Market Competing or Market Creating - What is your organization's carrier

There is no doubt that many, many industries are in need (some overdue) of new value-cost frontiers. Over the years, I have had the grand opportunity to work for and learn from amazing organization, exceptionally talented teams, complex array of product and services, and market shaping strategies, however almost all organizations have found it a tough climb to define strategies (and deliver upon) to achieve sustainable high performance.

Pick up any existing industry and ask if it isn’t in need of new frontiers (aka horizons, assets, growth/customer pools). How does demand pair against supply in that industry? Tighter profit margins, rising costs, stagnant or declining sales, market share battles and in many industries declining market sizes, regulatory, environmental and sustainability requirements, aging assets needing capital intensive replacements and new solutions, are hitting industries across the board. Very few industries seem immune from this and that I put down to the early life cycle or potential barriers to entry.

?The prevailing economic environment, rise of digital solutions, post COVID world of work-life and people’s priorities have pronounced manifolds impact on economic models most organizations carry, where difficult choices are being made to trade off customer value, shareholder value, people/team value, and commitment towards environment and communities. And yet, it inevitably limits the sustainability of measures taken and their outcomes. ROI (financial or otherwise), customer loyalty, value stacking from product/service bundling, revenue and profit diversification, and capital / resource investment for retaining current portfolio or future growth now all carry a higher risk factor and lower confidence.

Whether an organization is cash-strapped start-up or high growth disrupter, large & establish corporate or not-for-profit, leaders often accept and act on two fundamental assumptions. One is that market boundaries and industry conditions are given (i.e. you can’t change them) so strategy is built around that. The other is that, to succeed within these constraints, an organization must make a strategic choice between differentiation and low cost (value-cost trade-off) but it can’t do both.

Organizations and leaders that have purposefully challenged these fundamentals are the one creating winning strategies, gain true competitive advantage, sailing into new markets, activate large new customer pools, and mostly positive and substantial impact on communities, environment and corporate ecosystem. Moving from market competing to market creating. A few terms going around for such phenomenon, one being Blue Oceans (Market creating, new oceans with little or no competition) vs. Red Oceans (exiting markets with competing forces for market share)

?Three Components for a successful shift from Market Competing to Market Creating:

?1.??????Market creating perspective: To expand people’s horizon towards new value-cost frontiers instead of ONLY competing in current market conditions. Raising fundamentally different questions to understand opportunities and risks. Too many organizations are wedded to industry best practices and boundaries even as they strive to break away from them. Open up your mind to “what could be” instead of limiting it to “what is”.

While the right perspective is critical, it is not sufficient to actually conceive of and open up a new value-cost frontier. This is one of the greatest challenges organizations face.

2.??????Market creating tools: The second component, therefore, is having tools to translate a creative perspective into commercially compelling new offering for consumers. If having the right perspective is a matter of shifting strategic thinking by asking different questions, having the right tools (analytical, visual, structural etc.) enable asking the rights questions at the right point in the process and to see the significance of their answers.

Making this shift is a transformational journey; one that requires bringing people along. Without people’s voluntary cooperation it will most definitely stop in its tracks. Most strategy work doesn’t delve into human side of organizations, but it MUST, to create and deliver on this shift from market competing to market creating.

3.??????Humanness in the process: Accordingly, the third component is to inspire and build people’s confidence so they can own and drive the process towards effective execution - have humanness in the process (most organizations face internal hurdles to change – cognitive, political or motivational hurdle). Two most commonly observable reason why transformational efforts fail. First, treating strategy creation and execution as separate and sequential activities. Second, when it comes to execution most of the time and attention is focused on making structural changes, which does little to inspire and build people’s confidence. Leaders and organizations need to essentially do opposite of what they commonly do (build executional considerations within the strategy set-up instead of sequential next step).

?In short, we are all paying for the products and services we consume and how the organizations go about conducting their businesses and create customer?shareholder value. To turn things around, we need to produce more creating strategies that can unlock new value-cost frontiers and with then new growth horizons.

?How about you? If you can relate to any of these situations and feel the desire to be part of a transformation journey, a blue ocean mindset shift is right for you.

?I am keen to hear your perspectives on this, and equally invaluable if you have already experienced this shift in your professional journey or have been part of organizations that encourage and nurture such ecosystem.

#finance #leadership #learning #business #change #strategy #mindset