Problem: Low-Cost and Differentiated Workplaces
We have studied the differences in business-level strategies closely in this chapter, but how might these differences relate directly to you? As you've learned, firms using a differentiation strategy will focus on drivers such as product features and customer service, while firms using a cost-leadership strategy will prioritize cost of inputs and economies of scale. These strategic decisions can have an impact on an employee's experience with the firm's work environment and culture. Nordstrom, Whole Foods Market, and Wegmans Food Markets are companies that routinely end up on Fortune's list of "100 Best Places to Work." These companies use a differentiation business strategy. In contrast, Amazon and Walmart use the costleadership strategy; and as low-cost leaders, they do not rate nearly as well. According to inputs from the employee review site Glassdoor.com, only 50 percent of the employees working at Walmart would recommend the firm to a friend. Compare this to the 72 percent who would recommend both Nordstrom and Whole Foods, and the 80 percent who would recommend Wegmans Food Markets. As you seek options for starting or growing your career, carefully consider the strategy the firm takes in the marketplace.
By no means should you avoid low-cost leaders in lieu of strong differentiators (nor should you deem all differentiators as great places to work). Fast-paced organizations that focus on driving tangible results for the organization offer much to learn. For example, Amazon has been a very successful company for the past decade, and many employees have had multiple opportunities to learn enormous amounts in a short period of time. While the environment is challenging and intense, some employees love it. For others, though, the demands of the workplace are overpowering and far too combative. Many of them leave after a year or two. Amazon had the shortest employee tenure among the Fortune 500 firms, according to a 2013 salary analysis by Pay Scale. Amazon employees are encouraged to criticize each other's ideas openly in meetings; they work long days and on weekends; and they strive to meet "unreasonably high" standards. "When you're shooting for the moon, the nature of the work is really challenging. For some people it doesn't work," says Susan Harker, a top recruiter for Amazon. The high standards and relentless pace are a draw for many employees who are motivated to push themselves to learn, grow, and create- perhaps beyond their perceived limits. Many former employees say the nimble and productive environment is great for learning and the Amazon experience has really helped their careers expand. Now consider the following questions.
1. Employees and consultants say the Amazon workplace is the epitome of a "do more for less cost" environment. We recognize this is a hallmark goal of a cost-leadership business strategy. But ask yourself this key question, Is it the type of high-pressure work environment in which YOU would thrive?
2. By 2020 Amazon is planning to have space for 50,000 employees in its Seattle office buildings (an increase of three times the number of employees in 2013). They will be offering bold new ideas and moving Amazon toward being the first trillion-dollar retailer under an intense pressure to deliver on their goals. The allure from this type of success is compelling and offers tremendous rewards to many employees, shareholders, and customers. What aspects of success are you seeking in your professional career?
3. Before you launch into a new project, job, or firm, or even before you make a change in industry in the effort to move forward in your career, always consider the trade-offs that you would and would NOT be willing to make.