Best practices in strategy implementation

Implementing change is hard enough when it involves your own company. The degree of difficulty reaches new heights when change is required on the part of your business partners, whether suppliers, distributors, or end customers. One firm recently came up with a new product idea, one that they thought was significant in terms of taking reliability to a higher level. They felt that their customers, who incorporated this supplier’s product into their own equipment, would clearly see the benefits of this idea. 

The problem was that it also cost more, a factor that was quickly seized upon by the customers to whom they took this idea. As the supplier’s sales manager noted, “It ended discussions as soon as we said that we have a great new product, but it will cost more”. He went on to note that “Not one of our customers showed an ounce of enthusiasm for the idea, backing off because they were unwilling to do anything that might push their own product’s cost to a higher level”. The approach that this firm took to this challenge provides an interesting success story, one that combines a strategic concept with an action plan that overcame the challenge of implementing change on the part of this supplier’s customers.

The strategic concept that this firm identified to overcome customer resistance was to bring to their customers an option through which they could offer the end buyers a standard product at their current price point and a new, high-end option incorporating the new more-reliable ingredient at a higher price point. This approach allowed the supplier to provide their customers with a “no downside, real upside option”. If the end buyers selected the upgraded version, the supplier and the customer could share the rewards of reaching a higher price point.

This strategy has been successful in many industries. For example, a substantial number of the options that we take for granted on our cars and trucks have followed this path. In many instances, the automotive suppliers first introduced innovations in the aftermarket, getting motivated buyers to have their vehicles refitted with these options. Small items like cup holders, most of the consumer electronics used in vehicles (eg, CD players, DVD players, navigation systems, security systems, etc), performance options like those associated with The Fast and Furious movies, and products like sunroofs that required actual alterations to the vehicle all began as aftermarket products.

The next step for the automotive suppliers was convincing the carmakers to offer these as options on their vehicles. Many of us can remember making the decision to buy the car with the CD-6 player and the sunroof, even though it had a higher sticker price. Today, most cars offer those options as standard equipment. Creating an opportunity through which customers can upsell always opens the door to discussion. It’s one of the basic ways of creating value for customers as a route to capturing value for your own shareholders.

The firm that is the subject of this case study did more than seize upon a strategic concept that transformed the discussion away from resistance to an idea that might force a price increase and towards an idea that might generate more revenues and profits without much in the way of risk. The other ingredient to their success was putting themselves into their customers’ shoes and building fairly detailed implementation plans as to how each customer could move from concept to reality. 

They thought through many dimensions of what would be required for each customer to make this change and move towards an offering that included both the standard product and the new higher-end upgrade. They developed not only strawman action plans, but also did their homework to accompany them with a detailed financial business case for the idea. They drew upon their own market research to provide estimates of each segment’s likely level of uptake, and estimated the costs of making the change in multiple categories, from manufacturing through sales collateral through inventories. 

As one customer said, “It’s not often that a supplier comes to you with a pre-packaged implementation plan, accompanied by a business case that gets you excited.” Through this process of getting ahead of third-party implementation challenges, a product idea that was first greeted by active resistance evolved to become a shared success between this supplier and its largest customers.

You can email George at gfb@bluecanyonpartners.com if you have any comments or questions.

About the Author

George F. Brown, Jr. & Atlee Valentine Pope

George F. Brown, Jr. and Atlee Valentine Pope are the authors of CoDestiny: Overcome Your Growth Challenges by Helping Your Customers Overcome Theirs, Austin, TX: Greenleaf Book Group Press, © 2010.