The Shape Shifters: Continuous Change For Competitive Advantage

Part I

The following is an excerpt from The Shape Shifters: Continuous Change for Competitive Advantage, the latest book from IW columnist John Mariotti, president of The Enterprise Group, Knoxville, Tenn. In the world of business, many factors enter into decisions. There are people and organizational decisions, equipment and plant decisions, new product and process decisions, political decisions and, ultimately, strategy decisions. What should we create? To sell to whom? For what? Why should anyone buy ours compared to all the alternatives out there? When we make these decisions, what will determine our success? The answer is: The "configuration" of the chosen business and the value it creates and delivers to its customers. I struggled with these issues as president of Huffy Bicycles for almost 10 years, and then for a couple years more as president of Rubbermaid's multi-national Office Products Group. Sometimes I thought I knew the answer. The market usually quickly confirmed whether my answer was right or wrong. Each time the questions arose, another combination of factors - a new configuration or "shape" had to be considered, and a new customer's perception of value had to be understood. Now I am doing it as an advisor to leading consumer product companies, and I find the situation the same. This book is the culmination of over 30 years of experience, operating in fast-paced businesses, where contemplation lasts only until the phone rings, the next interruption occurs, or the next meeting starts. After all those years business experience in four different industries, and even more research, the inescapable, indisputable conclusion I will try to explain in this book is why and how the "shape" that consistently creates and delivers the best value is the key, because the best value wins! Winning does not mean simply getting the first order. It means fulfilling the succeeding orders and making a profit and return on investment greater than the cost of capital, so there is the opportunity to do it over and over. It means keeping the customer, as a long-term partner, too. Understanding and defining value is not the only key, but understanding what sort of value is perceived as better than the competitor's offering allows us to create that value both more effectively and more rapidly. Once understood and created, delivering that value consistently is also essential. It is here that the people issues become pivotal. Developing an organization, leading that group of people, and achieving these goals is what the life of business is all about. Since the customer perception of value is always changing, our understanding of value must also be shifting to match or anticipate it. It was with this realization that I thought about the concept of the shape-shifter. In the successful television series Star Trek--The Next Generation, a shape-shifter was a being who could alter his or her form at will to the shape best suited for the circumstances or conducive to success in a mission. Thus, the essence of shape-shifting, is to be able to re-create yourself, your organization, its core competencies, and your business into the shape that can create and deliver what the customers value most. The only way to effectively change the "shape of value" is to change what I call the "shape of the business" that creates and delivers that value. Understanding how to continuously shift the shape of businesses to deliver value consistently, when the very definition of value itself is constantly shifting, is the key to long-term success. In Competing for the Future (Harvard Business School Press, 1994), Gary Hamel and C. K. Prahalad speak of "getting to the future first." I heartily agree--but only if the shape we get there in (to create and deliver value) is the right one. Make no mistake, getting there first is important, but not only must we get there with the best value, we must also continue to deliver the best value consistently. Many large companies have dominated markets in the United States over the last four to five decades. They got there first, and grew to incredible size and strength. But somehow the fearsome strength of General Motors, US Steel, even IBM, and Sears are not what they used to be. What happened? Could it be that their shape was no longer the right one for creating and delivering the new customer perception of best value? What will be the future of Wal-Mart, Intel, and Toyota? As the customer's perceived shape of value shifts, will they shift too? Fast enough? Change is inevitable. But change is difficult. People resist change unless they are part of how it comes about. Then they can actually enjoy it. Capitalizing on change effectively can become the most powerful source of competitive advantage but it all depends on the people and their leadership. Another condition is just as predictable and inescapable in business as it is in nature: As large organizations grow and mature, they become less flexible and are more vulnerable to newer, more vigorous, and more adaptive competition. Your journey through The Shape-Shifters will help you not only better understand value, but to generate some useful ideas about how to build on that understanding, to capitalize on continuous change, and then to build your organization's success based on that change. But before we begin, let me continue the analogy between change in nature and change in business.

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