If you’re a leader in your category of building materials, I’ve got bad news for you. You’re probably in trouble. Your future is at higher risk than you realize.
If you’re a smaller company, it’s time to recognize that market leaders are not as strong as they seem. They’re more like peacocks – they have big, colorful feathers that look impressive, but underneath there may be a pretty weak bird. If you can identify and exploit their (many) weaknesses, it will be much easier for you to grow.
Here Are the Weaknesses of Leaders and How Smaller Companies Can Benefit
1. Market leaders are no longer focused on sales or growing their market share. They will say they are a growth company, but they only see growth on their terms. “We will grow by selling to customers who will put up with us.”
You – Stay focused on sales growth and meeting customer needs.
2. Some leading companies reach a point where they believe their customer needs them more than they need the customer.
You – Keep the customer first.
3. When a leader’s sales reach a certain size, they start making profit optimization more important than growing their sales. They’ll hire MBA’s who have never met a customer or been on a job site to find more profit by staring at spreadsheets.
You – Listen to financial advice but don’t let it run your company.
4. Leading companies used to be focused on gaining new customers and growing the sales volume with each customer, but that has changed. Now they measure how much it costs to do business with a customer and how to make each customer more profitable by cutting service costs.
You – Again, stay focused on sales growth and meeting customer needs.
5. Leaders have so many rules and processes designed to reduce their costs that it becomes less and less desirable to do business with them every day. To the customer, it’s like death by a thousand cuts. They’re just waiting for someone to walk in and do something as simple as acknowledging an order the way the customer wants or to overnight parts.
You – Never stop asking your customers, “what could we do better?” and “how can we make your life easier?” While the market leaders are busy preening their feathers, you can work on giving your customers genuine value.
6. People at larger companies become more focused on protecting their jobs or positions than growing sales. They strut around, worried about their appearances instead of figuring out how to be effective. They have become masters of looking and acting important while carefully avoiding any actual accountability. If a marketing program fails, for example, marketing will blame it on the sales team’s inability to execute it.
You – Keep your teams working together. Ignore the “I dids” and reward the “We dids.”
7. Everything needs to be controlled. There are two reasons for this. The first is a big company employee feels the need to protect themselves in case something goes wrong. The other reason is that if by chance, someone tries something new and it succeeds, they don’t want them to get credit.
You – Let people try new things and encourage failure as a learning tool. For example, most large companies do not use social media effectively because of their need for control. As a smaller company, you can use social media to outflank your larger competitors.
8. They believe their own hype – even when it’s all show with little substance.
You – It’s good to be confident, but it gets dangerous when you stop looking over your shoulder.
9. They are blind to competitive threats. A sharp competitor who is less risk-averse and has a comparable product can try something different and start growing their sales. The larger competitor won’t see it as a threat and will allow the smaller competitor to gain momentum. By the time the larger competitor tries to react, it might be too late. Their first response is also usually more hype than real change – and the customer recognizes this.
You – Stop playing the game by the same rules as your larger competitor. Tilt the playing field in your favor by doing something different.
10. They are blind to new ideas, materials or products. How long did it take Trane and Honeywell to take Nest seriously? There are a number of recent grads from places like MIT and Stanford who are working on their own to develop new products for the building materials industry. Some of these will succeed and may make the market leader irrelevant. If a new product means you no longer need to insulate walls, how important is it to be the largest manufacturer of insulation?
You – Could you be a disruptor? One of these young geniuses is more likely to work for a smaller company than a larger one. You are also in a better position to see a disruptive product and to react.
11. They are blind to changes in the market. The larger a company is, the easier it is to find customers who are unhappy with them. Yes, larger companies have some customers who love them. The problem is that they base their performance on the feedback from those few customers. Anyone else is just a difficult complainer not to be taken seriously.
You – Continually ask customers, “I know you buy from (big guy). What are they doing that makes it difficult to do business with them? What do you wish they would do differently? If we could do these things, would you be open to buying from us?”
12. They see themselves as manufacturers who operate their own plants. Every new idea is based on being able to continue using those factories.
You – Don’t limit your thinking to the use of your plant. Keep thinking about what the customer or market needs. How and where it will be made are just details that can be worked out afterward.
If you’re a leader, stop acting like one! Get hungry again. Starting more like a smaller challenger. There’s not much to gain from being the big fish in a small pond.
If you’re not the leader, go for it! The leaders are more vulnerable than you think. Look past those long tailfeathers – if you can see their vulnerabilities, you’ll have wide-open opportunities to grow.
Whether you are a leader or a challenger, I can guide you to more sales growth with only a few changes. If this interests you, contact us and we’ll talk about it.
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Harry A. Paulison
Business Management, Business Development