Perfect Biz Match | Transform

Slipping In

You are part of an industry that is no longer oriented primarily toward new products.

Your company's whole product line is losing its proprietary hold on the market and is now experiencing considerable competition on all fronts. You are now forced to retain or grow market share in a very turbulent environment, very likely in the midst of steadily-decreasing prices.

Your products are no longer considered innovative. You must now compete on both quality and price. Continued improvements will merely enable you to stay in the game, not win it.

Key Issues
There is no turning back. Your whole industry is heading toward a jungle environment, and your company must either redesign itself to function in that environment or get out of the business. Nothing you or your organization can do will stem the tide toward commoditization of products, because this is an industry-wide movement. If you want to retain your pioneer culture, then you will need to focus on significantly new products and sell off or discontinue the old product lines.

If you do decide that your company will compete as a hunter, you need to determine whether it is possible to carve out a large enough niche to create the margins needed to support continued product differentiation.

Common Difficulties
Changing the mind-set
The frontier tools and strategies for survival remain part of the organizational mind-set, but they are not necessarily what is needed in the jungle. Yet this mind-set is not easy to change, especially if (as is often the case) management is completely overwhelmed by the complexity of doing business in this new environment.

Changing the focus to the customer
Pioneer organizations tend to be vertically designed, so that the technical function can have the freedom and the power to lead the system. In the jungle, however, the problem is to drive the system horizontally, based on the demands of the customer. It is difficult for the technology function to give up leadership to a new, market-driven system.

Moving from individuality to collaboration
Pioneers honor individuality, while hunters honor collaboration. A quick (and usually difficult) transition needs to be made from a culture that values individuality and innovation to one that values collaboration. This will be a permanent change which everyone in the company must make. The change needs to be driven by top management and requires the involvement of every employee. If this change is not made, particularly at the management level, the functioning of the organization will be seriously impaired.

Learning what customers want
A frontier organization is designed to invent new products and take them to a market that is waiting for those products with more or less open arms. The company simply needs to focus its attention on letting everyone know that its products are there.

In contrast, a jungle market requires companies to really understand their customers and to meet all their needs. This typically means making the products easy to purchase, own, and use. Therefore, throughout the organization, people must stop believing that they know what is best for the customer, and instead begin gathering information on what its customers actually do want and demand.

Outgrowing the arrogance of technology
The arrogance of technology must be overcome. In many pioneer organizations, there is a sense that the most important parts of the business are their products and their capabilities. In a jungle environment, this is no longer the case; customers may make buying decisions based largely or entirely on speed of delivery, price, and/or ease of purchase (everything else being more or less equal). If your company can't provide exactly what the customer wants - readily and at a reasonable price - then they may simply go elsewhere. The entire organization must therefore make a shift from revering its products to serving customers.

Solutions
If you intend to succeed in the jungle, you must first redesign your processes, structure, management, and culture to reflect a strategic focus on your customers. This is admittedly an extremely tall order. Yet it can be done - if your organization commits itself to the following:

determining exactly who your customers are
discovering what they want and demand (not what you think they want, or think they should want)
focusing on quality, price, and delivery
differentiating each of your products and product lines in at least one significant way

In addition, you will need to create a new environmental search and design function whose job is to 1) constantly evaluate the market and 2) quickly adapt both your products and your marketing to changes in the market - ideally, ahead of the competition. You will also need to allocate significant resources to the creation of product and brand distinctiveness so that your products are easily recognized, desired, and differentiated from those of your competitors.

Lastly, you will need to begin paying strict and constant attention to becoming more efficient, while still meeting all customer needs. This requires innovation - something you're used to. But now the innovation needs to be focused at least as much on keeping costs down and quality up as on creating new and differentiated products. To do this, you'll need to create cross-functional teams to examine all of your processes.

I cannot overstress the importance of this last set of tasks. If you ignore them, your margins will continually erode.

Yes, these undertakings are all daunting. But your organization's very survival depends on performing them.

Adaptation Issues
It is critical to slow the deterioration of margins as much as possible, while still giving customers the best products or services. This means paying close attention to the end of the supply chain, and providing lots of feedback to all parts of the chain. The big danger is letting margins shrink to the point where they suck the life out of your organization.

At the same time, you'll need to simplify your processes and information systems so that they help people focus on meeting customer expectations - and so that they do not take too much of the company's resources and attention away from your customers.

Resources need to be allocated into your marketing function, so that the right market niche is developed (or discovered) and exploited. Management has to step up to the plate to lead this process by creating permanent internal structures that reinforce this new customer-oriented activity.

It is critical that you select people with the right attitudes and skills to lead all of these changes. You will almost certainly have to bring in some key players from other hunter organizations.