Fascinating. In my odd moments I have been working to see where I can
and cannot apply Chrstensen's insights from "Innovator's Dilemma" and
"Innovator's Solution."
In this example, Wausau Papers chose to move 'up-market' by going after
a smaller group of customers - service sensitive ones - who were not
really wanted by the larger paper suppliers. the deception, inasmuch as
it was one, may not have been fully necessary to achieve their shift to
the higher margin portion of the paper market and leave the larger
players with the large volume, lower margin portion.
Steel mini mills did a similar thing as they competed against the larger
integrated steel suppliers (Christensen outlines that history).
Looks to me that the Wausau Paper experience fits Christensen's theory.
Can you (singular & plural) show me otherwise?
Cheers,
Jay
Charles Wankel wrote:
>EXCERPT from: Stalk, Jr., George, Lachenauer, Rob, "Hard Ball," Harvard
>Business Review, Apr2004, Vol. 82, Issue 4.
>
>Deceive the competition. Do you have a great strategy but worry that you
>lack the time to get it in place before competitors can blunt or otherwise
>resist it? Hardball players will mislead rivals to buy time--or to gain any
>other kind of competitive advantage.
>
>Think of the "fake" that is a fundamental--and legal-tactic in any number of
>sports: the head fake in basketball, the fake handoff in football, a
>pitcher's fake pickoff throw in baseball. The aim of all these feints is the
>same: getting your rival to set up or move in a way that puts him off
>balance and reduces his ability to meet your attack.
>
>Similar moves occur in business, although no one says much about them. The
>high-technology industry has employed fakes for years--for example, to
>attract potential customers and distract competitors, a software company
>will announce "vaporware" that isn't ready for prime time. In the auto
>industry, prototypes are sometimes doctored up to throw off the competition.
>
>Pushing this tactic too far--beyond the caution zone--could spell trouble,
>especially if it deceives investors as well as competitors. But certain
>types of fakes, particularly those that distort rivals' understanding of
>what you're up to, represent a key hardball strategy.
>
>Wausau Papers was a poorly performing manufacturer of uncoated paper, with
>outdated machines and high production costs. When a new president of the
>company learned that Wausau had an unusually large share of business in
>Chicago, he began asking questions. It turned out that Wausau's share was
>high there because, with a factory nearby, it could service its distributor
>daily. This became the foundation for a new strategy: Wausau would offer
>next-day service to its distributors in the major mid-western cities and
>encourage them to order small quantities, some with custom specifications.
>
>Wausau's customers responded enthusiastically to this offering of better
>service and greater choice. Frustration over long and unreliable lead times,
>poor service, and limited choice from traditional suppliers was so high that
>distributors eagerly switched to Wausau, even if they had to pay a premium
>price. Indeed, some ordered Wausau's traditional commodity products along
>with its new customized ones because of its speedy service.
>
>Wausau had to move fast to lock up its customers before competitors caught
>on and copied the strategy. To buy time, the company decided to try a little
>sleight of hand. Wausau was helped by the traditional mind-set of the
>industry. Its competitors, used to keeping their prices down by producing
>standard products in large quantities on very fast machines, were initially
>confused by customers' willingness to pay a premium for significantly better
>service and choice.
>
>Wausau needed to prolong this confusion so that rivals would take no
>action--or the wrong action--while the company executed its new strategy. So
>Wausau executives told the trade press that the company had been able to
>speed deliveries by holding large inventories of finished goods and by
>working longer hours--both of which were true. But the company didn't signal
>that it had also undertaken a major shift in strategy and operations. As
>Wausau hoped, competitors for the most part chose to ignore Wausau's moves.
>
>In addition to this active deception, the company employed passive
>deception, allowing competitors to think that they were continuing to win
>against their historically weak rival. Although Wausau rapidly captured the
>business of service-sensitive distributors that needed high-margin specialty
>products, many of those distributors continued buying competitively priced
>commodity products from less service-oriented suppliers. The suppliers saw
>this new segmentation as entirely acceptable; why would they want to
>undermine their own performance by introducing costly small production runs?
>
>Furthermore, to meet the demand of customers who wanted to continue buying
>its commodity products, Wausau began buying commodity papers in rolls from
>its competitors, cutting and repackaging them as part of its overall
>offering--which delighted the competitors. Wausau thus reduced its
>production of commodity papers and boosted its rivals' reliance on those
>low-margin products.
>
>Cybercollegially,
>Charlie Wankel
>
>-----Original Message-----
>From: Management Education and Development Discussion
>[mailto:
MG-ED-DV@MAELSTROM.STJOHNS.EDU] On Behalf Of Fred Nickols
>Sent: Thursday, September 30, 2004 10:02 AM
>To:
MG-ED-DV@MAELSTROM.STJOHNS.EDU
>Subject: Re: Help with a failing memory
>
>P.S.
>
>I also recall mention being made of misdirection, that is, leading the
>competitors to believe the company in question was up to something other
>than what it was up to.
>
>Regards,
>
>Fred Nickols, CPT
>Distance Consulting
>"Assistance at a Distance"
>
nickols@att.net
>www.nickols.us
>
>
>
>
>>-----Original Message-----
>>From: Management Education and Development Discussion
>>[mailto:
MG-ED-DV@MAELSTROM.STJOHNS.EDU]On Behalf Of Fred Nickols
>>Sent: Thursday, September 30, 2004 9:48 AM
>>To:
MG-ED-DV@MAELSTROM.STJOHNS.EDU
>>Subject: Help with a failing memory
>>
>>
>>Sorry to pose such an inane request but I can't recall the name
>>or location
>>of something I read recently and I'm hoping someone on this list
>>might have
>>a much better memory.
>>
>>I read something about strategy; specifically, about keeping your strategy
>>close to your vest so that competitors don't get wind of what you're up to
>>until it's too late for them to either counter or copy. The case in point
>>was the paper industry and I believe a manufacturer shifted from
>>high-volume, low-margin products to specialty papers with much higher
>>margins and left the low-margin business to his competitors. The case
>>involved, also, a new CEO who took a look at the business and discovered
>>this high-margin business waiting to be tapped.
>>
>>Ring a bell with anyone?
>>
>>Regards,
>>
>>Fred Nickols, CPT
>>Distance Consulting
>>"Assistance at a Distance"
>>
nickols@att.net
>>www.nickols.us
>>
>>
>
>
>
>
--
Jay Warner
Principal Scientist
Warner Consulting, Inc.
4444 North Green Bay Road
Racine, WI 53404-1216
USA
Ph: (262) 634-9100
FAX: (262) 681-1133
email:
quality@a2q.com
web:
http://www.a2q.com
The A2Q Method (tm) -- What do you want to improve today?