Is It Time To Redefine Your Market?
The ongoing stream of news about the gradual economic recovery may be tempting business leaders to start to breathe a sigh of relief. That would be a mistake.
As markets improve, the level of competition tends to increase, not reduce. And, although a rising tide floats all boats, the key to corporate success is to be the best at what you do, not simply be in the right market.
In any market, being number one or number two is vital to gaining the scale and profile that generates profitable growth. So, if you are stuck in the pack and are facing the possibility of more competition in the months and years ahead, what can you do about it?
One option is to redefine your market so that you can become the market leader. Take these examples:
To redefine your market for growth, you must first challenge your existing assumptions. For example, are you currently limited by your assumptions about your geographical reach (Ryanair), the products and services you offer (IBM, Asda), the types of customers you are targeting, the technology you use, or your existing operational capacity and capability?
- Following its launch in the mid-1980s, Ryanair became a struggling also-ran airline on routes between Ireland and London. It was only when the company brought in Michael O'Leary, and redefined its market to being Europe's leading low fare airline, that its growth and its profitability took off.
- In the 1990s IBM's new CEO, Lou Gerstner, transformed the fortunes of the business by shifting away from the commoditised PC and mainframe manufacturing markets to the added value services market, creating a division that advised corporate client on independent IT solutions, which included being able to recommend its competitors' products.
- Asda didn't entirely change its market, but has driven a large part of its success since the early 1990s by creating a compelling clothing offer. At that time the idea that a supermarket could sell fashion seemed ridiculous. Yet George at Asda is now the UK's biggest clothing brand and Asda is the UK's biggest fashion retailer.
The second stage is to identify what new opportunities (and risks) could emerge by changing your assumptions, and determine the fit of your existing capabilities with these potential growth initiatives.
If new capabilities are required, what options exist for building them?
Sometimes you will benefit by exploiting a third party's capabilities. For example, Asda had the good fortune to work with George Davis to create the George clothing brand and business.
On other occasions the capabilities may be hidden in your organisation. IBM's services business was built around its existing systems services department, which, in the early 1990s, was a simply sub-unit of the sales function.
You need not be trapped by your existing market definitions. In the business world, nothing is fixed in stone. Although inertia exists in most organisations it is possible for all companies to reinvent themselves.
The bottom line
Redefining your market may be the catalyst for driving step-change growth for your business, enabling you to become number one. As the economy recovers, will your business be one of the few that adapts to exploit the new opportunities and become the leader in your chosen markets?