Start making your competition irrelevant.

So many great products and services created by companies such as yours have become commoditised.  Did you set out for this to happen?  No way!

The rate at which the new value created by products and services is commoditised has increased dramatically, thanks to technological advancements in the way we do business and the purchasing behaviour of consumers.  Supply now outstrips demand in many markets that are actually contracting; creating price wars and obliterating profit margins for many involved in the value chain.

The implications are that as traditional markets get increasingly overcrowded, the prospect for growth and prosperity seems gloomier than ever.  Did you realise that many of the traditional methods of strategic analysis that companies use to compete, nearly always point to that very fact i.e. there is limited opportunity for growth if we continue doing the same thing.  But still we march forward to face our opponents head-on in a bloody war of attrition.  However, to win in the future, companies must learn to stop competing with each other.

Imagine the possibilities if your business was able to operate in uncontested market space where the competition was irrelevant because they didn’t exist.  Many companies are now achieving this by using a different approach to strategy.

This different approach to strategic thinking is called Value Innovation.

 

Instead of analysing the existing competitive environment as the benchmark for how you and your industry will move forward, the focus is to create a leap in value for potential new customers that will propel your business into a new and emerging market space.  The leap in value is achieved by placing equal emphasis on creating value and the process of innovation.

So what’s your first step towards freedom?

Central to the concept of Value Innovation is the development of a Strategy Canvas.  It is a diagnostic tool that helps to understand what elements of the customer offering (i.e. current value) everyone is currently competing on and consequently, where competitor money is being invested (i.e. current process of delivery).

The result of a Strategy Canvas is the creation of a Value Curve for you, your competitors and your industry.  Next is to build into your offering a set of alternative values and to reconstruct how that new message of value will be delivered, to an as-yet untapped set of customers willing to pay for your new competitive offering.  This is your unique Value Curve.

The successful companies of tomorrow are using the tools of Value Innovation today and will capture the opportunity of high profitable growth by creating new demand in uncontested markets.

For companies that are seeking a solution to the fight for competitive advantage, I recommend reading and implementing the tactics explained in Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne and published by Harvard Business Review Press.

A great quote to end the week.

Heard this one today and thought it was brilliant:

Never spend money propping up people who are the victims of their own decisions.

Be still my beating heart.......or should I say hearts!

The other night I was channel surfing and caught an episode of Gordon Ramsay's Great Escape in Vietnam.  He ate the beating heart of a Cobra that was then cooked up and prepared for the rest of the meal.

This brought back amazing memories for me of one particular trip I did to Vietnam.

A few years ago I had the privilege of traveling around Asia developing new markets for an agricultural exporter that I worked for at the time.

I had just completed a successful week of business in Vietnam with our local agents and we decided to celebrate by going for a meal at a restaurant in Ho Chi Minh city.  Funny how they 'forgot' to tell me that this restaurant specialised in snake.

We arrived at the restaurant and were taken to a private room out the back for business people.  Whilst enjoying my first Heineken and reflecting on the week that was, I was told that the restaurant specialised in snake dishes and was I up to the task.  

They already knew that I was pretty adventurous, so of course it wasn't a problem.  I simply thought that we would order some dishes from a menu and out it would come.  No biggy right?!!

Well a few minutes later I started to notice that more and more of the staff were shuffling into the room and standing there grinning and laughing with all eyes on me.

As I stood up to shake hands with the owner of the restaurant who had just entered the room and introduced himself, I noticed that one particular lad with a glint in his eye, was standing back holding a hessian sack that seemed to be squirming.

Our agent explained to me that the restaurant rarely has Westerners and so the owner would like to show me traditional preparation of the snake.  I respectfully said yes! I'd love to see it.

The young lad holding the bag produced a 5ft grey water python and presented it for my inspection and approval.

The snake was then cut and its blood drained into a container.  At this stage I still had no idea what was coming.

They then cut out the heart of the snake and placed it on a small dish - it was still beating.  The heart was put into a shot glass and covered in a high octane rice wine and handed to me - it was still beating.

Our agent explained to me that drinking the snake heart would keep me a healthy, strong and virile male.  Not a bad sales pitch really - so oh well, when in Rome...............and down it went.

I then drank two glasses of the snake's blood (mixed with rice wine) and then either the kidneys or liver.  Overall the staff and owner were quite impressed.  The rest of the snake was taken away and prepared for the rest of the meal.  It was excellent!!

I have many more crazy stories of travels in Asia such as being arrested for suspected drug trafficking, being chased by heroin gangs, earthquakes, eating dog, typhoons, Vietnam airlines in the early days - if you want to hear them, poke me back.

As a side note, I've been watching some of the other episodes of Gordon Ramsay traveling through the back-blocks of Asia and I must say that the way he talks to and treats the locals is terrible.  Surely someone is coaching him on some of that stuff.  I know he goes for shock value but his actions and fowl language would be quite offensive to many.

Now is OUR time to be the Value Innovation Generation.

Walk into any decent marketing program or marketing subject and the first piece of reading you'll be asked to complete is Marketing Myopia by Theodore Levitt.  His 1960 Harvard Business Review article was a ground-breaking piece of thinking that introduced some of the most influential marketing ideas of our time.  Levitt was able to articulate a profound warning (and explain the consequences) to those industries and businesses that remain focused on mass-producing more and more of the same product; thinking that there will always be someone on the other side to buy it at a profit.

I encourage everyone from the agricultural industry to read it, with the industry in mind. It's a great lesson in being market-centric, not product-centric; and defining the purpose of your industry correctly.

The article is full of answers to the greater question that I see on many peoples faces; that is 'how is it that after being told to invest my equity into increasing productivity, because I was also told there is a food and fibre boom and everyone wants my products, I am now making less money than ever before?'


In 2008 the South Australian Government's Thinker in Residence was Professor Andrew Fearne, an international expert on value chain thinking who was here to review and provide inspiration for the food and wine industry.  He gave a detailed assessment of how effectively we are value-adding our food and wine products.


His final report in 2009 started like this: 'an overwhelming sense of denial. She'll be right. The rains will come. Governments will fix this. Somehow something will change - that means we can carry on the way we've always acted before. That's, I think, fundamentally the vulnerability I see. Instead of asking what it is we should be producing in the first place - expecting, wishing and hoping things will sort out; so we can carry on doing the things that we've always done before.'


He warned our food and wine industries to not just keep producing more and more of the same.


Today I read the following comments from a recent food industry conference: 'the rapidly changing food and packaging supply industries will continue to push producers and manufacturers to innovate and improve their business models.'


'If you’re sitting in a company that’s not looking bright, and is not innovating, the future is not bright for you in Australia.'


I've skimmed across some pretty chunky (but reoccurring) themes to raise my point, but the future is clear - we can't keep going the way we are going, as very soon a large proportion of the industry will no longer be with us.  They'll have gone bust trying to deliver more of the same; or gone bust because we lost our markets.


So I'm putting the call out to all of us that will be working in the industry over the next 20 years: I declare that we are the Value Innovation Generation and we have the next 20 years to pull all of our industry and Government sectors together and start working as an industry fraternity and alumni, hell-bent on making sure that when our job is done, Australia (as a whole) is a global marketing force to be reckoned with for food, fibre, wine and others.


Now there's an industry I would want to work in, if I was deciding what to do and study after secondary school.

Packaging gone mad.

I must admit that when I ordered our new accounting software from MYOB online, I wondered what was going to be in the box - given it's size.

Guess what - a big fat nothing!

The box is held into shape with a framework of more cardboard.

Come on MYOB - you could have sent me the disk and booklet in a nice envelope.

How is it that in 2012, leading products are still getting away with wasteful packaging like this?

I guess in some ways the carbon tax will force many companies to re-think their packaging (emission) strategies - and will provide them funding to do it.


Less packaging = less carbon tax.

I see a huge CSR marketing opportunity for MYOB - can they?