Perfect Biz Match | Transform | Forcing a Way Back In

Forcing a Way Back In

You're attempting to move out of a commoditized battleground environment by changing the nature of your product(s), your methods or channels of distribution, or both.

Essentially, this involves climbing out of the fire back into the frying pan. Your organization is trying to force its way out of a battleground, where high volume and low margins define the market, into a jungle, where there are more players, more innovation, greater competition, and generally better margins - and where success is not so heavily reliant on volume.

An almost perfect example is Snap-on Tools. Back in the early 1990s, Snap-on saw that its very good margins were steadily eroding. Top managers realized that the market was changing from a kingdom to a battleground, and that, more and more, the company would be competing with Sears and a few other firms on volume and low margins. Snap-on made a decision to move back into the jungle with a new product line. The company purchased several diagnostics and "under the car" tune-up companies - a natural fit, since Snap-on already had ideal access to mechanics through its dealership program. Over time, as the hard tools business gets more commoditized, these new companies will account for more and more of Snap-on's business.

Key Issues
The major change your company needs to make is to become thoroughly customer oriented. In many ways this change is similar to the one rulers must make when they are pushed into the jungle. However, your company is better off, because its leaders and employees already understand how important efficiency is to the organization's success.

However, this focus on efficiency and lowering costs can be a double-edged sword. You must not allow this drive for efficiency get in the way of reacting swiftly and well to customer needs. Your focus must be, first and foremost, on giving your customers what they demand.

In a jungle, you may face many competitors, and some of them may enter the market from unexpected directions. For example, Hewlett-Packard or Mitsubishi might suddenly begin competing with Snap-on in the computerized diagnostic market. Indeed, this would be as natural a move for them as it was for Snap-on, because of their production capability in computer technology.

You'll also need to make a significant change in the way you market your products. In a battleground market, your focus was on constantly increasing visibility and the number of points of distribution - in other words, pushing as much product through the system to as many locations as possible. In a jungle market, however, your marketing energy is better spent 1) identifying customers in the niche area you select, 2) reaching out to them, and 3) satisfying them.

Common Difficulties
Understanding the magnitude of the change
The biggest potential problem is not realizing how big a change your organization will need to make. A structural change is insufficient. Unless you are going to add or spin off a separate unit to address this new market, your old organizational culture will need to undergo a thorough transformation.

This will probably be resisted, perhaps vigorously. Because you've been operating on a battleground, your people probably function with an aggressive, almost military mentality. This can become a serious deterrent to the kind of innovation needed to serve customers in a jungle market. You will have to convince your employees - particularly your marketing people - not to support the product at all costs and go after sheer volume, but to take a more interactive role with customers. They will need to start listening to what customers want and be willing to give it to them. They will also have to let go of a great deal of their control and let the people closer to the customer make more of the decisions.

Ultimately, you will need to get everyone in your organization to shift their attention to creating customers and serving them with their whole beings. This is a major change from creating distribution points and stocking them well so that advertising campaigns can be successful.

Getting access to customers
It is also essential to focus on gaining better access to customers. In a jungle, access is typically controlled by the prevailing distribution system. The market is often viewed as a zero-sum game by wholesalers and retailers, who believe the customer has only so many dollars to spend, regardless of the number and type of products offered. As a result, they tend to resist new products.

Learning niche marketing
Your people out in the field will also have to deal differently with customers. Salespeople in warrior organizations are used to implementing huge, carefully-planned marketing strategies. You must now get them to understand the niche your company is moving into. They also need to learn to secure and satisfy customers - not by making plenty of product readily available, but by discovering and satisfying their needs. Suddenly your salespeople have to do very hands-on, customer-driven work rather than just establish new distribution points. This mentality change is very difficult to make, and you should expect significant turnover in your sales and marketing departments as your organization works through the process.

Saying goodbye to the hero manager
Warrior companies tend to create hero managers, especially at and near the top. They get the big ideas and others implement them. In a jungle, this mentality will be counterproductive and very frustrating, because the ideas needed to satisfy the customer cannot be created at corporate headquarters. They must be created in collaboration with the customer by your people in the field.

Waiting for management to do it
The natural corollary to the hero manager is an organization-wide belief in management solutions to marketing and implementation issues. This belief will also get in the way of understanding and serving customers.

Jettisoning the functional mind-set
The separation of company functions that works so well on a battleground becomes a detriment when serving a jungle market. Getting across the boundaries to meet customer needs becomes of paramount importance - yet this becomes very difficult unless some major design change is implemented to break down these boundaries.

Solutions
Because a huge cultural shift - indeed, a full-blown organizational transformation - is needed to be successful in the jungle, top management needs to very deliberately retrain its army from a squadron of fighters to an occupation force. At every possible level of the organization, starting from the top, leaders need to talk less of the power of volume and more of customer needs, innovation, teamwork, and total quality in all functions.

Everyone who in any way deals with customers needs to be trained in a new set of marketing skills - skills based on listening to and understanding the customer. If done properly, this will lead to increased innovation and efficiency in meeting customer needs.

The system itself will also need to undergo a crucial change process. You'll need to redesign all of the key processes that affect your customers. I cannot overstress the need for this structural change. Without it, warrior behaviors will continue throughout much or all of the company, no matter how much management tries to change it.

Finally, the process of setting prices needs to change, so that it reflects added value to the customer rather than what can be added at each point of distribution. This is another cultural change that will almost certainly be resisted, and that can be overcome only through strong communication and action from the top.

Adaptation Issues
In order to successfully adapt to your new jungle environment, your company will need to establish a culture of collaboration. At first this will seem foreign to many employees - and many leaders as well. As a result, a significant number of people will leave on their own, and others will need to be let go. This is natural and appropriate.

A collaborative culture cannot function if only some of the people in the organization believe in it. The task of learning to be customer focused is immense; everyone has to be on board or your company simply won't be able to compete.

You'll need to establish teams and collaboration in all company activity. In essence, you'll create what has come to be known as a boundaryless organization. The warrior culture of commonality and responding to orders will need to be transformed into a culture of collaboration and innovation, where teams come up with solutions to seemingly-impossible demands in order to create greater profits. This kind of innovation not only demands energy and brainpower - it requires teams. It simply cannot be performed by a few very bright individuals.

Lastly, you'll need to establish a new kind of accountability. Rather than rewarding increases in volume, the new system needs to account for the ability to gain and retain market share by meeting customer needs (which, in turn, creates higher margins).

In many ways, jungle markets are the most difficult and complex markets to operate in. Most companies that enter a jungle market do so not by choice, but because they are pushed, pulled, or otherwise forced into it. Yet those organizations that do thrive in the jungle often create some of the finest products and services - and often have the most satisfied customers.

All of which makes successful hunter organizations some of the most rewarding companies to work for - or lead.