There’s been an understandable increase in companies of all shapes and sizes changing their go-to-market strategies in the hopes of surviving the current economic environment while setting themselves up for success when times get better. For some business owners, this represents a brave new world, but it’s one with which entrepreneurs are all too familiar.
I, personally, have the scars to prove it. I launched TV Ears 10 years ago with the intent on selling it to anyone that watched TV. Our original go to market strategy was through direct response infomercials; the idea was to sell a million units and grow extremely fast. That strategy failed due to our unrealistic expectations as well as inexperience in direct marketing, production costs and lack of funding. After nearly bankrupting the company, I and my management team took decisive action and modified our strategy. With that, doctor-recommended TV Ears was reborn and sold to hearing aid stores. This took quick and decisive action in response to a failing strategy which in turn saved the company. While we did enter the direct response market years later and are very successful at it today, it was only after we built our reputation in the hearing business and achieved sufficient economies of scale that allowed it to become a viable channel.
Patting on the back aside, the point here is that founders and entrepreneurs make these kinds of “make or break” decisions in all economies – good and bad. So before the rest of Corporate America starts to claim that the sky is falling, executives should think about three rules when faced with the dilemma of changing or dying.
Rule 1 – There’s more than one way to sell a product
Often times companies get “tunnel vision,” and focus on leveraging only one marketing and sales channel. While that particular avenue may be the most lucrative in the long run, it may not be the right path to engage target customers at the outset. In fact, it may make more sense to build a strong base of alternative channels before engaging the biggest fish.
Here’s a good hypothetical example – a computer accessory company has a new product and rightfully believes that its unique selling point will make a big splash in the general consumer market. So it’s natural that securing shelf space in a large retail chain would be the logical choice. Unfortunately, such outlets generally pressure their suppliers on price to the point that margins become slim, requiring that profits be made up in volume. So before making that leap and draining capital, the company may instead look to market initially to specialty computer outlets and online, where per unit profits may be larger until it can generate enough awareness and demand to sell a significantly large number in the main retail shops.
Rule 2 – Nothing ever goes as planned.
Having a business strategy is important, but treating it as Gospel gives any plan more than it’s due. That’s because most documents of these sort represent only a snapshot in time. A myriad of factors are in constant state of flux; including consumer buying trends, competing product introductions, and the advent of new sales and marketing channels.
Companies need to recognize that. One only has to look at the newspaper industry to see that. Anyone starting up a daily news outlet today with the mentality that people will only read their content is by picking up a hardcopy edition on their driveway is sadly mistaken. Unfortunately, some outlets still believe that to the point of being on the verge of extinction. New upstarts, however, are leveraging online and social media channels to deliver information, and are eating away at the long-established player’s market share. This change in business strategy is evolving regularly as communication tools like Twitter, Facebook and LinkedIn become more mainstream. None of these outlets were considered primarily communication vehicles even five years ago, when some new media companies were formed. If they are still following their same business plan, they are destined for failure.
Rule 3 – While you can’t plan to change, you can plan
No one I know has a lock on predicting the future with any real degree of accuracy, so it’s unrealistic to think anyone can see what tomorrow will really bring. That doesn’t mean, however, that a company can’t prepare to respond to an emergency. There is a big different between planning to change and planning FOR change.
Here’s a case in point: In the early 1990’s, Foodmaker, Inc., the parent organization of regional fast food chain Jack in the Box, caught national attention when it suffered from an E. coli outbreak in their beef inventory. After the PR dust settled, the company became painfully obvious of the negative impacts toward their operations if their supplies became contaminated. So while Jack in the Box couldn’t predict if, when and how another such instance would occur, the company did develop an extensive alternative menu that was devoid entirely of beef. Should such a catastrophic event to their supplies occur again, no matter how it happens, Jack in the Box plans to be fully up and running.
Change is inevitable and one that occurs in any environment. The key is for Corporate America to take the lead of entrepreneurs and understand that large shifts in strategy and tactics is part of the job, and why folks like us get paid the big bucks!