Discussing the 3C strategic triangle model

The 3C strategic triangle model covers three major elements: customer needs, the company itself, and competitors, providing companies with a comprehensive and scientific strategic planning approach. It emphasizes driving corporate development by satisfying customer needs, while taking into account the full use of internal resource advantages and the development of targeted competitive plans to differentiate from competitors and ultimately achieve success. It is recommended for students who want to understand the 3C strategy.

The core of the 3C strategic triangle model is to solve the business strategy issues of enterprises!

The business strategy mainly addresses two major relationships: one is the supply and demand relationship, and the other is the competition relationship.

The former first finds the demand and then satisfies it with products. The latter needs to pay attention to the relevant competitive environment because customers will compare when choosing products.

The 3C strategic triangle model was proposed by Kenichi Ohmae, a leading figure in Japanese strategic research. He believes that when formulating business strategies, it is necessary to consider three major factors: the company's customers (Customer), the company itself (Corporation), and competitors (Competitor).

A good model should have two major elements: universality and simplicity.

The reason why we need models is to use the commonality of models to solve individual problems in scenarios, which requires models to have universal characteristics. A good model is like a principle, which is the most basic law with universal significance.

At the same time, from the perspective of practical operation, we should also have the principle of simplicity. The great truth is simplicity, and the constant pursuit of essence is itself the logic of simplification.

The 3C strategic triangle model integrates customers, companies, and competition into one strategy, which can be understood from the perspective of time, place, and people.

• Renhe: Finding the needs
• Geographical advantage: Taking advantage
• Time: Hit the right environment

These three elements form a strategic unit and cannot be viewed one-sidedly. For example, if you only look at demand and not supply, it is a fantasy. If you only look at supply and not demand, it is like water without a source and a tree without roots. If you only look at yourself and not the competition, it is like building a car behind closed doors.

Generally speaking, it is about seeking the logic of the greatest common divisor and finding the optimal solution where the three overlap and fit.

The business strategy needs to be adjusted according to the situation during the process, because all three may change. Unless major factors change, the general direction will remain unchanged.

The logic of strategic management lies in the unity of management strategy, ensuring that strategic goals and strategic directions do not change much. Because resources and opportunities are limited, they need to be unified.

1. Corporate Customers

The prerequisite for business operation is to find the demand first. Customers are the basis of all strategies. This is the logic of leading from results to processes. Before doing anything, first understand why you do it and follow the Golden Circle Rule.

We often say that companies need to solve the problem of supply and demand. First, they need to find the demand, and then the supply. Otherwise, it is like water without a source and trees without roots. You must first have a target before you can shoot an arrow. This is what we often say: customers first, companies second, and competition third.

Just like Luckin Coffee uses the logic of beverages to make coffee, it studies what type of coffee consumers need. Santonban uses the logic of taste to compete with traditional instant coffee, and uses the logic of convenience scenarios/price advantages to compete with freshly ground coffee.

At the management level, you also need to verify how big the market capacity of this demand is, what proportion you need to achieve, and which functions play a decisive role. Find the 1 and the 0 behind the functional combination.

2. The Company

From the perspective of the company itself, two questions need to be answered. The first is what problem needs to be solved, that is, how to meet the demand from the supply side.

Generally speaking, it is difficult and unnecessary for a company to occupy a leading edge in every functional area. The reality is that if you gain a relative advantage in a core function, you can also form your own moat.

The second is to answer how to solve this problem. How to make good use of current resources and what resources need to be acquired in the future. This can be mainly viewed from the perspectives of products, pricing, channels, promotions, services, and R&D.

For example, Midea has broken away from the logic of single product categories and focused on the integration of home appliances, which not only avoids direct competition with its competitors but also meets consumers' needs for integration. In addition, the attractiveness of the overall customer orders has effectively promoted sales by dealers.

From the company level, the advantages you can gain are only relative, and advantages are dynamic and will change with internal resources and external environment.

3. Competitors

The logic behind looking at competition is that in addition to a company’s own products, demand is also influenced by the external environment, because customers need to make choices, which is also in line with the logic of customers “comparing products from three stores”.

This is just like the college entrance examination. Whether you score high or low depends on how well everyone else does. In business, if you are good and the other party is better, then you are not good because you are not the only choice. If you are good and the other party is average, or you are average and the other party is worse, if this demand exists, then you are also good. The same is true for price. Whether it is cheap or not depends on whether the competitor is cheaper.

Sometimes we say that heroes are made by the times, but it also depends on what kind of competitors you encounter. At the competition level, we can list three questions: what do you rely on to compete? Who do you compete with? How do you compete?

1. What is the basis for competition? Industry logic

When entering an industry, the first thing you need to know is what the barriers are in this industry and what advantages you need to have in order to survive.

For example, one of the core barriers in the cosmetics industry is brand power, because it affects consumers' decisions, so sales expenses have become a larger expenditure for companies.

2. Who you compete with is a question of your opponent

At the competition level, you need to identify who your competitors are, who your customers will compare you to, and what are the substitutes?

3. How to compete is a strategic issue

We can refer to Porter's three major competitive strategies to determine who to compete with:

1) Overall cost leadership strategy

This is the unchanging essence in any industry. The logic of a healthy price war lies in the low-cost strategy. When facing buyers' pressure to lower prices, you still have the initiative. Low costs require that the company's operating efficiency is high enough. In the case of fierce industry competition, there is still room to avoid a catastrophe and thus cross the cycle.

When the market is good, the book cash flow looks good, and when it is bad, there is still room to resist with price. To obtain this advantage, there are two main points: one is that the operating efficiency is high enough, and the other is the right to own a certain resource, such as patents and the priority right to obtain a certain raw material.

2) Differentiation strategy

If total cost leadership means that value is similar but profits are higher, then the differentiation strategy is the difference in value, that is, providing unique products/services that customers recognize.

For example, product performance, technical strength, customer service, channel convenience, or unique design/product image, etc. Usually, a company will have a certain advantage if it occupies one factor.

It should be noted here that the differentiation strategy does not mean that the cost is not taken into consideration, but the overall cost leadership is not the main strategic goal of the enterprise. Because the company has a certain uniqueness in the value provision layer, the price sensitivity is relatively low.

3) Concentrated strategy

The core of this strategy is to focus on the specific needs of a certain consumer group. The premise of the concentration strategy is that compared with competitors with a large-scale layout strategy, it is more capable of serving a relatively small number of people and specific needs.

In the process, it can be differentiation or cost leadership, or both. In the selection concentration strategy, you can choose the target group where specific consumer needs are more painful, competitors are the weakest (or have not yet deployed), or the group that is least likely to be affected by substitutes.

IV. Conclusion

To sum up the 3C strategic triangle model in one sentence, it is to meet customer needs through products while differentiating from competitors.

Business strategy is about managing demand, from discovering demand to meeting demand and differentiating how demand is met.

Author: Zang Feng; WeChat public account: Strategist Zang Feng