Which Companies Will Thrive as the
Economy Picks Up?
Companies are facing intense competition
right now. Industry after industry is confronting a situation called
"product party," in which one company's product or service looks just
like the competitor's when looked at through the customers' eyes. This
results in competition on the basis of price. What can companies do to
relieve some of the pressure on price?
"You must either innovate or evaporate," says Howard Hyden, president of
the Center for Customer Focus and an expert on improving competitive
advantage. "The winners are constantly looking for ways to 'add value'
in creative ways to get away from strictly competing on price."
According to Hyden, innovative companies are continuously learning. The
speed with which an organization learns from a variety of sources out in
the marketplace is what he called its "learning velocity."
The most important learning source for any business: their customers. By
asking their customers what they are doing right and wrong and what
possible changes they see down the road, companies can gain valuable
information that will help them adapt and even stay ahead of the
competition. It’s what Hyden calls examining your company from the
“outside in.”
“Only 7 percent of marketing executives have incentives tied to customer
satisfaction,” says Hyden, who believes that too many companies are
unaware of or indifferent to their customer’s needs. Since the majority
of executive compensation is tied to profit and loss, that’s what they
pay attention to. They don’t spend their time thinking about their
customers. “Instead of just focusing on the financial statements,
companies that listen to their customers’ needs and innovate will be the
ones that succeed,” he adds.
To illustrate his point, Hyden gives the example of NorthStar Print
Group, which has been a long-time provider of labels to Miller Brewing
Company. The brewing company regularly called on NorthStar to create
labels on a rush basis, but with a lot of other customers to serve, they
found it difficult to deliver. Finally Miller issued an ultimatum:
either deliver on time or they would take their business elsewhere.
Because Miller represented 40 percent of the company’s business, they
knew they needed to do something drastic.
Hyden conducted a workshop with the printing company’s employees who
said that they were frustrated by Miller’s failure to forecast its label
needs. When asked to imagine the situation from Miller’s perspective --
thousands of bottles of beer coming down the line filled and capped, but
held up because there were no labels -- the printing company’s employees
understood immediately the urgency of Miller’s needs.
“They were able to turn the situation into an opportunity to add value
for the customer,” says Hyden. The employee team decided to analyze the
brewer’s past order history so that they could forecast for Miller and
better anticipate the size and frequency of orders. Not only were they
able to reduce employee stress, but they significantly boosted Miller’s
customer satisfaction and have since won numerous awards for being
Miller’s best supplier. By listening to the needs of their customer,
they were able to innovate internally and significantly increase their
profit margins.
“This turnaround resulted from simply changing their focus -- to a
customer focus,” adds Hyden. “Real competitive advantage comes not from
looking at the bottom line, but from listening to what your customers
have to say.”
Howard Hyden is a businessman and nationally recognized expert who
speaks to organizations about how they can improve their competitive
advantage and employee satisfaction -- resulting in an improved bottom
line.
Courtesy of ARA Content
