“Not sure how to respond to our competitor’s latest move. They just offered a extra year’s warranty on their product for free.” Miguel complained.
“For free?” I asked.
“Yes, we’ve battled our competitor hard for the past two years. We make a move, they counter. They make a move, we counter. Tit for tat. I’m not sure how to win this battle.”
“Have you thought about disconnecting your focus from your competitor to think more about your customer? As long as you focus on your competitor, you can only think like your competitor thinks. Focus on your customer.”
“You improved your quality, so your warranty program became a competitive advantage instead of a liability. Your lead time was down to four weeks. You lowered your cost structure. Your output and unit profit was consistent and predictable, systems focus. And then the rug got pulled out?” I asked.
“Yes,” Arianne reluctantly explained. “Everything, up to now had been internally focused. Efficiency, pace, quality. Then, the market fell out. Our customers would shrug their shoulders and buy from someone else. At first we thought they didn’t understand what a quality product we had. We even sent out our engineers with our sales people to explain why our product was more durable, lower cost and could be delivered faster. But, it was us who didn’t understand.”
“What do you mean?” I quizzed.
“We had been so internally focused that we didn’t notice a shift in the market. Our market moved. Our product was fine, but our market wanted something different. Our competitor smoked us. They had re-tooled a number of features based on user-feedback. We had no clue.”
I nodded my head, “Market responsive.”
“Yes,” Arianne confirmed. “It cost us a million dollars in stagnant inventory and months of development time to catch up. We had been so internally focused, we almost lost the ship.”