The good professionals at Booz&Co (publishers of Strategy+Business) joined the long list of organizations offering guidance on how to cope with the current economic uncertainties, in: Rethink Your Strategy: An Urgent Memo to the CEO.
A number of the recent articles I’ve reviewed offered a fair amount of board up the windows, grab the food and flashlights and head for cover type of advice. Rethink Your Strategy offers just a bit of that along with a good deal of practical advice on reviewing your business portfolio, shedding bad businesses and remembering that R+D and Capital expenditures are more strategic than ever.
In an interesting article offering sound guidance, I particularly enjoyed the segment on anticipating your future industry structure. This is a key strategic topic that merits a great deal of consideration in your organization.
“This downturn is a once-in-a-century opportunity to redefine your competitive position. If there are five main players in your industry today, should there be three tomorrow? What role should you play in the consolidation? Can and should you push a competitor to the brink? Alternatively, should you sell your business even though you may be a strong player? You need to create an industry road map and then decide where your position lies in the terrain.”
As companies teeter or plunge over the brink, you will be faced with a host of remarkable opportunities and complex decisions. One of the greatest opportunities is for you to develop programs to capture the nervous customers of your competitors, who are most concerned about continuity in their supply/service chains.
A solid company with good financials, healthy R+D pipelines and good customer service track records should run, not walk to emphasize their strengths, their stability and their desire to welcome new clients. While the marketers (of which I am one) will have many ideas on promoting your strength and stability, I encourage top executives to make calls on your competitor’s customers at the executive level and begin forging relationships that will improve their switching comfort. When the time comes for this client to pull the trigger and fire your competitor, the personal contact will pay ample dividends.
If you have the misfortune of playing for one of the companies teetering on the brink, an option is to consider gaining help from your clients. In industries where switching costs are high and loyalty a factor (they are out there), it’s not unheard of for customers to band together to help support suppliers or at least key units of suppliers. I’ve watched as customers in a heavily regulated industry actually banded together to save a software supplier. While this is not an easy path to walk, it may merit exploration depending upon your situation.
The Bottom-Line for Now:
Spend part of your time examining opportunities in this time of crisis and chaos. While it may sound heartless to prosper at another firm’s failure, I call it capitalism. It’s much more fun and profitable to be on the side defining the new industry rules and structure.