One of those stories that is told in MBA programs, which probably is more myth than fact, is about Pepsi’s vision statement for a long time has been “beat Coke.” I don’t know how true this is but the idea is that this simple strategy was all that Pepsi needed to fuel its drive and center its focus. Coke as the preeminent power in the industry was the company to overcome to achieve the first place in the marketplace.
What is really interesting to me about this is that a vision based on market dominance has been become one of the most accepted strategies. A growth strategy based market dominance is one of the easiest to articulate but is one of the most elusive to achieve. I wonder however given this elusive nature of the strategy whether organizations should strive for something else beyond dominance.
I was reminded of this earlier this week when I came across a couple of schools my wife and I were exploring for our children. School “X” is known as the “best” school in the city in terms of academic programs and extracurricular activities. School “Y” on the other hand is known as an “excellent” school but is ranked behind school X. In talking with the administrators of school Y it became clear to us that one of the strategies that they employed is based on the preeminence of school X. Apparently, because of how popular school X is, it is a very exclusive institution. As such, school Y has positioned itself as the second choice because they know that not everyone is able to enroll their kids in school X. School Y managed to developed its approach along the same lines as school X and they don’t seem to be bothered by the fact that they are in second place.
I won’t speculate on whether this strategy is sound or not, especially given that I am not an expert on education. However, given the fact that only one company in various categories can be in first place, it seems that differentiation will not always work. While it may not be very glamorous to be in first place, it can be very lucrative to be number two in the market.