Case Studies

INABILITY TO CHANGE AS FAST AS THE MARKET PLACE IS CHANGING

Market leadership is becoming increasingly temporary because market forces are changing rapidly, and companies are finding it harder than ever to keep up. Current forces contributing to the rapid pace of change and disruption include:

  • Employee resistance to ending work-from-home policies
  • Labor shortages due to the “great resignation”
  • Changing consumer buying habits
  • The proliferation of digital transformation efforts across industries
  • The importance of taking a stand on social issues to the consumer
  • Privacy and data security concerns
  • The push for environmental sustainability

In studying how long companies that outperform their peers keep their competitive edge, Martin Reeves from the Boston Consulting Group and chairman of the BCG Henderson Institute found that while in the 1980’s, 15% of companies lost their edge over a 5-year period, more recently the decay rate was 100%. “After a spike in performance, they were back down to the median for their sector within just one year. In fact, some of these previously strong performers actually underperformed their sector average just one year later.”¹

Few companies can sustain their performance in today’s rapidly changing environment. Let’s look at one company’s efforts to maintain market leadership.

A Story of a Determined Market Leader

Devcn was in trouble. For twenty years it was the technological leader in four markets, envied by its competitors, and praised by corporate ownership for annually exceeding profit forecasts. Almost imperceptibly, Devcn’s competitors began to steal market share by collaborating with customers to co- create new, customized, innovative products. Meanwhile Devcn tried to maintain customers by adding new features or creating new products, without first understanding what their customers were asking for now.

Stuck in “the way things have always been always done around here “mindset, Devcn was not changing as fast as the marketplace. Their engineering-focused culture and way of doing business that had helped them thrive for 20 years was now a major impediment to change. And, it was costing them dearly. Revenue was falling.

Devcn had a highly siloed culture. Lack of collaboration among engineering departments was slowing down innovation. Departments were focused on competing with other teams, not on talking to clients about their needs. Devcn tried to increase collaboration and speed-to-market by implementing an ERP system. Unsurprisingly this had little impact on the culture of competition. As a result, little changed, and nothing improved.

That’s when they called us.

How we revealed the impediments to change.

Devcn agreed to have everyone in the company complete our DnA® Assessment to reveal barriers preventing them from making the changes they needed to make to regain their market leadership position.The data and highlights from the diagnostic summary (Figure 1 ) struck a chord with the executive team.

The Strengths
  1. Their people were trying to work together
  2. They had a strong emphasis on efficiency
  3. They had a strong core of action-oriented leaders
  4. Loyal, committed employees
The Blockages
  1. People were trying to work together but old power struggles were making it difficult
  2. They were efficient, but they were operating with outdated models
  3. They were action-oriented but would only do whatever they were told
  4. Employees were committed but were looking for direction
The Challenges
  1. Improve coordination across units
  2. Resolve tensions between staff looking for new opportunities and those defending the old way of doing things
  3. Clarify company direction and focus
  4. Redirect culture to be more customer focused and open to change

Up until now they had only seen the pieces of the puzzle. The results of the diagnostic fit the pieces into a clear image of who Devcn was. The executive team saw a company with a lot of strengths in need of a new direction. More specifically the results showed the executives how the blockages prevented successfully leveraging Devcn strengths. With all the pieces finally in place they could see themselves and their challenges clearly for the first time.

They were pleased to learn that despite recent setbacks, their history of success had left them with a strong culture and motivated employees. They now knew that Devcn was more than strong enough to survive the challenges and once again return to prominence in their market. They only needed to navigate the blockages.

How the client used our data.

The executive team agreed they needed to work on the four challenges (see Figure 1 ). The data from the DnA® Assessment gave them insights into precisely what to change and what not to change.

For example, the results from our assessment showed (see Figure 2) a company operating in a way that focused on making current products better rather than different. While the competition was taking market share by innovating new products, Devcn was tweaking current products and losing customers as a result.

The data also showed that the company operated in a way that emphasized profits over market share—a clear indication of a way of doing business that needed to change if they were to regain lost market share.

This data was both a shock and a gift. It was a shock because Devcn executives had no idea there was such a disconnect between their desire to grow market share and the prevailing culture that emphasized profit over market share. But, it was also a gift since they now knew where to focus their energy and time.

As a result, they articulated and gained buy-in for a new and exciting direction that both was customer focused and leveraged the expertise of their engineers (Challenge #2). They reorganized the company into market-facing segments (Challenge #4) and assigned engineers to specific market segments led by operations and service executives. This arrangement broke down the dysfunctional engineering silos without destroying the morale of engineers (Challenge #3).

ALL THE STRENGTHS OF THE PAST REMAINED BUT WERE RESHAPED TO QUICKLY MEET NEW MARKETPLACE CHALLENGES.

And because the workforce saw their concerns about lack of direction and power struggles being taken seriously by the executive team, they felt engaged and excited. Everyone felt more aligned.

As a result of the changes they implemented, after several years of declining revenue, the next two years saw revenue grow by 14%. By relying on real-time data unique to their culture, they were able to quickly pivot and change as rapidly as their ever-evolving marketplace.