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Presents Surviving Saturation- Hyper Competition and Your Choices by Will Phillips

Presents Surviving Saturation- Hyper Competition and Your Choices by Will Phillips. To download presentation and supporting materials: See Presentations on home page REXonline.org. Will’s UK Cell: 787 208 3361. Why Hyper Competition?. #1 reason for joining? Knowledge sharing

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Presents Surviving Saturation- Hyper Competition and Your Choices by Will Phillips

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  1. PresentsSurviving Saturation-Hyper Competition and Your ChoicesbyWill Phillips To download presentation and supporting materials: See Presentations on home page REXonline.org Will’s UK Cell: 787 208 3361

  2. Why Hyper Competition? • #1 reason for joining? • Knowledge sharing • Brand convergence • Quick niche copying • High quality is the norm • Decline of brand loyalty • Success attracts new entrants • Rising tide of medical-health information • Investors attracted to recurring income • Market segmentation • AND little increase in ww demand

  3. What You Can Do • Sales Machine: Powerful, Successes System • Specialty niche • 60 + year olds, Kids Performance, Squash • Differentiate: Blue Ocean • -25-35, Family • Hard ball • Shrink • Die

  4. A. Sales Machine • CLUB GENERATED LEADS: 60%. • SELF GENERATED LEADS: 40% • RECRUIT-SELECT-HIRE PIPELINE • NEW SALES PERSON ORIENTATION • CORE TRAINING: Sales; Product • SALES MANAGERMENT: Manager, tracking, daily training, daily meetings. • EFFECTIVE INCENTIVES-MOTIVATION

  5. C. Blue Ocean Strategy All industries today! Focus is beating the competition. Focus of all strategy work for 25 years Insufficient to sustain high performance

  6. How To Create Uncontested Market Space and Make the Competition Irrelevant

  7. Capacity to Create New Industries • Discount Retail • Express Delivery • Minivans • Snowboards • Home Videos • Cell Phones • 24 hour news • Gas Fired Electricity Plants None of these EXISTED 25 years ago!

  8. The Track Record • 14% of new business launches are • They produce 61% of the profits • 80-20 Rule rules!

  9. For example: The Circus • Declining industry • Kids wanted Play Stations • Animals Rights • Uncomfortable tents

  10. Cirque du Soleil • For Adults • No Animals • In Theaters • Uncontested market space • 5x the ticket price

  11. Respond To Competitors Value Innovate

  12. 1st Principle • Value creation without innovation is incremental. • Innovation without value is tech driven or futuristic. • Value Innovation aligns : • Utility • Price • Cost • Avoids value-cost trade offs

  13. Cirque • Dropped • Animals: expensive and offensive • Star performers: expensive and turnover • Aisle concessions: high priced add on • Three Rings: confusing • Added theater • Sophistication • Story line • Original scores • Multiple productions: Four in Las Vegas now!

  14. Cirque • Drove Costs down where industry competed • Drove Value Up in new areas

  15. Compete in existing market space Beat the competition Exploit existing demand Make value-cost tradeoffs Align organization with its choice of differentiation or low cost Create uncontested market space Make competition irrelevant Create and capture new demand Break value-cost tradeoffs. Align organization to pursue differentiation AND low cost Principle #2

  16. Principle #3 - Factors Assignment • What are the factors you compete on: • Products and services • Costs • Delivery • Consider what is on the agenda of • Industry publications • Industry conferences • Industry gurus, consultants and advisors.

  17. Costs Down Value UP Principle #4: Four Actions Framework REDUCE COST: 1-Eliminate industry factors 2-Reduce over designed industry factors CREATE NEW VALUE: 3-Escalate compromised industry factors 4-Create new factors

  18. RED BULL • Double the caffeine of Coke • 2/3 the size of Coke can • More than twice the price • 1.9 billion cans sold in 2004 • Spends 30% of revenue on marketing • Not super stars, but 500 fringe athletes, hip kids • Sponsors extreme sport contests and cultural events • 14 Red Bull airplanes for air shows • Coke spends 9%

  19. Market share is 40% to 80% per country • A new market: ENERGY DRINKS • PS Market research showed people hated • The Name • The Taste • The Logo • Coke, Pepsi and Anheuser-Busch have all joined the new market

  20. D. Play Hardball To GROW Defenders best hope is not to loose.Aggressors can win.CHOOSE!

  21. What’s Hardball Look Like? • Single minded • Relentless • Ruthless • Playing to win • Willing to hurt competitors • Willing to get hurt • DON’T cheat

  22. Softball ? • Make money • Run a good business • Focus on soft skills • Leadership • Marketing • Teamwork • Customer service • 80% of management books and consultants

  23. Soft Ballers • Complain about competitors • Want restrictions against competitors • Complain about unfair advantages • Hard ballers call all this ‘WHINING’

  24. Hardball Strategies • Deep understanding of your profit model? • Deep understanding of their profit model? • Avoid head to head attacks -SWA flys to secondary airports

  25. 4-The Will to Win and a Sense of Urgency Takes Priority Over: • Complacency • Cockiness • Bureaucracy • Status • Hierarchy • Petty conflicts • Greediness • Blindness to opporthreats

  26. 5-Play the Edges -Legally -Financially -Industry Wise -Edges are Blurry -Don’t break the laws

  27. 6-Devastate Rivals Best Profit Centers -Promotional flooding -Price cuts -Surgical focus -Based on real knowledge of costs/profits of competitors

  28. 7-Plagiarize with PRIDE -Steal any good, unprotected idea -Improve it -Suck away their uniqueness

  29. 8-Deception -The beloved sports fake -Vaporware -PR -Rumors

  30. 9-Unleash Massive and Overwhelming Force -Do not act until fully ready -Hammer blows -Focused -Direct -Swift -Repeated -Relentless

  31. 10-Raise Competitor’s Costs -The super low price offer-one day -When they don’t understand the true costs -Know and then cede the unprofitable clients and sectors

  32. Will to win? Willing to get hurt? Willing to hurt? Play the edges? Know your competitive advantage? 6. Don’t complain and cry ‘unfair’. Deep understanding of your profit model? Deep understanding of their profit model? Have a hardball team? Haven’t played a lot of soft ball? Assess Your Strategy1=Unequivocally ‘Yes’ 2=Sometimes 3= Maybe 4=Rarely; it’s not me/us!

  33. Total Your Score and Divide by 10 1.00 to 1.49 Hard ballers. 1.50 to 1.99 Junior hardball teams. 2.00 to 2.49 Part time hard ballers. 2.50 to 3.49 Softballers; beware of hardballers entering your league. 3.50 to 4.00 May be earning good money mowing the grass; not competitive players.

  34. New Format Invasions Strategy and Business Issue 40

  35. New Format Businesses • Assemble common assets in new ways • At 20% to 40% lower costs • While maintaining or improving quality • DO NOT rely on new tech • Change multiple functions at once • Often reach into vendors and distributors • All this works only when done all at once.

  36. Old Format Success • Focus on the killer app • Minivan • Ipod • Viagra • New Format Success killer app is • Massively lower costs

  37. Gas Station • Gas and repair bays • Gas and convenience store • Gas ATMs in Scandinavia • 50% less margin needed for nice profits

  38. Zara • Retail fashion clothing loses margin in • Unsold clothes; markdowns • Zara • sells 80% = twice the normal

  39. Stage 1 • Strips out amenities • Focus on bare bones • Quality • Honest • Reliable • Attracts penny switchers

  40. Stage 2 • few patents • lots of copiers • Successful copiers move into • new geography • new market segments • Old format businesses • Move down and die • Move up but are anchored by the low priced comp.

  41. Incumbents mistakenly ascribe • new format’s success to • paying less for labor or materials • In reality this is true but they also use far fewer resources. • lower quality • No cases of an incumbent responding successfully unless they adopt the new format.

  42. New Format Survivors • Have a clear and accurate view of how new format competitors deliver value at low cost. i.e. how the new format works • They adopt the whole new format and don’t fiddle with pieces. • Adaptations to the new format do not compromise the low cost advantage. • Make the new format their core business not a side offering

  43. What You Can DO • Scan market for new format invaders • Understand the new format • Look at the new format as an OPPORTUNITY • Design your moves from the market back • Be very careful of adding costs • Make the new model your mainstream • Avoid mergers

  44. Stay Alert….Be Humble…Adapt

  45. Strategies for Fighting Low Cost Rivals • Three Questions • Six Strategies From Nirmalya Kumar HRB Dec 2006

  46. Watch, don’t take on ! No Yes Yes Yes Don’t launch price war! Mine your data on numbers and customers. Increase differentiation. Become a low cost player. Sell custom solutions. Scale down size. Learn to live with it. Merge. Acquire similar companies. No No Step up differentiation. Differentiate on many aspects. Reduce costs. Attack with a low cost business of your own. Danger 1-ASK: Will competitor take any current or future customers? 3-ASK: If I run a low cost business, will it synergize with my high cost business? 2-ASK: Will enough customers pay more for what I offer?

  47. Follow Up Reading Books • The Art of Profitability by Adrian Slywotsky • Profitable Growth Is Everybody’s Business by Ram Charan • How To Grow When Markets Don’t by Adrain Slywotsky • Confronting Reality by Larry Bossidy and Ram Charan • Blue Ocean by Kim and Mauborgne • Hardball Strategies By Salk and Lachenauer

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