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7/29/2019 Surviving Saturation
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Presents
Surviving Saturation-
Hyper Competition
and Your Choices
byWill Phillips
To download presentation and
supporting materials: See
Presentations on home page
REXonline.orgWills UK Cell: 787 208 3361
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#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
Why Hyper Competition?
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What You Can Do
A. Sales Machine: Powerful, Successes System
B. Specialty niche
A. 60 + year olds, Kids Performance, Squash
C. Differentiate: Blue Ocean
A. -25-35, Family
D. Hard ball
E. ShrinkF. Die
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A. Sales Machine
1. CLUB GENERATED LEADS: 60%.
2. SELF GENERATED LEADS: 40%
3. RECRUIT-SELECT-HIRE PIPELINE
4. NEW SALES PERSON ORIENTATION
5. CORE TRAINING: Sales; Product
6. SALES MANAGERMENT: Manager, tracking,
daily training, daily meetings.7. EFFECTIVE INCENTIVES-MOTIVATION
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C. Blue Ocean Strategy
All industries today!
Focus is beating the competition.
Focus of all strategy work for 25
years
Insufficient to sustain highperformance
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How To Create Uncontested Market Space
and Make the Competition Irrelevant
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Capacity to Create New
Industries Discount Retail
Express Delivery
Minivans
Snowboards
Home Videos
Cell Phones
24 hour news
Gas Fired Electricity Plants
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The Track Record
14% of new business launches are
They produce 61% of the profits
80-20 Rule rules!
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For example: The Circus
Declining industry
Kids wanted Play Stations
Animals Rights
Uncomfortable tents
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Cirque du Soleil
For Adults
No Animals
In Theaters
Uncontested market space
5x the ticket price
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Value Innovate
Respond To Competitors
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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
1st Principle
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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!
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Cirque
Drove Costs down where industry
competed
Drove Value Up in new areas
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Principle #2
Compete in existingmarket space
Beat the competition
Exploit existing demand
Make value-cost tradeoffs
Align organization with itschoice of differentiation orlow cost
Create uncontestedmarket space
Make competitionirrelevant
Create and capture newdemand
Break value-costtradeoffs.
Align organization topursue differentiationAND low cost
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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.
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Principle #4: Four Actions
FrameworkREDUCE COST:
1-Eliminate industry factors
2-Reduce over designed industry factors
CREATE NEW VALUE:
3-Escalate compromised industry factors
4-Create new factors
Costs Down
Value UP
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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%
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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 alljoined the new market
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D. Play Hardball To GROW
Defenders best hope is not to
loose.
Aggressors can win.
CHOOSE!
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Whats Hardball Look Like?
Single minded
Relentless
Ruthless Playing to win
Willing to hurt competitors
Willing to get hurt DONT cheat
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Softball ?
Make money
Run a good business
Focus on soft skills
Leadership
Marketing
Teamwork
Customer service 80% of management books and
consultants
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Soft Ballers
Complain about competitors
Want restrictions against competitors
Complain about unfair advantages Hard ballers call all this WHINING
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Hardball Strategies
1. Deep understanding of your profit
model?
2. Deep understanding of their profit
model?
3. Avoid head to head attacks
-SWA flys to secondary airports
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4-The Will to Win and a Sense of Urgency
Takes Priority Over: Complacency
Cockiness
Bureaucracy Status
Hierarchy
Petty conflicts Greediness
Blindness to opporthreats
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5-Play the Edges
-Legally-Financially
-Industry Wise
-Edges are Blurry
-Dont break the laws
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6-Devastate Rivals Best Profit Centers
-Promotional flooding
-Price cuts
-Surgical focus-Based on real knowledge of
costs/profits of competitors
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7-Plagiarize with PRIDE
-Steal any good, unprotected idea
-Improve it-Suck away their uniqueness
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8-Deception-The beloved sports fake
-Vaporware
-PR
-Rumors
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9-Unleash Massive and Overwhelming Force
-Do not act until fully ready
-Hammer blows
-Focused
-Direct
-Swift
-Repeated
-Relentless
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10-Raise Competitors Costs
-The super low price offer-one day
-When they dont understand the true
costs
-Know and then cede the unprofitable
clients and sectors
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Assess Your Strategy1=Unequivocally Yes 2=Sometimes 3= Maybe 4=Rarely; its not me/us!
1. Will to win?
2. Willing to get hurt?
3. Willing to hurt?
4. Play the edges?
5. Know your
competitive
advantage?6. Dont complain and
cry unfair.
7. Deep understanding
of your profit model?
8. Deep understanding
of their profit model?9. Have a hardball
team?
10.Havent played a lotof soft ball?
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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 hardballersentering your league.
3.50 to 4.00 May be earning good money mowingthe grass; not competitive players.
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New Format Invasions
Strategy and Business
Issue 40
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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.
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Old Format Success
Focus on the killer app
Minivan
Ipod
Viagra
New Format Success killer app is
Massively lower costs
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Gas Station
Gas and repair bays
Gas and convenience store
Gas ATMs in Scandinavia
50% less margin needed for nice profits
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Zara
Retail fashion clothing loses margin in
Unsold clothes; markdowns
Zara
sells 80% = twice the normal
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Stage 1
Strips out amenities
Focus on bare bones
Quality
Honest
Reliable
Attracts penny switchers
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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.
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Incumbents mistakenly ascribe
new formats 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.
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New Format Survivors
Have a clear and accurate view of hownew format competitors deliver value atlow cost. i.e. how the new format works
They adopt the whole new format anddont fiddle with pieces.
Adaptations to the new format do not
compromise the low cost advantage. Make the new format their core businessnot a side offering
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What You Can DO
1. Scan market for new format invaders
2. Understand the new format
3. Look at the new format as an
OPPORTUNITY4. Design your moves from the market back
5. Be very careful of adding costs
6. Make the new model your mainstream7. Avoid mergers
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Stay Alert.Be HumbleAdapt
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Strategies for Fighting
Low Cost Rivals
Three Questions Six Strategies
From Nirmalya Kumar HRB Dec 2006
1-ASK: Will
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1 ASK: Willcompetitor takeany current or
futurecustomers?
2-ASK: Willenough
customers paymore for what I
offer?
3-ASK: If I run alow cost
business, will itsynergize withmy high cost
business?
Watch, dont
take on !No
Scale down size.Learn to live withit. Merge.Acquire similarcompanies.
No
Become a lowcost player.
Sell customsolutions.
No
Dont launch price war! Mine your data on numbers and
customers. Increase differentiation.
Yes
Step up differentiation.Differentiate on manyaspects. Reduce costs.
Yes
Attack with a lowcost business ofyour own.
Danger
Yes
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Follow Up Reading Books
The Art of Profitability by Adrian Slywotsky
Profitable Growth Is Everybodys Business byRam Charan
How To Grow When Markets Dont by AdrainSlywotsky
Confronting Reality by Larry Bossidy and Ram
Charan Blue Ocean by Kim and Mauborgne
Hardball Strategies By Salk and Lachenauer
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E. When Not To Grow/Shrink
Owners lifestyle is good.
Staffs lifestyles are good.
Owners ego is dormant.
Your desire for contribution/meaning is full.
Your business is not growing for a while
You have tried everything you can. Competition is strong
B i I R di
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Barriers In Responding
To Competition
7 Habits of a Highly Defective
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7 Habits of a Highly Defective
CEO
1. Arrogance.
2. Wishful Thinking.
3. Insecurity.
4. Denial.
5. Control.
6. Distancing.
7. Isolation.
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To download presentation
and supporting materials:
See Presentations on home
page of REXonline.org
Wills UK Cell: 787 208 3361