Nov
15

Even Mature, Basic Industries Must Remember This: It’s an iTunes World

By

At Tissue World 2012 in Shanghai this week, a conference related to the booming business of producing tissue paper, I had a sobering conversation with a former employee from one of the world’s great equipment companies. I overheard a current employee at this company state that things were slow, in spite of the global surge in tissue production. In fact, if I heard correctly, this leading company “had no orders” for their machines. A disaster. Hundreds of employees may lose their jobs in coming months, as far as I can tell, in spite of this segment of the industry being healthy and active.

The former employee explained the disaster to me. From what I can gather, the problem stems from the decision by management to perfect their processes and standardize their offerings for ultimate efficiency. That sounds like good business, right? It’s what any good MBA would want to do, right? Sure. But what it did was take the focus of the company away from meeting the diverse needs of their customers and instead tried to force customers to conform to the needs and desires of the supplier. Customized orders were given punitive pricing, and pricing of standardized products was made completely inflexible. The company developed highly efficient, nearly perfect systems, and lost their customers. Disaster.  When massive cost reduction becomes massive customer reduction, you’re toast.

We live in an iTunes world. People are increasingly expecting the products they buy to be tailored to their needs. They expect offerings to be flexible, customizable, adapted to their needs. If you can’t build flexibility into your product line and into the service you offer your customers, if you can’t understand and meet their individual needs, your relationship, though decades long, can suddenly evaporate. They can close your web page and in moments find a different vendor that they can work with. You must adapt the way you do business and have ways of customizing what you do and how you do it without adding exorbitant fees.

You may need to rethink your business model to do this. You may need to consider adding some new partners in your supply chain, and perhaps retooling your apps and website to provide a more customized feel for those placing orders or learning about your products. You may need training of your sales staff and marketing teams. But you can’t ignore that we are in an iTunes world with flexible competition everywhere. You must innovate and adapt to better meet the needs of your customers and keep your business, even a very mature business, alive.

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