The end of 2016 and start of 2017 has been particularly disruptive – causing many executives and Boards to scratch their heads and wonder how to move forward for the next few years.
- Luxottica of Italy, the world’s largest manufacturer and retailer of eyeglass frames, (owning such brands as Ray Ban, Oakley, Vogue; exclusive licenses for Gorgio Armani, Burberry, Bulgari, Channel, Dolce & Gabbana, Prada, Versace; and distribution through its subsidiaries LensCrafters, Pearle Vision & Sunglass Hut); pays $49 Billion to merge with Essilor. Essilor of France is the largest maker of ophthalmic lenses, (including such brands as: Varilux, Essilor, Crizal, EyeZen, Foster grant, Xperio, Transitions & Kodak). Dominance is likely.
- AT&T pays $85 Billion to merge with Time Warner – 6th largest all time merger – right after AT&T had merged with DirecTV – creating a behemoth telecommunications & content creation/ distribution provider.
- Germany’s Bayer & USA’s Monsanto has a $66 Billion merger to create a huge global agri-chemical company; shortly after a $130 Billion merger of Dow Chemical & DuPont.
- In Canada’s charitable sector, it’s been recently announced that the major Cancer charities are merging together to reduce costs and maximize net contributions to Cancer research.
- India’s federal government merges 13 state-owned oil companies into 1 that will match the size of USA conglomerate GE on the Fortune 500 list.
- China has a $100 Billion merger of state-owned Sinochem and ChemChina to form one of the world’s dominant fuel-making and oil refining enterprises.
The strategy behind mega-mergers includes:
- Finding value-increasing efficiencies through reduction of overheads
- Finding complementary value combination and more streamlined co-ordination
- Dominance of market so as to allow for increased pricing or enhanced market access/growth.
Clearly, global companies are becoming bigger. Major brands are enhancing their global positioning and appeal. And, these mergers are designed to “squeeze” out more productivity & profitability and also reduce competition. Some investors are now even wondering if these are signals of reaching the top/end of the long-lasting Bull market.
Meanwhile, another approach to the marketplace is a focus on Local – local character, uniqueness, niche and boutique attractiveness. These enterprises often thrive through a strategy that includes:
- Authentic, multi-sensory experience provision
- Customized service unique to the needs of each client
- Total solution creation/facilitation mindset
This strategy approach develops significant client loyalty and often the ability for premium pricing.
If you can't be big & dominant, or local & unique solution-oriented; how else do you survive and thrive in these disruptive days? Well, frankly, that’s getting increasingly challenging!
Probably the third main approach is to segment the marketplace (regionally or demographically or psychographically), and then dedicate yourself to continued innovation – providing programs/services/products that are constantly leading-edge for that segment. Your segment also needs to be large enough and willing enough to pay for or support your innovations.
Unfortunately, many organizations do not offer a clear strategy in any of these three approaches – or worse – they try to be a little bit of all three – with mediocre and unclear value positioning.
Increasingly, these kind of organizations (companies, NFP’s or government entities), are being disrupted out of existence.
Strategy today requires an honest assessment of your value provision – compared against other providers in your marketplace or virtual. It also requires some creative exploration of potential new trends and needs that you might take advantage of, using your enterprise’s unique capabilities.
Doing more of the same, and trying to “tough it out” is probably not the best approach.“Hope” is not a good strategy during disruptive days.
What you do now is critical.
- Dig Deep.
- Dig-in.
Engage in a very thoughtful, honest and creative strategy exploration with a clear understanding of the disruptions going on around you – perhaps even, discover what disruptions you can create!
--
About the Author
Doug Macnamara is the President & CEO of Banff Executive Leadership Inc., which offers strategic thinking/planning facilitation around the world, plus public and customized programming to improve Board Governance and Executive Leadership Practices. They also provide coaching and consulting services to Boards and Executives to help enhance their leadership practices. For more information, visit their website: http://www.banffexeclead.com/
A version of this blog was first published here.
