A bit of good healthy strategy

Very fashionable until the early '90s, the question of corporate strategy have fallen into disuse. At the beginning of 2000 imaginative and bold strategic theories glittering with joy and optimism flourished.

The web and the technology seemed to offer endless possibilities for communication on a planetary basis. Everything worked well and promised to work even better if only one dared a bit more, and free rein was given to the relational database wizards and the resulting potential, new and brilliant segmentations.
Then in the summer of 2007... one had the subprime mortages, Lehman Bros… indeed, we know what happened.
What should one do when the market draws to a halt? What strategic theories does experience and specialised literature provide to deal with circumstances such as the present ones? What does the Goddess Strategy prophesize from her Olympus? I, in my study field, spend hours and hours each week talking with the best customers and I am sure  my colleagues working in this fascinating and difficult profession do the same.

I will try, therefore, to sum up what we have learnt "in the field" in this fourth year of the crisis.
When things go wrong, those who are already strong get stronger, the mediocre weaken and suffer, the weak disappear. The reason is disarmingly obvious: when end customers become scarce and demanding, producers that are weak in the process of value creation become "useless". They are simply no longer needed. They disappear. The Goddess Strategy here is clear: if you are strong invest in the process of value creation, develop products and applications, do marketing, improve the price segmentations.
If you're already weak, leave the market with no regrets .. for your fine and nice distributors and customers. If you are midway between the two, you need to have a good think. Excellent opportunities may beckon, or it may be the opportunity for some real slimming for once and for all.
Summing up: the ability to generate value for customers is the key to everything. Reflect, consult the experts, and learn to measure how good you are.
Errors and solutions. When you have a drop in turnover, even to two digits, when customers do not just buy less but they disappear and generate suffering regarding payments that no one had ever experienced before, you are in the condition of the Wayfarer who is lost in a thick, dark forest. There are those who will stop to think to look for a way out and those who believe in racing out at breakneck speed. And if over there you come across a ditch and the road is closed on that side, you turn back...

Beyond any metaphor the worst mistake one can make when faced with a sharp drop in sales is trying to "push the sales throttle", soliciting customers, whether good or bad, or "stealing" the customers from competitors (as if they were ready to give them away), or to force ones way into new market segments where experience is lacking. This would lead to a pointless bleeding on your behalf.
The alternative? Make use of the "menacing calm" of the crisis to reason; introduce new marketing tools, create new metrics; thoroughly question customers as to their real problems, learn to measure the relative strength of your competitors, design new products and new price logics.
Here space is a tyrant while the crisis is liable to last for a long time. Rendezvous on the same subject in the next Crystal Ball.

By Roberto Furlanetto


Browse the last issue of magazines