Crystal Ball Glazing - Part I

Moving into the second half of 2009, we are confronted with choices. The path that we choose to take will set the course for the next 3 to 5 years. How so? Depending on what you set your sight on i.e. if attaining strong cashflow generating capabilities and a strong balance sheet with solid cash position are what you seek, you will need to plan ahead. First you will need to review your business model specifically in the area of customer relationship, pricing and revenue growth taking into account of game changers looming over the horizon.

The question to ask - Do you have strong product offerings that will continue to attract your target audience?

What is done to grow your customer base? Can you expand beyond the 80/20 rule i.e. while deepening the relationship with your existing customers, are you able to identify the white space - where needs are unmet. In doing so, you will notice that there are disrupters willing to chip away your market share and you would need to be mindful of how you position your products without alienating your exisiting customer base. By this we mean that you need to focus without straying from your core competencies. This is where you need to revisit your core ideology - and subject it to extreme stress testing. Is your stated purpose still relevant and are you keeping to your core values? Do you still maintain your beliefs? More importantly, do your customers also subscribe to these beliefs? What will break this bonding between you and your customers? Have your competitors come around with a better value proposition in reinforcing these beliefs or are they cutting corners to gain market share?

Competing smartly is critical in extending your competitive advantage period as well as maintaining a robust return in excess of capital ( RECC ). The interlocking relationships amongst value drivers - meeting customers' need ( quality ) at the right price point and rewarding your stakeholders appropriately mean that one has to be very judicious when making trade-offs. Without a sound business design that proactively counter-balances all the competing forces ( bargaining powers ), it may be very difficult to sustain your competitive advantages.

Hence understanding the price dynamism specifically the cost structure of competitors is an important component of the process.

At what price point will it be possible for your business model to prevail over the competition?

At that price point, is it possible to maintain a culture of innovation and continually come up with compelling new offerings to meet the ever changing needs of customers.

The goal is to seek pricing where you are able to generate return in excess of revenue while at the same time aiming to be a low cost producer. This way, you are erecting barrier to entry keeping new entrants at bay.

How do you achieve top of mind message recall?

You could leverage on the following drivers:
a) stickiness factor
b) law of the few
c) law of context where small changes in the context of a message can determine whether or not it tips

Marketing campaigns should be via appropriate media that allows the promotion of your products in an "in-your-face" sort of a manner without upsetting your customers. A more subtle way is to leverage on word-of-mouth marketing by influential opinion leaders. It is wise to create the environment where you can allow your mavens and connectors to spread the message. A combination of these techniques can bring you closer to your target audience.

Additionally, you need to be mindful of the necessary and suffcient conditions for these principles to be applied i.e.
a) size of an organisation
b) degree of decentralisation
c) decision-making process
d) existence of a central agency for co-ordinating the program
e) trusted partnership

There are many layers within an organisation that may act at cross-purposes and ultimately diminishing the ability of end-consumers in making wise choices. It will be necessary to make sure that individuals are empowered to decide what is in their best interest and to reduce the "noises" in between layers.

Coming Up Next
Meaning of quality, care, gumption ( traps ) - values and truth.
How can one continually beat the competition systematically, on a process-driven basis.

Keywords: quality, value systems, trust, domain knowledge, technology, networking, maven traps, speed of trust, lifestyle

Read more!