There is a difference between telling someone what to do (management) and inciting a movement (leadership).
Managers use organisational structures to get stuff done, leaders create momentum by enabling connections to be made amongst like minded people, and showing the way.
You need 2 things to generate momentum:
The web has changed the dynamics, but not the rules, they are as old as human interaction.
The usual, and correct view of a supply chain is a number of competitors at each point in the chain competing to provide the goods and services necessary to send the goods along to the next stage. The classic is the Australian wool chain, where the agents compete to broker the wool, the scourers compete amongst themselves, as do the top-makers, weavers, and so on. This all takes a lot of time and energy, competing horizontally.
Well developed demand chains by contrast compete vertically. They are driven by demand, and each point in the chain works collaboratively with the others to best meet the customers need. Slowly, the competitive environment is altering, and competition at the point of sale is becoming a competition between competing supply chains, not just competing retailers.
The benefits of this type of activity are potentially huge.
Wool Connect, a group of wool producers has its wool in shops as socks after a couple of months, rather than a couple of years as would be the norm, and they know where the wool goes, and they get a premium for a premium product.
SOW is a simple but powerful concept for both consumer and B2B markets.
How much of a customers spending on products you could supply, actually comes your way, Vs going to a competitor? how much of their “wallet” to you get? It is a great measure of the relative value of your offering to a customer against that of your competitors.
The key is to define the wallet, and fundamental to that is an understanding of the customers behavior, what they buy, from whom, via what channels, why they buy it, and what they buy it instead of.
Setting the parameters of a wallet for major or target customers is a task that should be central to any strategic effort to enhance performance. It is also a valuable exercise for the sales and marketing personnel, as it demands a critical examination of the customer, always a useful exercise.
Many people who run businesses obsess about the competition to the extent that it impacts on their own strategic development. They watch what competitiors do, aggressively match them, and set out to beat them at their own game.
Often the better answer is to be different to them, be so different that there is a yawning chasm for at least a small group of customers, such that they would not leave you for them, and you attract that same type of customer currently with “them”
Competition is not all about them, it is also about us.
The explosion of media options in the last 5-10 years is giving small businesses options they did not have in the age of mass media, mass marketing.
The recession will drive a continuing growth in alternative media at the expense of the traditional media, the growth is inexorable.
Small businesses now have the opportunity to connect with their markets in ways impossible a few years ago, meeting specific very narrow markets that may be geographically spread. Access to the “Long tail” of marketing, is creating markets that did not exist 10 years ago.
Small businesses with a “narrow but deep” market potential are no longer restricted by geography. Look at what my friend Jonathan Hatcher and his wife Alyssa are doing with their fantastic berry jam products grown and made on their farm in he NSW southern highlands. Their products have great appeal to the small , widely dispersed group of people who value the emotion that goes into each jar of jam.
In a downturn, the volume of low priced stuff increases, & as consumers reward themselves, some stuff a the “top end” also does well.
Beware if you are in the middle, and not the lowest cost producer, both your volumes will suffer, and margins will be squeezed as you try to compete.
Beware if you think you can move to the “top end” without a strong and unique value proposition that is compelling in the market.
However, if you have the strong value prop, even in the downturn, you should do well in many product categories.
There is always a silver lining if you look hard enough for it.