What’s Your Version of Out-of-the-Box?
What do J&J, Fed Ex, Morgan Stanley, Microsoft, GE, HP, Hyatt, Trader Joe’s, SW Airlines, MTV, and CNN have in common? A recent Newsweek article identifies these 11 great icon brands as US companies that started in a recession.
A recent Wall Street Journal article contains market share data for different markets showing how leadership is changing rapidly. Who thought CIT and GE would lose their strong lending positions to businesses?
The game changes in recessions, especially one like the present when the other side of the downturn is anything but an equivalent upturn. Consumers and businesses are in “reset mode” and their changes create new opportunities for:
- Followers to unseat leaders;
- Leaders to consolidate their industry; and,
- New-to-market categories from existing and new companies.
Add in game changing new regulations for green house gasses – which essentially alters every comparative price – and the future is really wide open. Put it this way – if economic cycles were geography, this recession would be to exploring what the moon was in the 1950s – uncharted territory.
What moves make sense right now? Fred Schlegel in Frog Blog offers a compelling challenge to out-of-the-box thinking, which many leaders feel is a must-do given uncertainty all around. He suggests instead that we need to be in a cardboard box with some limitations. I’d repeat the list, but I’d prefer you read Fred’s lively writing.
The suggestion I’d like to give is the following:
Before you leap out of the box, figure out how strong your core business is.
If your position is weak, find the part of your business where you can lead and align that part of the business with trends and make improving and growing this part of your business your new True North. This is called the “shrink to win” approach.
If your position is strong, but your core business’ market is disappearing (e.g., land lines in the telecommunications industry), find a way to transfer your skills to a growing and more profitable part of your more broadly defined industry. This is called the “reinvent the core” approach.
If your position is strong and the core is growing, find adjacent target markets or categories where you can excel. Segment your current target market and serve each segment better to build competitive barriers. Keep pushing to enhance your value promise so that no one can catch up. This is called “great market leadership” and companies that are consistently profitable and growing have mastered this art.
Yes, there are huge opportunities today. But which you pursue will depend upon where you stand today.
Where do you stand today? How is that influencing the opportunities you are considering?
For insight on business model innovation and the perils of commoditization, read my recently released book, Beyond Price.