It’s trade show season once again and time to live out of your suitcase…at lease for a little longer. During one of the recent shows several manufactures I spoke with wanted advice on how to deal with the increasing pressures they are experiencing in maintaining their market share & profitability. While these discussions aren’t unusual, the level of frustration expressed seemed higher than normal.
Being the sharp professional I am, I asked the obvious questions – what do you feel is causing this and what have you done so far to address it? Very insightful of me I know, and the responses were predictable.
More competitors are expanding into my product categories making it harder to maintain or grow our market share. They are putting additional margin pressure on us by under selling us to get product placement. Most also mentioned increased margin pressures from their retail customers as they try to compete with “the internet”. Again, nothing surprising here. This is the same story we have come to expect to hear.
Unfortunately, what they are doing to respond to these pressures is also becoming predictable. We expanded into new product categories (I’ll steal market share from them). We added features to existing product but maintained pricing. We lowered our price (took smaller margins) to increase value to the consumer. We are running more promotions on key sku’s to key retailers so they can make more (or at least some) margin and be competitive with the internet sellers, etc. etc. etc. Ultimately what they are doing is responding to competitive pressures by utilizing what Simon Sinex in his book Start with Why calls manipulations. More on this latter…
On the last day of the show I was finally able to catch up with an industry friend I had been trying to track down. He is an executive with a leading manufacture which manufactures products in one of the most over sku’d categories (over 200 vendors) in the sporting goods industry. They experience all the same pressures as the other manufactures. During our talk I asked how 2019 finished up, how the trade show went, and how 2020 is looking. His answers? They had a strong 2019, the trade show exceeded their expectations, and they are very positive on 2020. A big contrast to several vendors I spoke to earlier.
Once again; being the sharp professional I am, I asked another obvious question – are you doing anything new or different to get those results? He looked at me for a minute before answering. I am pretty sure he thought it was a dumb question but thankfully was gracious enough not to say so. His answer was simple yet genius. He said no, they aren’t doing anything new or different. They are focused on doing what they always do. Huh?
They (unlike many of their competitors) are laser focused on their purpose. And their purpose isn’t to sell product. What? They understand the product they sell is how they achieve their purpose. And they sell a lot of product. If I told you their purpose you will know immediately who I am speaking of. Why? Because their purpose (their company culture) is aligned with their brand identity. Not only is it aligned, it is ingrained to the point that they are one and the same. Their company culture (purpose) is their brand identity. They understand that “People don’t buy WHAT you do, they buy WHY you do it” – Simon Sinex, Start with Why. Consumers buy their product because they are emotionally invested in the company’s purpose. As I said earlier, this company is still affected by competitive pressures. But because they are focused on their purpose and their brand identity is aligned with their purpose, they respond to those pressures’ verses react to them. They are resilient.
So why then do so many companies focus on manipulation verses inspiration? Because manipulations work and it is much easier to manipulate than to inspire. “The danger of manipulations is that they work. And because manipulations work, they have become the norm, practiced by the vast majority of companies and organizations, regardless of size or industry. That fact alone creates a systemic peer pressure. With perfect irony, we, the manipulators, have been manipulated by our own system. With every price drop, promotion, fear-based or aspirational message, and novelty we use to achieve our goals, we find our companies, our organizations and our systems getting weaker and weaker.” “Manipulations lead to transactions, not loyalty”. – Simon Sinex, Start with Why
It isn’t easy to inspire. It isn’t easy to embed a company culture (purpose), provide the vision and build a brand identity aligned with your purpose. By the way, whose job is that in the first place? The embed a company culture, and provide the vision part? It is the CEO’s. Frankly in larger organizations it is their only job. Many CEO’s fail at this simply because it is difficult. Actually…coming up with the purpose / vision isn’t hard. All CEO’s can do this. It is embedding the culture / the purpose that is hard. Or as Bob Burg calls it – the holding. “The hardest part isn’t the vision. Anyone can come up with a vision. The hard part is the holding.” Bob Burg, The Go-Giver Leader.
Ok, so you are a CEO and after reading this blog post you want to get to work embedding a company culture (purpose), provide the vision and get your team going on building a brand identity aligned with your purpose so you can move away from a manipulation dependent business. Where do you start? I quoted the author Simon Sinex a couple times in this blog post. I would recommend you start there by reading Start with Why. You could also contact me. I would love the opportunity to help you find your purpose 😊
What if you have realized your company has lost its purpose (or never had one) but you aren’t the CEO. What do you do? This is not the best of situations. If you have a CEO that is humble and realizes they are not strong in this area but have a good team of leaders around them, they can delegate the responsibility to the team or one of the team members. I have seen this work quite well for a period (several years actually). Long term it is best if the CEO grows into their responsibility.
What if you find yourself in a situation where you have a strong brand identity with the consumer but have lost your purpose as a company? The brand may be older than the employees currently working there and because of poor succession planning the company has lost its purpose. This is common today as companies change leaders frequently. Brand consolidation is also a major cause of this today. If you find yourself in this situation, I recommend you read – Build a Culture to Match Your Brand, by Denise Lee Yohn, December 17th, 2019.
In her article Denise articulates many of the same principles as Simon; however, she approaches it from the reverse direction. She starts with what you want as your brand identity and works back to creating your culture to match your brand identity. Denise also identifies several types of brand identities in her article and discusses the core values that align with them. It’s an excellent article.
In closing; I would like to say that while this blog post was focused on manufactures, the same Start with Why concept applies equally to retailers. I am sure you can think of several retailers who are struggling today. When you diagnose what is ailing them you will find they have lost their purpose and are caught up in the manipulation approach to business.
Find your purpose. Align your Brand Identity. And Be Relevant, Be Resilient… and Be Relentless! #branding #leadershipdevelopment #sportinggoods