{"id":5096,"date":"2023-03-15T22:11:24","date_gmt":"2023-03-15T22:11:24","guid":{"rendered":"https:\/\/durolabs.co\/?p=5096"},"modified":"2024-07-03T21:58:19","modified_gmt":"2024-07-03T21:58:19","slug":"how-do-market-leaders-succeed","status":"publish","type":"post","link":"https:\/\/durolabs.co\/blog\/how-do-market-leaders-succeed\/","title":{"rendered":"How do market leaders succeed when challenged by new disruptors?"},"content":{"rendered":"\t\t
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Leading manufacturers are sometimes surprised by innovative startups and are unable to act fast enough to compete. They end up getting left behind. Many times they fail because rigid processes or old assets hold them back. But a culture of change, empowering employees and embracing flexible software and processes can help them retain market leadership.<\/p>

This blog explores some of the limitations for market leaders and provides tips on how they can succeed despite the constant evolution of technology and emerging competitors.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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New technologies blindside market leaders who are unable to react quickly enough<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Iconic brands define entire industries. Their products are familiar to generations of loyal customers. Buyers do not need to ask \u201cwhy should I buy this product?\u201d because they want the leading brand. But when news reports send signals of distress, the company is upended and poof, they\u2019re gone!<\/p>

Blackberry, Nokia, Kodak, Sears, and Borders were all market leaders that were not able to survive. These companies are unique and have their own stories, but they have one thing in common: they all fell victim to an emerging technology shift in their industry.<\/p>

For example, Blackberry and Nokia produced the first multifunction phones for business professionals. They dominated their industries for a number of years, and Nokia even beat Apple to market with a touchscreen smartphone that also had a camera. However, it was Apple that leveraged\u00a0Haptic technology<\/a>\u00a0(variable forces on a user\u2019s finger to interact with a surface such as a touchscreen), and this was the game-changer for the iPhone in 2007.<\/p>

Apple\u2019s advantage actually started building in the late 1990s, resulting in the iPod in 2001. Years of R&D with Haptic human interfaces for the iPod allowed them to apply those technologies and skills to other products such as the MacBook and iPhone. Blackberry and Nokia couldn\u2019t compete. Their skills, patents, and IP weren\u2019t as advanced as the rapidly developing new touch interface products being released by Apple and also Samsung. This triggered a global paradigm shift that overwhelmed Nokia and Blackberry, among others, and obsoleted the need for buttons on mobile devices.<\/p>

Similarly, Kodak was caught flat-footed by digital cameras, Sears by online retailers, and Borders by a shift to online retailers compounded by the emergence of e-readers such as Amazon\u2019s Kindle.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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The pace of innovation isn't slowing down<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Consider ChatGPT (Chat Generative Pre-trained Transformer) which has caused a wave of fear among businesses and employees alike. The AI-fueled chatbot can answer a question or create a document on demand in seconds.\u00a0Google is worried<\/a>, as are teachers, book publishers, content creators, educational institutes, and subject matter experts.<\/p>

Not only is there an opportunity for students to do their homework with AI-generated documents or for marketers to use the technology to create content, but ChatGPT could also revolutionize, even replace, the multi-billion dollar search industry.<\/p>

When a new technology arises, it\u2019s not always obvious how it could be applied or what it might disrupt. This is especially true in modern hardware product design and manufacturing. Components are sourced from a vast ecosystem and utilized in new ways that weren\u2019t envisioned when the component was first invented.<\/p>

New products, such as drones, GPS, and satellites have arisen with entirely new value propositions from their original purpose. For example, drones, which were originally designed for military surveillance, have made an impressive impact in climate monitoring and wildlife conservation. And who would have thought that Haptic technology, pioneered in the 1960s, would change the way people interact with their devices and create a \u201cnew normal\u201d fifty years later?<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Becoming a market leader isn\u2019t easy; remaining one is much harder<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Leading brands are built over time by doing many things well.<\/p>

A balance is needed between updating products in discernable increments and being progressive enough to create barriers to competition.<\/strong><\/p>

Brands also need to keep customers engaged and satisfied. If the leap to the new product is too great, loyal customers will be alienated and get frustrated. They will evaluate alternatives as they consider buying the new, upgraded model. But if the new product doesn\u2019t offer any additional value, customers will seek the new shiny thing. The challenge is that loyal customers are both a source of reliable revenue and a trap that restricts change.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Why do industry leaders fail?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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When an industry leader fails, people typically assume that \u201cthey didn\u2019t listen to their customers.\u201d But oftentimes they\u00a0did<\/em>\u00a0listen to their customers and weren\u2019t able to act quickly enough. Ironically, many of the characteristics of a strong brand leader become impediments to reacting fast when an emerging competitor turns up. For example, a need to maintain existing product lines used by a vast customer base could tie up development resources. Or lengthy engineering processes that are designed to ensure product quality could inhibit innovative designs from coming to the forefront in time.<\/p>

While many factors affect a market leader\u2019s resilience over time, we\u2019ll focus on what might hinder the engineering and product development of new products.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Reuse of existing tools and content limits innovation<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Engineering design teams sometimes attempt new things, focusing on ideation and experimentation. They might form a \u201cTiger Team\u201d composed of innovative forward-thinking employees who are given the autonomy to develop new ideas into marketable products. However, challenges remain. The content and the tools they use hold them back.<\/p>

Heavily customized, large-scale technology deployments are carefully set up to facilitate repeatable and standardized processes. For example,\u00a0PLM for the product departments might enforce strict guardrails<\/a>\u00a0to streamline product development.<\/p>

Teams have permission but aren\u2019t empowered to think outside the box.<\/strong><\/p>

They need to reuse existing BOM structures and processes for development. If a new design doesn\u2019t fit into the corporate\u00a0BOM structure<\/a>, it can\u2019t be represented in PLM.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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A risk averse culture prevents agility\u200b<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Typically, large established organizations have a risk-averse, conservative culture with lengthy and stringent approval processes. Everything gets measured using Key Performance Indicators (KPIs) and people are incentivized for fractional improvements.<\/p>

The stable and predictable work environment and, pressure to meet standard KPIs can stifle agility. The \u201ctiger team\u201d needs to work within the guardrails of the corporation. Rarely are they free to act like the innovators and risk-takers working at startups driven by fanatical-seeming visions.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Existing assets aren\u2019t relevant to emerging market demands\n<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Leaders have a valuable body of corporate Intellectual Property (IP), inventions, best practices, and patents. However, that IP may have nothing to do with the rising new technologies. For example, consider film cameras vs digital, paper v eBooks, brick-and-mortar department stores vs online, and button keypads vs touchscreens. Having those assets and human experience with the related products may not give manufacturers what it takes to make a competitive new product. The new technology trends might also be incompatible or irrelevant to the current business model.<\/p>

The following assets could in fact be liabilities when competing against a new entrant:<\/p>