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Escaping Commoditization, and Today's Other Common Business Challenges

We recently hosted one of a series of workshops that we do at frog for IESE, the highly-regarded business school in Barcelona, and it was interesting to see that several challenges emerged as common for the participating companies.

This particular workshop was for IESE’s Global Executive MBA program, and we had 25 managers and executives participating from a wide array of companies and industries from across the globe. The workshop, which used our frogThink methodology for creative facilitation, was focused on innovation culture and strategy.

We gave the participants some homework to think about challenges they were facing in their businesses. Looking at these thoughtful and often quite lengthy responses, several inter-related themes emerged that were common across industries and geographies:

  1. Commoditization: Many of the executives’ companies are facing market stagnation caused by too many competitors, disruptive entrants, huge price pressure, and few opportunities for differentiation. The question is, how do you find new ways to create value?
  2. Risk-Avoidance: Companies get trapped in near-term thinking, and cannot stomach bigger bets that may have longer-term payoffs and lead to more defensible competitive differentiation (see point #1). How do you balance an innovation portfolio so that it has a mix of big and small risks?
  3. Customer Disconnect: Companies are too removed from really knowing their customers well – what motivates them, what they value, how and why they behave and buy what they do. Companies that sell through large chains are often finding that the chains know more about their customers than they do, and keep them one step removed from true customer insight. How do you regain a deep connection with your customers? This is a vital step for escaping the commoditization trap.
  4. Emerging Markets: Understanding and succeeding in emerging markets is increasingly vital for growth and competitiveness, yet many companies struggle to understand how best to engage them. Going into emerging markets requires an entrepreneurial and disruptive mindset (see point #2), and not being presumptive about who your customers are, what they want, and how to reach them (see point #3). How do you gain insight into what makes an emerging market tick, and fine-tune your offerings for it?

“Fixing” all of these was obviously impossible in a one-day workshop. But thanks to the highly engaged students we had an energizing session using several important tools for dealing with these challenges: how to think of customers more holistically (not just as data points and abstract entities), how to question the assumptions of what your business is about, and how to explore new opportunities in low-risk ways.

AVP of Marketing Strategy Adam Richardson is the author of Innovation X: Why a Company’s Toughest Problems are its Greatest Advantage. His book is the manual for leaders looking for clarity about the emerging challenges facing their businesses. You can follow Adam on Twitter @richardsona.