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May 28, 2018 BIZ BOOKS

Strategies for long-term business growth

By Jim Pawlak

“If You're in a Dogfight, Become a Cat — Strategies for Long-Term Growth” by Leonard Sherman

Dogfights in business occur because businesses doggedly pursue market share in product segments that consumers view as undifferentiated. In attempts to maintain or grow “bragging rights” in commoditized products, they actually throw money away and watch ROI decline.

Sherman addresses the “why” of market-share dogma: Managers believe they must “compete aggressively to protect their core business.” This results in the constant introduction of minimally incremental product improvements, many of which have no cost-benefit value in the eyes of consumers. By protecting their turf, they don't see greener grass.

Case on-point: General Motors lost over $20 billion in the European car market since 2000 while its market share there eroded over 10 points. In 2017, GM finally decided it had lost the dogfight and sold its European operations to PSA Group, owner of the Peugeot brand. While PSA Group “won,” it bought a severely wounded dog.

Conversely, Ford Motor adopted a “cattitude” approach to the European market. It hunted for “prey”(i.e. identified what was missing) and shifted production to small commercial vehicles and autos that could be built on existing American platforms.

Sherman says long-term growth and profitability can be achieved by focusing strategy on three imperatives:

1. “Continuous innovation — not for its own sake, but to deliver …

2. Meaningful differentiation — recognized and valued by consumers, enabled by …

3. Business alignment — where all corporate capabilities, resources, incentives, and business culture and processes are aligned to support a company's” strategy.

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