheaper, better and faster.

Cheaper, better, faster are basically the different manifestations of differentiation, the essence of business competitiveness, a management concept made popular by Michael Porter, a world-renowned US business professor. Some companies may have it easy during the better days, or by virtue of the fact that they operate in a market with little competition – but in today’s world, a business needs to differentiate itself, and to constantly find and sharpen its competitive edge, to stay ahead (if not simply afloat).

“Market leaders may enjoy significant advantages at one moment, but no one can rest on their laurels”

The key point to take note of is the choice of a suitable strategy – one with the right fit for the company. Too often, companies pick the ‘cheaper’ option. It’s an easy route, one might think – when company A sells an item at a dollar, while company B sells the same thing at 90 cents, given all else equal, it is obvious who the customer will choose. To be cheaper, a company will need to employ ways to give it a cost advantage, such as using automation and new technologies to improve operational efficiency, or go further afield to source to secure lower costs. However, barring any revolutionary development, there are limits to what a company with limited resources can do to minimise costs.

In short, this strategy is not suited to every business, and, in the end, the margin only gets smaller and smaller – so companies may want to consider the adoption of other strategies. A word of caution, however – although we believe the three strategies need not be exclusive, it is often advantageous to have a distinctive strength in one of the three. In addition, many consider operational efficiency to keeps costs down to be a given in the current competitive world.

Equally important for business owners would be to remember that both businesses and products need to constantly adapt and evolve, and so must the strategies employed. This should be an ongoing process, with companies taking into account changes in the overall business environment, and not merely a response to developments in the immediate competitive landscape.

Companies should find ways to continuously distinguish themselves from one another in order to stand out and excel. Market leaders may enjoy significant advantages at one moment, but no one can rest on their laurels. Just consider the many big businesses across various trades and industries that declined in the last decade.

Furniture companies around the world should always work towards becoming cheaper, better or faster. The choice of which of the strategies to adopt depends very much on the prevailing market conditions, the competition, a business’ own capabilities and resources available, and so on. The choice would be determined by the objectives of the enterprise – usually profitability and sustainability.

Dr Casey Loo (DPhil, MIB, BA) is the founder and programme director of the Furniture Leadership Awards (FLA) – find out more at www.furnitureleadership.com. He is also: the editor-in-chief of Furniture & Furnishing Export International, a B2B magazine specialising in the Asian furniture markets; president of the International Alliance of Furnishing Publications (IAFP), an association of 19 leading furniture trade magazines worldwide; and adviser to the Council of Asian Furniture Associations. This article was featured in the March issue of Furniture News.

© 2013 - 2024 Gearing Media Group Ltd. All Rights Reserved.