Financial capital is about the only product in short supply today. In other markets, too much supply is chasing too little demand, making price king for 2009. How does a company win when demand drops and may remain lower? Consider these strategies:
Redesign your supply chain.
Deflation risk has rarely been higher, despite U.S. Treasury and Federal Reserve efforts. With suppliers eager to retain and win business, shift as much of your inventory onto suppliers as you can. You'll free up capital and avoid losses if selling prices plummet faster than your cost of goods sold.
Redefine the business you're in.
There are only two safe market positions in a recession: lowest cost or monopoly. If you can't be the Wal-Mart of your industry, transform your business to become a unique and sole solution to a customer problem. QTI, a B2B company, redefined its business beyond staffing and consulting services. They now run the Human Resources department for smaller businesses. Hilldale Shopping Center's Jan's Boutique could send sales associates into women's homes as wardrobe advisers. Lowe's could position itself as the one-stop homeowner's solution to dramatically lower energy costs. Might Shopko steal customers from Wal-Mart by partnering with another organization to teach English and offer GED classes, child care included?
Retain an external focus.
Become clear internally about your company's value promise to customers.
Develop proactive operating mechanisms to fight the inward focus driven by a recession at a time when external focus is even more important. Create a customer advisory panel. Conduct monthly competitor reviews. Ask executives to hold face-to-face visits with key customers, CFO to CFO, HR director to HR director, CEO to CEO. Choose your response to industry consolidation. Excess supply is a catalyst to industry consolidation. Can you be a consolidator? If not, you have two choices: Position yourself as one of the best companies to buy or merge with, or build, a sustainable niche for competing against larger competition.Every internal action ultimately impacts the value (benefits less costs to acquire them) customers perceive or experience with your company's offerings. Everyone in your company should know why customers are better off choosing your offerings over the competition. If customers see competitors' benefits as basically the same, they choose on price . Everyone in your company should be focused on either eliminating non-value-added costs or profitably enhancing benefits.
Make it easier to sell your product.
Whether you use distributors, retailers, agents, manufacturer reps, the Internet, or a direct sales force to reach your end-user customer, make your channel more effective and efficient in reaching target customers and getting them to "yes." Improvement may require retraining, redesigning processes, measurement, and weeding out poor performers. Unnecessary steps consume operating profits. The opportunity cost of failed selling efforts is less time with other customers who might buy.
Create an external advisory board.
Which of these actions might help your company survive the current market crisis?
CEOs and managing partners will never feel as alone as they will during a recession. If you don't have a board composed of CEOs who've been where you hope to go, create one.n
