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    Presents

    Surviving Saturation-

    Hyper Competition

    and Your Choices

    byWill Phillips

    To download presentation and

    supporting materials: See

    Presentations on home page

    REXonline.orgWills UK Cell: 787 208 3361

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    #1 reason for joining?

    Knowledge sharing

    Brand convergence

    Quick niche copying

    High quality is the norm

    Decline of brand loyalty

    Success attracts new entrants

    Rising tide of medical-health information

    Investors attracted to recurring income

    Market segmentation

    AND little increase in ww demand

    Why Hyper Competition?

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    What You Can Do

    A. Sales Machine: Powerful, Successes System

    B. Specialty niche

    A. 60 + year olds, Kids Performance, Squash

    C. Differentiate: Blue Ocean

    A. -25-35, Family

    D. Hard ball

    E. ShrinkF. Die

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    A. Sales Machine

    1. CLUB GENERATED LEADS: 60%.

    2. SELF GENERATED LEADS: 40%

    3. RECRUIT-SELECT-HIRE PIPELINE

    4. NEW SALES PERSON ORIENTATION

    5. CORE TRAINING: Sales; Product

    6. SALES MANAGERMENT: Manager, tracking,

    daily training, daily meetings.7. EFFECTIVE INCENTIVES-MOTIVATION

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    C. Blue Ocean Strategy

    All industries today!

    Focus is beating the competition.

    Focus of all strategy work for 25

    years

    Insufficient to sustain highperformance

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    How To Create Uncontested Market Space

    and Make the Competition Irrelevant

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    Capacity to Create New

    Industries Discount Retail

    Express Delivery

    Minivans

    Snowboards

    Home Videos

    Cell Phones

    24 hour news

    Gas Fired Electricity Plants

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    The Track Record

    14% of new business launches are

    They produce 61% of the profits

    80-20 Rule rules!

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    For example: The Circus

    Declining industry

    Kids wanted Play Stations

    Animals Rights

    Uncomfortable tents

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    Cirque du Soleil

    For Adults

    No Animals

    In Theaters

    Uncontested market space

    5x the ticket price

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    Value Innovate

    Respond To Competitors

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    Value creation without innovation is incremental.

    Innovation without value is tech driven or

    futuristic.

    Value Innovation aligns : Utility

    Price

    Cost Avoids value-cost trade offs

    1st Principle

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    Cirque

    Dropped Animals: expensive and offensive

    Star performers: expensive and turnover

    Aisle concessions: high priced add on Three Rings: confusing

    Added theater Sophistication

    Story line Original scores

    Multiple productions: Four in Las Vegas now!

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    Cirque

    Drove Costs down where industry

    competed

    Drove Value Up in new areas

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    Principle #2

    Compete in existingmarket space

    Beat the competition

    Exploit existing demand

    Make value-cost tradeoffs

    Align organization with itschoice of differentiation orlow cost

    Create uncontestedmarket space

    Make competitionirrelevant

    Create and capture newdemand

    Break value-costtradeoffs.

    Align organization topursue differentiationAND low cost

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    Principle #3 - Factors

    Assignment

    What are the factors you compete on: Products and services

    Costs Delivery

    Consider what is on the agenda of Industry publications

    Industry conferences Industry gurus, consultants and advisors.

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    Principle #4: Four Actions

    FrameworkREDUCE COST:

    1-Eliminate industry factors

    2-Reduce over designed industry factors

    CREATE NEW VALUE:

    3-Escalate compromised industry factors

    4-Create new factors

    Costs Down

    Value UP

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    RED BULL

    Double the caffeine of Coke

    2/3 the size of Coke can

    More than twice the price

    1.9 billion cans sold in 2004 Spends 30% of revenue on marketing

    Not super stars, but 500 fringe athletes, hip kids

    Sponsors extreme sport contests and cultural events

    14 Red Bull airplanes for air shows

    Coke spends 9%

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    Market share is 40% to 80% per country

    A new market: ENERGY DRINKS

    PS Market research showed people hated

    The Name

    The Taste

    The Logo

    Coke, Pepsi and Anheuser-Busch have alljoined the new market

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    D. Play Hardball To GROW

    Defenders best hope is not to

    loose.

    Aggressors can win.

    CHOOSE!

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    Whats Hardball Look Like?

    Single minded

    Relentless

    Ruthless Playing to win

    Willing to hurt competitors

    Willing to get hurt DONT cheat

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    Softball ?

    Make money

    Run a good business

    Focus on soft skills

    Leadership

    Marketing

    Teamwork

    Customer service 80% of management books and

    consultants

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    Soft Ballers

    Complain about competitors

    Want restrictions against competitors

    Complain about unfair advantages Hard ballers call all this WHINING

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    Hardball Strategies

    1. Deep understanding of your profit

    model?

    2. Deep understanding of their profit

    model?

    3. Avoid head to head attacks

    -SWA flys to secondary airports

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    4-The Will to Win and a Sense of Urgency

    Takes Priority Over: Complacency

    Cockiness

    Bureaucracy Status

    Hierarchy

    Petty conflicts Greediness

    Blindness to opporthreats

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    5-Play the Edges

    -Legally-Financially

    -Industry Wise

    -Edges are Blurry

    -Dont break the laws

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    6-Devastate Rivals Best Profit Centers

    -Promotional flooding

    -Price cuts

    -Surgical focus-Based on real knowledge of

    costs/profits of competitors

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    7-Plagiarize with PRIDE

    -Steal any good, unprotected idea

    -Improve it-Suck away their uniqueness

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    8-Deception-The beloved sports fake

    -Vaporware

    -PR

    -Rumors

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    9-Unleash Massive and Overwhelming Force

    -Do not act until fully ready

    -Hammer blows

    -Focused

    -Direct

    -Swift

    -Repeated

    -Relentless

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    10-Raise Competitors Costs

    -The super low price offer-one day

    -When they dont understand the true

    costs

    -Know and then cede the unprofitable

    clients and sectors

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    Assess Your Strategy1=Unequivocally Yes 2=Sometimes 3= Maybe 4=Rarely; its not me/us!

    1. Will to win?

    2. Willing to get hurt?

    3. Willing to hurt?

    4. Play the edges?

    5. Know your

    competitive

    advantage?6. Dont complain and

    cry unfair.

    7. Deep understanding

    of your profit model?

    8. Deep understanding

    of their profit model?9. Have a hardball

    team?

    10.Havent played a lotof soft ball?

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    Total Your Score and Divide by 10

    1.00 to 1.49 Hard ballers.

    1.50 to 1.99 Junior hardball teams.

    2.00 to 2.49 Part time hard ballers.

    2.50 to 3.49 Softballers; beware of hardballersentering your league.

    3.50 to 4.00 May be earning good money mowingthe grass; not competitive players.

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    New Format Invasions

    Strategy and Business

    Issue 40

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    New Format Businesses

    Assemble common assets in new ways

    At 20% to 40% lower costs

    While maintaining or improving quality DO NOT rely on new tech

    Change multiple functions at once

    Often reach into vendors and distributors All this works only when done all at once.

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    Old Format Success

    Focus on the killer app

    Minivan

    Ipod

    Viagra

    New Format Success killer app is

    Massively lower costs

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    Gas Station

    Gas and repair bays

    Gas and convenience store

    Gas ATMs in Scandinavia

    50% less margin needed for nice profits

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    Zara

    Retail fashion clothing loses margin in

    Unsold clothes; markdowns

    Zara

    sells 80% = twice the normal

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    Stage 1

    Strips out amenities

    Focus on bare bones

    Quality

    Honest

    Reliable

    Attracts penny switchers

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    Stage 2

    few patents

    lots of copiers

    Successful copiers move into

    new geography

    new market segments

    Old format businesses Move down and die

    Move up but are anchored by the low priced comp.

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    Incumbents mistakenly ascribe

    new formats success to paying less for labor or materials

    In reality this is true but they also use far fewer

    resources.

    lower quality

    No cases of an incumbent responding

    successfully unless they adopt the new

    format.

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    New Format Survivors

    Have a clear and accurate view of hownew format competitors deliver value atlow cost. i.e. how the new format works

    They adopt the whole new format anddont fiddle with pieces.

    Adaptations to the new format do not

    compromise the low cost advantage. Make the new format their core businessnot a side offering

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    What You Can DO

    1. Scan market for new format invaders

    2. Understand the new format

    3. Look at the new format as an

    OPPORTUNITY4. Design your moves from the market back

    5. Be very careful of adding costs

    6. Make the new model your mainstream7. Avoid mergers

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    Stay Alert.Be HumbleAdapt

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    Strategies for Fighting

    Low Cost Rivals

    Three Questions Six Strategies

    From Nirmalya Kumar HRB Dec 2006

    1-ASK: Will

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    1 ASK: Willcompetitor takeany current or

    futurecustomers?

    2-ASK: Willenough

    customers paymore for what I

    offer?

    3-ASK: If I run alow cost

    business, will itsynergize withmy high cost

    business?

    Watch, dont

    take on !No

    Scale down size.Learn to live withit. Merge.Acquire similarcompanies.

    No

    Become a lowcost player.

    Sell customsolutions.

    No

    Dont launch price war! Mine your data on numbers and

    customers. Increase differentiation.

    Yes

    Step up differentiation.Differentiate on manyaspects. Reduce costs.

    Yes

    Attack with a lowcost business ofyour own.

    Danger

    Yes

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    Follow Up Reading Books

    The Art of Profitability by Adrian Slywotsky

    Profitable Growth Is Everybodys Business byRam Charan

    How To Grow When Markets Dont by AdrainSlywotsky

    Confronting Reality by Larry Bossidy and Ram

    Charan Blue Ocean by Kim and Mauborgne

    Hardball Strategies By Salk and Lachenauer

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    E. When Not To Grow/Shrink

    Owners lifestyle is good.

    Staffs lifestyles are good.

    Owners ego is dormant.

    Your desire for contribution/meaning is full.

    Your business is not growing for a while

    You have tried everything you can. Competition is strong

    B i I R di

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    Barriers In Responding

    To Competition

    7 Habits of a Highly Defective

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    7 Habits of a Highly Defective

    CEO

    1. Arrogance.

    2. Wishful Thinking.

    3. Insecurity.

    4. Denial.

    5. Control.

    6. Distancing.

    7. Isolation.

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    To download presentation

    and supporting materials:

    See Presentations on home

    page of REXonline.org

    Wills UK Cell: 787 208 3361