I once worked with a family business, let’s call it Grandma’s Pasta Company, that was successful and well into its second generation. They were wrestling with challenges from competitors, as well as with those arising from changing conditions in the marketplace.
We had to go back and consider how they got to where they were in order to untangle the knot and move forward with new tactics that would get them past their competition. The company’s identity and operational specifics have been changed, but the issues are correctly portrayed.
This company made pasta. It made pasta locally and sold it all over their New England home market. Grandma had a secret process that enabled grandpa and his company to make and sell excellent pasta. The secret process was a true competitive advantage.
Grandpa started selling to restaurants and eventually to grocery stores. The businesses that carried his product had a sure fire moneymaker. It was pricey, but they could charge more to their customers because it was an outstanding product.
Eventually, as the company grew, they began to sell other, similar products.
Times changed. Eventually, while competitors were never able to exactly replicate grandma’s secret process, they were able to deconstruct the product and come close to replicating it.
The competition’s product eventually came close enough to replicating grandma’s, that they were able to steal market share by lowering the price and plucking away customers.
As the competitors’ products came closer to matching grandma’s pasta, even the best customers balked at the price. Margins fell. Market share diminished and for the first time in it’s history, Grandma’s Pasta wasn’t carrying the full load for the company.
As the executives at Grandma’s wrestled with how to keep their customers and regain their profits, many initiatives fell flat. They tried new advertising. They certainly tried to cut production costs. They were clever at finding ways to offer promotional deals and took their best customers to golf outings and ball games. Nothing worked.
Nothing worked until they began to reconsider their original business assumptions and recognize that the competitive landscape had changed, and that through no fault of their product, they had lost their competitive edge.
They needed to rethink their operating assumptions about why customers should buy their product over that of their competitors.
They needed to forge new relationships. They needed to offer additional value as a part of their new brand promise to their customers. They needed to find other advantages inherent in their organization’s capabilities, which could once again differentiate them from their competition.
They weren’t able to move forward until they recognized and reassessed the assumptions that supported their understanding of themselves, in relation to their marketplace.
Eventually, it became clear that they had to shift from product selling (“Our Pasta is really good, so how many boxes do you need this week?”), to relationship selling (“Here’s how you can develop new ways to sell our pasta to your customers – added value, complimentary sauces and joint promotions.”) They modified their existing national distribution network to partner with national chains of pasta sellers. They branched off into other, complimentary products.
Once they questioned what had always worked, they were free to begin to think about
what else they could do to update their game plan.
