Transformation and strategy work (part III): How to face a market saturation
A few topics reoccur with companies facing a strategic change. Based on those, I will look into three different transformation cases in these blogs. I will reflect them against to their specific market position and potential external change factors. All of these have the same key needs for strategy and transformation talk:
- keep the level of strategy talk in the strategic planning and execution,
- keep the focus on the long-term target and
- build the timeline for the transformation.
Now, our second case is a company that faces the need for transformation because of...
...the evident market saturation in consumer products
Here we are looking at a scene where consumer products companies are facing growth limitations in their current markets and products. In these cases, the fast and furious digitalization is not necessarily a key player, but could rather be an enabler for possible growth or adversely a unanimous threat, as competition can arise from anywhere on the globe. Global giants such as Amazon, Alibaba, Carrefour are changing the scene by setting up online delivery for anything, anywhere. Local small players are doing the same. For our case, companies home market in Finland the retail market is highly centralized and efficient, giving supplier companies a narrowish space to move in the market.
So, again, we are looking at questions like:
- How does all that impact strategy in long term? How about short term?
- Do you have to disrupt your own business before someone else does? (I think you should at least seriously consider it!)
- Can you be the market disruptor, or to take more defensive and protective path? Specialize at something, e.g. find something completely new to the market?
- How to enable growth, which path to choose?
Where to start?
In our case company, the top management wanted to have a wider perspective on trends and changes in the business environment to provide signposts for the path forward. Call it trend watching, market foresight, call it first steps for ideation. The work was started by:
- systematically observing the cross-industry business environment, sight set for 3 - 10 years (what are the weak signals, emerging phenomena)
- choosing a scenario and roadmap for potential new business (what could be)
- building the roadmap and the first steps towards the new and re-tuned vision (how to face the scenario(s))
Market observations were started by a trend outlook, from mega trends to cultural changes, and consumer market developments. As a continued process, the one-off trend outlook was followed by continuous signal tracking by the management team, in selected themes. After the outlook of market foresight, some ideation work followed. Outcomes were mapped against the current situation and known resources. Based on the improved market understanding, strategic decisions were discussed within the management team about expansion into new markets and potential product groups. The potential ideas were discussed from the operative point of view, trying to avoid the tangling up the strategic and tactical levels. The focus was purely on where to find the needed new growth.
How was building new horizons met in the organisation?
Raising the level of discussion from operational to long-term targets and up to the bold discussions on strategic moves took a few workshops, even for a management team. The discussion towards strategic changes was reached at roughly six months after beginning, during the third or fourth workshop on trends and market developments. Further preparations and decision making on major changes in direction was appointed to the board with the management team's focus on more operative improvements. Maybe this is typical in very efficiency focused SME's? I would love to hear your insights on this!
Ideas were brought up in the course of discussions, some that would use the existing resources in a new set-up, few new products that weren't or aren't yet plausible, and even completely new business logic utilizing current resources and know-how. Some of those would have meant stepping away from the current key business area for experimentation (a bit based on the three horizons framework ideology).
Taking any of those steps immediately posed questions on how to resource it, even when just talking about "tapping the ice with the stick". Some first new moves have been taken already, some turned out not to be so profitable after all, some are under more detailed scrutiny as I'm writing this. Most identified key market developments are kept at bay and in continuous follow-up for now. We believe, together, that continuous follow-up of trends and further building of futures thinking will bring up ideas worth venturing in. And, in my thinking, it will most certainly build the courage to make even bigger moves at one point.
Since the driver for change, in this case, was not a burning platform nor a pounding inevitable threat around the corner, there was no urgency for the changes or new ideas to be found. That allowed for more open discussion and less pressure for results, which is important for creativity. On the other hand, taking up new endeavours, risky trials or building something completely different did not sound so tempting (or viable at that moment). It might be that the perfect balance between drive, urgency and not pushing for forced results might be hard to find, but it's important to keep in mind.
Perspectives on the required change
If you are part of a management team, facing a stagnating or saturating market with a super-efficient production and delivery system, you will need to start changing now. You will need to be prepared for a market invasion in your own patch, in one way or another. It is evident, that if you are not actively building your own future, leveraging your know-how to new areas or building market leverage in new markets, products or services, anyone from the side step could knock you out. It could come by serving your customer from an international position, by improved value proposition or by jumping over you in the value chain.
A good first step is to start building an understanding of the future of your markets and the external forces influencing it. You don't necessarily need external help, although sometimes someone from outside can see your capabilities that are not so evident to yourself. Trend data on the macro level is readily available and you yourself know your own business and data by heart, right? Start following the trends affecting your operations from outside your core business or customers, keep track of developments that could alter your business environment and then, most importantly - keep up discussing those in your team and their meaning to you. Then pick a position for your company in your desired future, and start designing a sustainable strategy to reach that position. It won't be quick, but the results will most certainly be rewarding and fun, I promise.
Once your management team is on the track, continue by engaging all those in the organisation whom are interested in futures thinking and provide a common platform for open discussion. Don't be afraid - it mostly comes naturally from the ones interested and the benefits will be larger than the time invested. The process doesn't need to be a heavy one, but it's important to provide a feedback loop and show where the gathered and analyzed information has been used. Our customers have started using these inputs in their own customer communications and even started building their own futures' networks!
And keep that in mind that the most disruptive changes do usually come from outside your own industry.
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