Global Competition
July 12, 2006

Q:  Steve: I am a technology consultant and I am finding it more and more difficult to compete against companies in other countries where they can afford to charge less than me for some of the same work.  How do we compete? -- JJ, Boston

A:  I hear ya. I recently received an unsolicited fax which offered to have someone in India do my legal research for $7 an hour. As a recovering lawyer who used to do legal research for a living, that was frightening.

And that's just the start.

Just last week, "India, Inc." was on the cover of Time Magazine, and of course we all know what is happening in China.

But here's the kicker: What about Outer Mongolia? A few years ago the State Department hired me to go to Mongolia to discuss business with various corporations and government entities in that far-off country; they were interested in bringing in some franchises to the country as there were none at the time.

Although I had no idea what to expect when I finally got of the plane in Ulan Baatar, the capital, what I found was truly unexpected in any case: Most everyone was dressed in western clothing with a cell phone to their ear, they spoke perfect English, sipped lattes in the afternoon, and were highly computer literate. (My favorite place to send e-mail home was from an Internet cafe in the old communist party headquarters.)

So if you think that India and China threaten your business my friends, you ain't heard nothin' yet.

So what do you do? The first piece of advice I have is that you should not compete on price. Why? Because it's a losing battle, one you cannot win. It is akin to the small retailer who is threatened by a Big Box store coming to the neighborhood. Since the retailer cannot undercut the Big Box on price, they have to use a different strategy, one that plays to their strengths.

The same is true here. To compete in this global, 24/7, interactive, brave new world what you have to do is play to your strengths too.

So how do you do that?

I offer three strategies:

1. Remember what business you are in. Whether you are a computer programmer or a window-washer, if you own a service business, remember that you job is to SERVE. These days, there is no shortage of competition; clients can go across the street, or potentially, across the globe, depending on the business. So it is the company that serves their clients best that will emerge victorious.

Remember: Not every business decision you make is based on getting something for the least amount of money, and the same is true for your customers.

2. Offer multiple services: Offering products or services that a foreign competitor cannot is another way to distinguish yourself. Think Starbucks: Coffee in the winter, slushy drinks in the summer, and music and a groovy atmosphere year round. You too need to create multiple profit centers.

3. Form strategic partnerships: By creating a team around you of symbiotic businesses, you can, collectively, bid on bigger projects, market yourselves to new audiences, and work on projects you could not do alone.

Sure there is more competition out there, but there is also a world of new opportunity too. Not only must you compete with them, but they also have to compete with you. Use that to your advantage.

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Today's tip: One last thought about the value of strategic partnerships: The also allow you to jointly promote your respective businesses to each other's client base, and they even allow you to share clients and offer even more joint services. All in all, a strategic partnership can be a great way to become more profitable without getting too big.

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