The Rest of the Story
In my last blog titled “Sea Room & the Power of an Outside Set of Eyes”, I spoke about the power of a new set of eyes to shape or create a powerful strategy. Having turned around several companies I can say that creating a compelling vision and a powerful strategy are two of the foundational elements of a successful turnaround. A third element is building a powerful team, but I’ll save that for another time. The same is true if you want accelerated growth beyond your traditional or market growth rates.Strategic Planning
Several years ago, I use to teach a course in strategy development. At the start of the course, I would ask managers and executives in the course, “What do you do when you are faced with a company that is disadvantaged in the cost of their products, has inferior technology compared to their competitors, and is in a downward spiral?” The answer I ultimately provided is you create a great story and then live into the story you created.
It Takes a Great Story to Create a Winning Strategy
The great story we created took a failing $7M company to a $19M company two years after developing and launching a strategy focused on a different way of differentiating the company. Since our competitors had the cost advantage and superior technology, we had to find a different basis for competition. We chose a customer intimacy strategy. This meant that we had to really understand the concerns of our customers at a deep level. Through discussions with customers and our sales channel we found that OEMs (Original Equipment Manufacturers) had seven key concerns shaping their selection criteria. For example, one concern was that they needed design control to ensure that design changes wouldn’t impact their product. Another example was their concern for differentiation through customization.
We put a program together that addressed these seven concerns and positioned ourselves as the OEM’s “Ideal Strategic Partner.” We specifically addressed each of the key concerns including offering solutions that fit our customer’s unique requirements. Then, we developed a video that spoke to who we were and our commitment to take care of our customer’s concerns, rather than our products and technology. Once the video went to our rep channel, the phones never stop ringing. It was a great story as evidenced by the fact that our sales took off even though we were the high price offering and our technology was adequate, but not great. Because of our positioning, it was more important to our customers to do business with us and what we stood for, than to pay the lowest price or get the latest technology. With our growth we became highly attractive to Fortune 50 companies as well as startup and middle stage companies because we acted “as-if” we were their internal engineering and manufacturing department. We took the time to co-create and design products that help them be more competitive and win industry awards.
The Requirement to Be Agile and Make Mid-Course, Strategic Corrections
However, at $19M we stalled and were endanger of incurring a loss. We did two things; we acted quickly to correct for the set back and I brought in an “outside set of eyes” to look at our strategy and positioning to see what we were missing. Long story short, on the business side we were flat at $19M, but made enough profit to bonus everyone in the company for helping us pull us out of the fire.
More importantly, my business and marketing consultant took the same data I and my executive staff knew and used that data to support a strategic shift that we did not see. That is the power of bringing in a new set of eyes that is not blinded by being too deep into the operational forest. That one insight and implementing his recommendation, took us from $19M to $23M to $27M to $34M year over year.
What did he see that we did not see? We were completely focused on a horizontal market. Over time, one market segment grew to 50% of our business. He recommended taking that specific segment vertical. This meant we offered unique features to support this vertical segment, we marketed to this segment with relevant messaging, and we tuned our sales conversation to this segment. That is all it took. So, I tell people “tongue in cheek” that in some respects being a CEO is “easy.” When you get into trouble, all you have to do is have the humility to ask for help, have the wisdom to take their advice and finally, because there are usually bandwidth issues to take on a new initiative, hire them to execute the initiative. Now you have the rest of the story.