Leading a business in the New Economy isn’t for the faint of heart or indecisive. What most companies have learned is that the New Economy is very unforgiving. Every operational, sales and marketing flaw, mistake and missed opportunity results in companies paying dearly in lost sales, profits and customers. It’s like working for Alec Baldwin’s company in the movie Glenn Gary Glen Ross when he said, “We’re having a contest. First place wins a Cadillac, second place wins steak knives and third place gets fired.”
Let’s use Sears as an example since they ended the year by announcing that they are closing 120 stores and taking as much as a $1.8 billion charge for the under-performing stores. As chief executive Lou D’Ambrosio was quoted saying.”We have to do a much better job of demonstrating who we are as a company. It’s important to us to ensure that people understand the value proposition of Sears*.”(*Chicago Tribune 1/2/12)
Will Sears turn things around and win the Cadillac, simply survive and win the steak knives or get fired and become another casualty of the New Economy? That depends upon their leadership and ability to execute in the months ahead.
Let’s examine more closely how these new rules of engagement are playing out in many businesses today. This of course is a high level view that can be generalized across various markets
As markets contract customers become more cautious and demanding. This causes businesses to become more competitive. Some businesses respond by cutting price and reducing service or quality (sometimes both). Others innovate to better meet their customers’ needs. The market rewards those businesses that best respond to their customers’ needs. Average and below average companies are eliminated because they didn’t respond or didn’t respond fast enough. The remaining businesses get smarter and more competitive. During the next round the customer demands even more and only the best will survive. Market leaders who innovate increase their share (Apple, Samsung, and South West Airlines). Companies who can’t (like American Airlines, Bally Fitness, Hostess, Kodak etc) lose market share, profits and customer loyalty (these are the next candidates to be fired or to get steak knives).
How is your business positioned in your market? Are you in line for the Cadillac, the steak knives or will your customers fire you?