The Market is soft and there is nothing we can do. Rubbish.

by | Apr 30, 2014

market down

Demand is down. The market is soft.  There is nothing we can do. But it will pick up. We just have to wait.

Heard this before?

Sure the market might pick up. But it might not. And while we are waiting, what are our competitors doing? Waiting as well? Or innovating.

Excellent article appeared in my inbox tonight from Strategy&. Here are some quotes:

"The trouble is, a weak market isn’t a valid excuse. Plenty of companies that achieve above-average shareholder returns compete in average or below-average industries. "
"How do the winners in low- growth industries do it? By taking market share from others. And not only do they take market share, but they take it profitably, often without reducing prices. When companies successfully get these two things going together—market share and profitability gains—they in effect create their own growth cycle, one that is independent of the industry cycle. A sort of disequilibrium takes hold, allowing the companies that created it to become dominant in their sectors. "

"The companies that create the conditions for it generally don’t follow a template, but discover a particular advantage they can use to tilt the market in their direction and keep it that way. These enterprises often become a source of fascination (and envy) among competitors because they offer proof that in busi- ness, true advantage can be created and sustained for years, or even for decades, when companies are especially shrewd—no matter the overall state of the industry. "

"If the leading company uses its advantages smartly, other companies slip in both market share and profitability. And the effect is cumulative: The less successful companies’ weakening position leads to a reduction in investments, further hindering the quality of what these companies can offer to the market. Some of them don’t survive, allow ing the leader to grow yet more in influence and market power."

It concludes as follows:

"What does all this mean, if you’re a CEO in a slow-growing industry? It means you shouldn’t go looking for a “better” industry, one that’s growing more rapidly than yours. Embrace your own segment. Counterintuitive as it sounds, the opportunity to get great returns for shareholders is probably better where you are than in a market that’s growing by double digits. You can make those better returns come to you by figuring out where you have an advantage, or might gain one, in terms of cost, service, selection, or a disruptive new product. Make an increase in market share your main measure of winning. And finally, once you’ve got the advantage, keep on doing what you need to do to extend it. The nature of any market is that the opportunity is finite. It’s you or them."

It's you or them. What's it going to be?

Jeffrey Tobias

About Jeffrey Tobias

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well-known startups.

View All Posts

Managing Director, The Strategy Group

Dr Tobias is an accomplished innovation consultant and entrepreneurship strategist, drawing expertise from the academic, entrepreneurial and corporate worlds. Jeffrey’s commercial and business experience is particularly focussed on lean startup, design thinking and leadership. Prior to The Strategy Group, Jeffrey was Cisco’s Global Lead for Innovation in the Internet Business Solutions Group helping Fortune Global 500 companies improve customer experience and grow revenue by transforming how they do business.
Jeffrey is a professor of innovation and entrepreneurship teaching MBA students at the Australian Graduate School of Business at the University of New South Wales. An active angel investor, Jeffrey is on the board of various well known startups. Jeffrey’s corporate background includes leading global innovation strategy at Cisco, working with large corporates such as Adobe, Westpac, Telstra, Woolworths, and Perpetual.

Need help to get your business to the next level?

More related articles on innovation

Share This