October 14, 2004

Excerpts: Hardball - Part V

By: 800-CEO-READ @ 7:22 PM – Filed under: Management & Workplace Culture

A win is when you can retain and grow the business ofyour anomalous, highly profitable customers when you implement the new strategy. And, even more delightful, when you can capture the business of your competitors customers. The majority of Brokaws growth, for example, came from new merchants, the ones the company had no prior relationship with. Brokaw enticed these merchants with its improved service offering and hooked them with its ability to manage specialty orders. Not only did most of the existing specialty business come Brokaws way, its skill created incremental business. Such incremental business comes from your competitors customers and reinforces the basic economics underlying the anomaly. In the case of Brokaw, the more specialty business Brokaw was able to attract through its legacy merchants and its new merchants, the lower was the per customer cost of providing fast service. As more and more of the specialty orders migrated to Brokaw, there was less and less specialty business available to any competitor who might try to challenge the company.
The most successful win is the one that your competitor may not immediately recognize as a win, cant figure out, or may even see as a loss. It took years for Brokaws competitors to realize that the information they had gotten in the press did not tell the whole story of how Brokaw had achieved its win. Besides, because their own core business was barely affected, they asked themselves, Why make a move if we dont have to?
Taking advantage of an anomaly is an opportunity to inject into your company some of the vitality, excitement, and spirit of experimentation that is characteristic of start-ups. Every day, entrepreneurs are working to reinvent your business and carve out a piece of it for themselves. By capitalizing on anomalies, you can harness the same kind of creative energy and put growth back on your companys agenda.
Reprinted by permission of Harvard Business School Press. Excerpted from Hardball by George Stalk and Rob Lachenauer. Copyright (c) 2004 by The Boston Consulting Group; All Rights Reserved.