Wednesday, 19 June 2013

Keeping up with the competition

Recently I was asked "if I am doing everything that I can think of and still not beating the competition what should I do?" This person had made a lot of improvements to their company and had, for a short period, been doing well. But the competition had reacted and they were once again falling behind. My, rather abrupt, answer was "think harder or give up" which entered us into a broader discussion.

Unfortunately, after having made a series of process improvements, this person was now back to doing business as usual - and this was the problem. Henry Ford once said, “If you always do what you’ve always done, you’ll always get what you’ve always got.” Nowadays the pace of change is so rapid that there are few instances where this remains the case - those who don’t continually innovate and streamline end up falling behind and struggling to survive.

A good example of this is AA Insurance; a decade ago it had a large network of retail premises, offered good quality competitive insurance and continued for a number of years building on this model. However, when Direct Line saw an opportunity to change the way insurance was bought, reduced overheads and therefore premiums, it took great market share and AA Insurance started to struggle.

AA insurance is still here today thanks, in my opinion, to the great visionary work of Mark Wood who came in and made a number of hard, radical decisions which looked to the future instead of reflecting on the past. He was not popular with everyone, good leaders rarely are, but he did turn the insurance arm of AA around.

Going back to the original question I was asked - the person I was helping was well intentioned, very good at delivering change, but was lacking the understanding of what was possible and the ideas to get there. Their real question was how do I go about identifying opportunities for improvement? This is far easier to address. To do this you should look at your own operation with a critical eye and assess if it is it better than last month?

Questions you should be asking are:
  • Am I really making best use of all the resources I have available to me?
  • What are my current constraints and can they be eliminated?
  • If I were to start from scratch what would I do differently?

A regular review of what is happening externally in your market is also key:
  • How is my performance compared to the market? The earlier you can identify any gaps and trends the better you can assess and react to them.
  • What are my competitors doing? What are they investing in, what capabilities are they building? If they are investing they are expecting a return and you are likely to see your comparative performance change in the future if you do not invest too.

Continual improvement is now a part of all business. Building this into the company culture and making time to capture and assess a broad array of information and data at regular intervals is now what distinguishes the great performers. The best performers tend to use the broadest range of data available from a multitude of sources including:
  • Good quality internal MI
  • Regulator reported information
  • Publicly available data sources
  • Industry and sector  shows and conferences
  • Industry press
  • Benchmarking studies
  • Networking with peers

Investing time and resources to gather and review this information to drive change in your business is key.

By Nick Georgiades, Director - Advisory Services, TDX Group.

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