October 22, 2020, 6:46:17 PM
Today, in many industries, the operating paradox for profits is ‘your competitors are your partners.’ Making this work, is not that simple. This is never more true than when a manufacturer and retailer both share and compete within the retailer’s distribution channel.
The manufacturer and the retailer both shared -- and competed within -- the retailer's distribution channel. They both had something to gain and something to lose -- whether they cooperated or not. The retailer was young, quick, sales-focused, and market-share driven. They were growing explosively. They wanted the largest possible market share Now! -- regardless of profit. The supplier was a well established, high-quality, high-profit, customer service-oriented manufacturer with an impeccable, well-established brand -- and a strong need to maintain profits. Although both companies played to win, their definitions of winning were decidedly different.
After a round of interviews, it became clear they were not about to budge on their business models. One of our partners worked with senior teams to co-create models and methods bigger than the presenting paradox. Using this process, they were able to identify additional, mutual pockets of value, areas of greatest friction, and agree on exploring a few, hitherto ignored, opportunities and adjacencies. In the process, they repurposed aspects of their strategy and resegmented important markets. Then, both companies’ senior teams, with our facilitation, created a scaffold of forums and planning gathering new insights at the point of the customer they could agree to implement in alignment. Given the differences in culture, we then worked with them idenitfying perofrmance hot spots and worked with those teams, functions, and leaders to align with the strategy.
They were able to use jointly a new operating platform -- all while the retailer introduced an in-store brand that competed directly with the manufacturer’s products. Within six months, both companies were able to maintain profit margins, increase revenues from $2 Billion to $2.2 Billion, and increase market share.