| Winning the
Market Share War By Craig A. Steffen
The goal of any
manufacturing operation is to design, make and sell profitable products that customers
want.
It sounds
so very simple. Yet my experience is that,
simple as it sounds, the working out of this goal is complex at every stage. Why is it so difficult to make this concept a
reality in our companies?
Most of us speak
about our businesses, perhaps unconsciously, using military terminology. In our meetings and annual reports we say things
like, “we’re seeking a winning strategy,” or “we’ve captured
significant market share,” or “we’re battling our competition on
several fronts.”
By using this
language we are rightly acknowledging that we’re engaged in a war. Yet, most companies never implement the tools of
war and consequently don’t experience the “spoils” of victory. How does this concept apply to YOUR business?
Does the
following cycle sound familiar to you?
1. A
product or improvement idea comes to our attention through one of the engineers or from a
customer.
2. At a
manager’s meeting we all decide this idea should be developed.
3. After
many months and thousands of dollars the idea has been developed into a product or a
product improvement.
4. We
print up a brochure or an ad and hand off the idea to our sales force and distributors
announcing this innovation to our customers.
5. Revenue
and profits don’t grow, as we were sure they would.
6. Everyone
from Management, Engineering, Sales and Distribution is frustrated and confused with the
failure.
7. Tension
and morale suffers as the “blame game” begins.
If this scenario
occurs in your company, you’re not alone – it happens in most companies. Any good military officer (which I am not) could
tell you that there is something fundamentally wrong with the above cycle of events. In short, it lacks the elements of Strategy.
Strategy
is defined in Webster’s dictionary as,
“The science of planning
and directing large scale military operations, specifically of maneuvering forces into the
most advantageous position prior to actual engagement with the enemy.”
No one would dream of going to war
without gathering the Generals (those with broad experience and depth of insight) and
seeking the answers to a few basic questions, some of which might be:
1. Who is my enemy and what are
his strengths and weaknesses?
2. Why am I considering this war
– is this worth fighting for?
3. What are my human, financial
and alliance resources?
4. How much training and
preparation is necessary to get ready for this war?
In
business, as we launch new products, introduce innovation or generate value-added
improvements to existing products, we must incorporate this kind of Strategy into our
processes. The questions we must answer are a
bit different, but the goal is the same. A
few of the things we must know are:
1. If we develop our idea, who
would our customers be?
2. Do these target customers want
the product or improvement we’re considering?
3. How much might they be willing
to pay for it?
4. What will it cost us in terms
of time, money and opportunity?
5. Is this the BEST thing we could
be spending our R&D resources on?
6. What specific people will
ultimately make the buying decision and what do they care about (price, convenience,
service, function etc.)
Of
course, there are many more questions that must be asked and answered in order to win the
product battles we propose to wage. If we get
these answers prior to engaging the enemy – we’re far more likely to
capture the market share we seek.
Though
most of our companies are filled with very talented people, it is rare to find strategic
thinkers among them. We hire people who are
tactical and detail-oriented. These are the
people who meet goals and accomplish assigned tasks.
They’re vital to any organization.
In our analogy, they are the “troops.”
I submit,
however, that engaging and responding to strategic thinkers is at least as important. If you want to win the war, avail yourselves of
the “Generals” who can maneuver forces into the
most advantageous position. The
long-range benefits will astound you.
A
well-established medical devise company had been floundering for decades in the
non-strategic product development cycle described above.
They worked hard, but, in the end, they failed to achieve sustainable
growth. They never captured the market share
they sought and subsequently never became anything more than a bit-player in their
industry.
Upon
implementing these Strategic principles over the course of a few product development
cycles, this company increased and sustained revenue and profits several times greater
than any previous year. It has now been
nearly six years, and the growth keeps coming. Bottom
line: they did the work necessary to win the market share war. Have you?
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