How to Use Incumbency to Your Advantage in Business
In business, incumbency refers to the position or status of an existing entity that has an advantage over its competitors. Incumbents are often established companies that have loyal customers, strong brands, and large market shares. They also have access to resources, networks, and information that give them an edge over new entrants or challengers.
However, incumbency is not a guarantee of success. Incumbents can also face challenges such as changing customer preferences, disruptive innovations, regulatory changes, or competitive pressures. To maintain their leadership and profitability, incumbents need to leverage their strengths and overcome their weaknesses. Here are some strategies that can help incumbents use their incumbency to their advantage in business:
Focus on customer satisfaction. Incumbents should not take their customers for granted. They should constantly monitor and respond to their needs, preferences, and feedback. They should also provide high-quality products and services, offer value-added benefits, and create loyalty programs. By satisfying their existing customers, incumbents can retain them and attract new ones through word-of-mouth referrals.
Innovate and differentiate. Incumbents should not rest on their laurels. They should continuously invest in research and development, explore new markets and opportunities, and launch new products and services. They should also differentiate themselves from their competitors by offering unique features, benefits, or experiences. By innovating and differentiating, incumbents can stay ahead of the curve and avoid becoming obsolete.
Build partnerships and alliances. Incumbents should not isolate themselves. They should collaborate with other entities that can complement their strengths or compensate for their weaknesses. They should also form strategic alliances with suppliers, distributors, customers, or even competitors that can help them expand their reach, reduce costs, or improve quality. By building partnerships and alliances, incumbents can leverage their networks and resources and create synergies.
Adapt and evolve. Incumbents should not resist change. They should embrace it and adapt to it. They should monitor the external environment and anticipate trends, threats, and opportunities. They should also be flexible and agile in adjusting their strategies, operations, and culture. By adapting and evolving, incumbents can survive and thrive in a dynamic and uncertain world.
In conclusion, incumbency can be a powerful asset for businesses if they use it wisely. Incumbents can use their incumbency to their advantage by focusing on customer satisfaction, innovating and differentiating, building partnerships and alliances, and adapting and evolving. By doing so, they can maintain their competitive edge and achieve long-term success.