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Why your business model is no longer competitive?

If your sales force says that the only way to compete is “price”, there are good chances that your offer reached a “commodity” status and you have a really hard time in making your  company meet the sales target.


Unless your product or service has been displaced by a new offer capable to make the same job in a different way ( but substantially better:  e.g. cars vs horses ), one way to see what is happening may be suggested by latest prof. C. Chirstensen innovation’s management theories.


First, he argues that, yes, your offer may have ended up over-performing what the Customer needs (uses) to make his job done.


























This may happen because:


A)  your high-end customers, those that have never enough of the performance of your product, have shrunk so much to basically disappear or be totally won by a competitor ( leaving you and all the rest of the competitors pack fighting for the business opportunities left over ) 


B) or because  a new type of product/offer ( an innovation ) has disrupted your market, stealing all the Customers.


Forget this last situation for a while.: You are in the first one. After all, is not so easy to bring on the table a totally different idea and kill a market.


What you can do to recover competitiveness?


Here some options, ( apart the usual optimization efforts, best practices, and self-esteem sessions…)


1) ally and conquer:

 you can join the forces with other competitors to gain economy of scale and squeeze out the others.

2) you can integrate upstream:

gaining a cost advantage that can make you ( or the supplier who bought you…) better equipped for a price war.

3) you can integrate downstream:

Moving to the service side of your business and becoming a system integrator of a larger scope of supply, may help you differentiate again in the eyes of a customer anxious of reducing his fixed costs.

4) you can disintegrate your business:

Splitting it into the basic components, may help find better sub-systems performances, e.g. moving a subsystem to a Low Cost Country to save costs or closer to the Customer to improve commercialization.

5) you can integrate your business:

If your business is based on a standard industry platform (probably the same that your competitors are using too), being able to find a way to offer the same level of performance using a totally new (simpler and more convenient ) integrated system, can make you go beyond competitiveness: can make you win the market. (e.g. netbooks vs tablets)

6) you can buy a new technology:

Buy it where has been developed and import it into a new (local) market, or hire key technologist/marketers and their network, to achieve a new technology transfer and adoption. So changing the game completely…But this is situation “B”…


Is there other option you can see?

Please let me know.


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Flavio Tosi


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Flavio Tosi

What to do when your business is disrupted

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