THE BAD STORY
A while back, the international community came together to ban a particularly damaging product, which had been identified as being a major contributor to global warming – CFCs. Surprisingly, this was particularly good news to one manufacturer of that product, or perhaps not so surprisingly – they had been lookingahead and had developed an alternative product, one that didn’t have the same bad effects. Not only that but, for now at least, they were just about the only one with such an alternative. The old product had been used in a range of applications, from refrigerators to air conditioning and aerosol sprays. The manufacturer had simple, but good, relationships with their customers in these diversemarkets
Based on their current sales of the old, soon to be banned product, plus a margin of growth for their technical brilliance and for their new competitive advantage, the supplier made plans for manufacture of the new ‘wonder’ product – the company built a large, brand new plant. What they didn’t do, at least no more than usual, was talk to their customers. Why should they? After all, the oldproduct was banned, the company had a replacement and customers would surely beat a path to their door. All the suppliers needed to do was to ask their existing contacts, the buyers, how much of the old they bought, theirs and their competitors’, and use this as a forecast for the new – simple. Unfortunately, it wasn’t and, instead of beating a path to the manufacturer’s door, the customers‘snapped’. They resented the ‘arrogance’ of the supplier and they resented the new prices that were to be charged. They actively sought alternatives. Not alternative suppliers of the new product, there were none, but alternative solutions altogether. The supplier had forgotten Michael Porter’s model . The aerosol market accounted for half of the manufacturer’s sales projections. How many aerosols with cleverpropellant gases, banned or otherwise, do you see nowadays? It’s all roll-ons or pump-action sprays. Admittedly, they are often inferior in performance to the old aerosols, with a tendency to dribble down the elbow, but they are the choice of the market.
THE SAD STORY
A very capable supplier of ink had an excellent partnership KAM relationship with its number one customer, a manufacturer ofcomputer printers. So good was the relationship that the supplier was happy for the customer to set their own research and development targets and timetable. The two R&D functions would meet, discuss the customer’s needs and a project would spring into action. On this occasion, the project was the search for ‘dry fastness’ – something in the ink that would make it dry faster on the page. If theysucceeded, the supplier would gain significant competitive advantage. The project proceeded on target, and time, money and energy was poured in. After 18 months’ work, the project was nearly complete. Then the customer rang to say it was all off. To the supplier’s great distress, it transpired that a paper manufacturer had approached the customer with a new type of paper, one that would help ordinaryink to dry faster. The story gets worse, and sadder. Not only was the project a waste, but if ordinary ink was OK then so was anyone’s. Worse still, this particular paper was good with much cheaper inks, inks that had been regarded as third-rate products up until then. So, not only did the project fold, but also the supplier saw their existing business decline. And the customer was working on amechanical (printer) solution to the same problem…
THE UGLY STORY
The ugly story, and the worst by my reckoning, is about the supplier that nearly destroyed themselves through excessive KAM zeal. As a manufacturer of a fast-selling consumer product, in a very mature market, the company saw their escape from future decline in KAM through seeking competitive advantage in the intimacy of the...