Size does (not always) matter
16. Mai 2016
Concentration has been a trend in many industries for a long time. M & A activities, in order to enhance economies of scale (and to eliminate competition), keeps these industries in motion. In the automotive business for instance, the number of independent manufacturers declined from more than 60 in the 1960s to only 12 in the early 2000s. And most specialists, despite some new players such as chinese producers or disruptors such as TESLA, expect this consolidation process to continue.
Big is beautiful, and now this: Subaru, sales figures somewhere between number 15 and 20 in the world, is the most profitable car manufacturer – for the second year in a row! According to the Center of Automotive Management, Subaru’s margin jumped another 3 percentage points in 2015. Sure, Subaru does have a strong link to Toyota, but then, what about the cooperation between Daimler and Nissan or Toyota and BMW?
From my point of view, Subaru’s strength is their distinct focus on a particular niche segment and the specific wants and needs of the customers in this segment. Obviously, even in the very competitive automotive mass-markets, niche players are able to hit the bull’s eye – big is not always beautiful.
Beat the market!
26. März 2015
It’s time that companies apply the same level of scrutiny and commitment to marketing and sales, as they have done to lean-manufacturing. „Companies must tap the potential of marketing and sales to deliver better results.“
This is the result of a detailed benchmarking study conducted by McKinsey.*
Here’s what I think are the most important aspects:
Many companies focus on tactical efforts that provide quick, visible results. This is a mistake! Companies with the best marketing and sales capabilities have a sustainable competitive advantage.
7 hallmarks of superior marketing and sales capabilities
- View marketing and sales as an investment, not an expense!
Leadership often looks at marketing and sales as an expense rather than an investment in top-line growth. But, investing in carefully chosen marketing and sales capabilities (e.g. transactional pricing) can yield up to 5 – 10 times the return of an investment in hard assets (such as factory equipment). - Target the capabilities that matter the most!
Companies tend to invest in capabilities without thinking through which are likely to have the most impact or are most important to beat competition. - Know what needs to be fixed!
It is virtually impossible to fix something if you don’t know what’s wrong with it. Companies should undertake a diagnostic that reveals capability strengths and weaknesses – to allow action to be taken. - Don’t try too much!
Building capabilities requires focused attention. Not trying to do too much, too soon ensures meeting goals and improving margins. Two actions at a time is enough! - Tailor the approach to your company’s development-stage!
Develop marketing and sales capabilities in the right sequence:
Stage 1: Low growth and profitability relative to market. Investment should focus on foundational capabilities.
I am convinced that market- and customer segmentation, and a focussed approach to target-segments and -customers are key. This is the foundation to increase Sales efficiency and profitability, e.g. using Value Selling, Value Pricing, and customer-portfolio management. Without this foundation, companies will not be able to make it to the next stage.
Stage 2: Low growth but high profits. To promote growth, companies should focus on building capabilities in branding, strategic marketing, customer life-cycle management, and customer service.
Stage 3: High growth and high profitability. To become a market leader, businesses need to invest in higher-factor skills such as channel performance and integration as well as alternative go-to-market approaches. - Think institutional capabilities, not just individual skills!
Individuals may leave, but companies need to sustain capabilities over time. The only way to implement true institutional capabilities is to create a clear view of which capabilities are necessary across the entire company. This also creates a consistent working vocabulary. - Build an operating model to support change!
To become more focused on execution, and to enforce stronger accountability for teams as well as for individuals, the model needs to be specific and measurable: annual performance-improvement goals; scheduled reviews throughout the year by segment, key account, etc.; individual and business-unit performance reviews; incentives aligned with institutional goals; and leadership role modeling to shape the culture. Top-performing companies actively build a culture that’s customer-focused, managed for the long term, creative, confident, flexible, and fast moving.
And (my #8): spend more time with your customers!
* March 2015 | byBart Delmulle, Brett Grehan, and Vikas Sagar