The Perfect Storm has come together of Excess Capacity and Product Variety

Carol Ptak, a recent guest on my podcast said…

A lot of people have focused on the fact that the Economic times right now are really bad. What a lot of people are missing is the fact that the world around us has fundamentally changed.

A we see now across the world is that we have excess capacity when you add to that the Internet where we get on the Internet we expect to have an experience like Amazon, or order it is going to tell me instantly when I’m going to get it. If you don’t provide it at the price I want to pay and the time I want to pay then I can just go someplace else. Why can I do that? That’s because I have all this excess capacity out there.

So what companies are seeing today is volatility like they never had to manage before and at the same time they no longer have the reliability of understanding what the customers are going to demand and when they’re going to demand, because customers are increasingly fickle.

So what we’ve got is the perfect storm that has come together of excess capacity and incredible product variety. Think about a new product lifecycles. They’re getting shorter and shorter and shorter. The world we’re trying to live in and started about four or five years ago is that we can no longer afford to build unless someone’s going to buy.

I have to agree with Carol, fundamentally the world has changed and if you are going to wait for the shift back you are in trouble. We could cal this a pull market. No longer can we build and build an force our product on others without serious consequences such as price slashing. However, in the long term if our markets have changed and more specifically our delivery methods have changed, we must change.

So how Meteorologist puts his finger on the eye of a Hurricane. Earth Image: visibleearth.nasa.govdo you survive the Perfect Storm? Do you sail right into it? The problem you have is that there is not a mental model for this. You do not have a map. You cannot process and organize all the data that is arriving, let alone organize it. If everything or on the other hand to little is considered you will not come up with an adequate model.

How do you overcome all this? Most people can focus effectively only on one thing at a time. I am not saying that organizations have to focus on only one thing at a time but maybe, I am. If you are to survive, the very first thing you need to do is face reality. That reality is that you have to be crystal clear on what your customer and what your market values!  There is quite a bit of understanding that goes into building a Customer/Market  Value Model. Obtaining the Voice of Customer/Market is part of it but so is Customer/Market Identification. Your perception alone is biased, you are not the one buying your product. Your judgment must come into play when interpreting the right data from the right market. Not deciding what your market is thinking. Having a true understanding of what is important about your product or service to the marketplace is the strongest survival tool you can have.

If you are to face the Perfect Storm, your thrust has to be very precise and with as much strength as you can muster. Just riding it out seldom works!

Carol’s ASR Website:

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The Nature of Value Podcast with Dr. Eric Reidenbach
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