Overcoming a Competitive Threat
What happens when a competitive threat occurs that can dramatically harm your organization’s market position? How can your organization respond? Here are some effective ways we used to help a client develop a very effective strategy to a competitive threat.
Our client, an organization that I will refer to as “Azure” is a dominant force in the marketplace for specialized training in North America and has held this position for two decades. Their highly specialized training is a requirement by many industries to maintain certifications for safety and to ensure their employees meet all regulatory requirements.
A year ago Azure called us in to complete an organizational review to improve the effectiveness and efficiency of their key business processes. They wanted our help to examine all levels of their operations and provide guidance as to how they could align their capabilities with their strategic objectives.
Unfortunately, Azure’s customer relationships were poor. Their employees often said that “this was the best job they’ve ever had in the worse place they’ve ever worked.” The outcome of the organizational review was to provide them with the actions they required to improve.
Then a competitor announced that they were going to start operations in the same location as Azure, within the next 6 months. This organization, which I will refer to as “Bold” has its head office in Finland. They provide similar services to Azure but are considerably larger, serving many countries around the world. Bold has streamlined processes, good customer relations and motivated employees. Many of their customers are multi-nationals. These multi-nationals also use the services of Azure in that marketplace and use Bold in some of their other markets.
What should Azure do? Should they just continue to do what they have always done? Should they just give up and close their doors? Can they take up the challenge and turn it into an opportunity? Here’s what they decided to do.
The first response by Azure was to brainstorm and identify some of their key concerns and challenges. As part of an initial analysis of their current situation the leadership raised a number of questions:
- How much of our revenue is at risk?
- How much of our market includes international companies that are already using the services of Bold?
- Is our current market where Azure is located being completely served? Are there opportunities to expand?
- What courses do we anticipate Bold will offer? Will these be the same as what Azure offers? Will Bold offer different courses than those being offered by us?
- Will this competition damage our company’s credibility, especially with customers that have already expressed concern over our operations?
- Will we have to lower the prices of our courses to stay competitive with Bold? Or will Bold have to lower their prices to be competitive with us?
Analyzing the Current and Future Situation
Azure’s leadership asked me to prepare a facilitation process for an initial one-day exploratory session. The goal for the leadership team was to identify the issues, concerns and challenges that the new competitor, Bold, would bring and to understand the risks and opportunities of the situation for their organization.
As the external consultant for this session, my objective was to keep it on a very positive note. During this session the participants completed an in-depth SWOT analysis of the current situation. The SWOT Analysis gave the leadership team an opportunity to really think through all of their Strengths and Weaknesses as well as their current Threats and Opportunities. They discussed and analyzed the results.
Next, I moved the group forward from the present time frame into the future. I asked them to put aside everything they knew to be true; all of their assumptions, their constraints and their concerns. I divided the group into small teams. Each team created scenarios of what the future might look like in 5 years. They each described; where they’d like to be and included how they would transition from the present into these future scenarios.
When completed, I asked each group to read their scenarios out to each other. They questioned and challenged each other’s scenarios and eventually they came to an agreement on a combined scenario that best described where they would like Azure to be in 5 years and what they needed to do to realize this vision.
Developing the Business Competitive Plan
Azure’s vision was clear. Now they were ready to go deeper and create their Business Competitive Plan. In preparation for this planning session, we held engagement sessions with all the employees.
Employee Engagement & Preparation
We organized employees into small focus groups because, in our experience, it is always easier for people to raise concerns and provide their ideas and solutions in a small group setting rather than in one large group. We spent a day with these small employee groups across the organization asking them to share their ideas about their issues and concerns regarding Azure and the competition. During the sessions, we had them explore future scenarios in which Bold had entered their market and sought their suggestions and ideas for dealing with the competition.
Once we completed the employee engagement sessions and analyzed the findings, we were ready to work with the leadership team to develop the Business Competitive Plan.
Business Competitive Planning Session
We started this 2-day session with a review of the SWOT, (Strengths, Weaknesses, Opportunities, Threats) the leadership team’s issues, concerns and challenges, the scenario of the future, the feedback from the employee engagement sessions and the opportunities that were ahead. The leadership team were feeling very positive.
Next, we started to build the business strategies. Each strategy described what had to be done and how its success would be measured. Once completed, it was time for the group to pinpoint the risks associated with each of the strategies they had listed and identify ways to mitigate the risks they had recognized. In this way, they would know what was necessary to manage each risk.
We then completed a cost-benefit analysis for each business strategy. This step was necessary in order to prioritize the strategies and determine the required budget, time and resources to execute each of them.
Developing the Operational Plan
Our next step was to develop a detailed operational plan. It included the next level of specifics as to: who will do what, when it will have to be done and at what cost.
We shared the operational plan with the employees. Because they had been involved in the engagement sessions earlier on in the process, they could see how their input had helped to shape the business strategies. They felt motivated to help. They had never been consulted before and now they were being asked to help save their organization (and of course their jobs). So they enthusiastically took up the challenge!
The competition arrived and was surprised. Their initial research indicated this would be an ideal market for them and that their competition was weak. However, they were wrong. Azure met them head-on. As a result, Bold is struggling to gain a foot-hold into this market and Azure continues to dominate.
So what’s the lesson learned from this case study? First and foremost: don’t be afraid of competition. While it can be potentially threatening, if you embrace it, and prepare to challenge it with a well-crafted response, your outcome could be surprisingly positive. In the case of Azure the way in which they handled the competition made them a stronger, more viable organization than they were before. Their competitive threat taught them a valuable lesson about complacency and encouraged them to create a sound strategy and operational plan for success that engaged all levels of the organization