Markets are complex. There are multiple players who are dealing with players in other markets—customers and suppliers of your customers. It's easy to misread the market. When you do, that can lead to pursuit of the wrong strategy. Doing a solid market assessment for your market and your customers' market and refreshing that assessment regularly keeps your strategy aligned with market dynamics.
- Markets are complex. There are multiple players in your market who are dealing with players in other markets. You have to think about the market you're competing in as well as the markets of your customers and your suppliers. It's easy to misread the market. Doing so can lead to the pursuit of the wrong strategy. Do a good market assessment for your market and your customers' markets and your suppliers' markets. Refresh those assessments regularly to keep your strategy aligned with changes in the marketplace.
I know one electronics retailer that completely misread the market. They were focused on building physical stores and they said we want to have an assortment where anything you need if you come into our store we have it. The result was they had very slow moving inventory in terms of their assortment. They also didn't push for a big online presence as hard as they needed to. What happened was that online channel became dominant. The online channel was able to beat them both in terms of the assortment that was available and the price that customers could get it for.
The retail stores became non-cost competitive. They couldn't compete with the prices or the assortment online. This organization missed that their customers' market had shifted. They customers had moved from going to a retail store to just clicking their mouse at home and getting the product shipped to them. The result was this organization went bankrupt. They completely misread the dynamics in their marketplace. To avoid their fate, conduct a rigorous Porter's Five Forces analysis.
Do that analysis for your business and your market first. Then do the analysis from your customers' perspective. What's your customer's market look like, what are the dynamics there? Also do a Porter's Five Forces analysis for your major suppliers. You want to know if your suppliers are facing any major risks. You need to know if a supplier is at risk of going under well in advance of that happening. If you know that, then you can make the appropriate actions today to contingency plan for that problem in the future.
Once you've done these analyses, go out and validate them with your customers and your suppliers. If you've got close partnerships, invite those groups in to do this analysis with you. It'll make the analysis more accurate and enable you to put in place the right contingency plans. Don't misread your market. Invest the time in having the best competitive intelligence of what's going in the marketplace so you can build an appropriate strategic plan to succeed in that environment.
- Assessing the market
- Reacting to customer behavior changes
- Dealing with competitive actions
- Adjusting to technology changes
- Managing your prioritization process
- Making tough choices
- Ensuring that you're working with the right talent
- Aligning compensation and incentives
- Linking strategy to execution