Point Mercury Evinrude

Point Mercury Evinrude

The Market Share Leader Complacency Syndrome

The Market Share Leader Complacency Syndrome

‘The Boys just got too comfortable'

This is the tenth in a series of articles that have dealt primarily with Board decisions, decisions of CEO's and senior executives of major corporations.  Corporations that became industry Market Share leaders but over time recognized that their marketplace was either in transition or in decline. With an ‘eyes wide open' approach to business basics, they reinvented a corporate culture that ultimately translated into corporate redirection and sustained growth. The decision making processes embraced by these organizations invariably traced their success back to the business basics - Business Process Management tools and broad based Market Research in the Strategic Planning Process. The ‘success story' articles are then contrasted with the antithesis type situations involving major corporations characterized by market dominance but through either poor decision making or a close minded commitment to the ‘now' business ultimately eroded their market dominance.

Bombardier/OMC

For a high profile example with clear cut results we can look at Johnson and Evinrude Outboard Motors. Evinrude was founded 1907 in Milwaukee, Wisconsin, and Johnson in 1913 in Terre Haute, Indiana.  The stories are over 100 years old but it has more recently been a 40 year story that unfolded decade-by-decade. Johnson and Evinrude merged in 1936 to form Outboard Marine Corporation. Back in the fifties and early sixties the world of outboard engines was ruled the two market share leaders, Evinrude and Johnson, both manufactured by OMC, with Mercury Marine, also an early player. Let's fast forward to 2000 when OMC filed for bankruptcy and was acquired by Bombardier Recreational Products (BRP). Quite simply, OMC had failed to keep pace with the technological changes that ultimately emerged as product shortcomings. Along with losing 2-stroke market share to Mercury Marine, the 4-stroke winds of change were emerging at Yamaha, Honda and Suzuki. OMC was embedded old-line corporate culture with millions of dollars tied up in old technology and older manufacturing facilities for a seasonal industry, which put genuine limitations on R&D capital. At that stage, it became a 2-stroke/4-stroke battle that ultimately forced the closure of OMC.

As a footnote, even though 4-stroke outboard engines sit with a 70% + market share, Bombardier, already knee deep in-2 stroke technology, acquired OMC, knew what needed to be done on the way in and promptly did what OMC should have done. In the marketplace of today Bombardier offers the full range of Evinrude and Johnson 2-stroke outboard engines that represent a very viable alternative to 4-stroke technology. Bombardier utilizes much of their 2-stroke Ski-Doo snowmobile and Sea-Doo watercraft technology in a full range of outboard engines that are lighter, faster accelerating and less expensive than their 4-stroke competitors. Gone is the noise, the oil/gas mixture, the dirty, smoky, environmentally challenged 2-stroke outboard of yesterday. Their E-TEC outboard engine product line features a direct oil injection system that eliminates oil/gas mixing with the lowest outboard emissions in the industry. Their 2-stroke engine is much quieter than its predecessors and the boat planes faster than the comparable 4-stroke competitor (Google 2-stroke vs. 4-stroke). The 2-stroke/4-stroke battle rages on. Whether it's the aircraft industry, high-speed rail systems, or a broad range of recreational products, it is the sustainability of their corporate culture that defines Bombardier. A corporation that continues to reinvent itself with a focus on tomorrow versus a Senior Management Team with their collective steady gaze fixed on the rear view mirror. Bombardier acquired old technology with a very clear cut business plan that enabled them to broaden their product line in a four season Recreational market with which they were already very familiar. There are some great lessons here.

Handset/Tablet/Android/Blackberry

Another good case in point may well develop from recent events in the handset and tablet device marketplace wars with Apple, Nokia, Blackberry(RIM), Samsung, LG, HTC and Motorola. First, as a backdrop, let's look at some corporate decisions. Back in July 2005 Google decided to acquire Android, a 22 month old startup to add to its mobile arsenal. It was not particularly big news at the time but probably a competitive market research flash-point and a definite stake in the ground nonetheless. The next flash-point, in November 2007, Google initiated the Open Handset Alliance (OHA) which was formed to establish standards for handset device manufacturers, application developers, chip makers and mobile carriers. Among the 34 original OHA organization members were Samsung, Motorola, LG, Sprint, Texas Instruments, Intel, Qualcomm, China Mobile, NVIDIA (3D graphics) among others with Sony Eriksson and Dell following a year later. With the formation of the OHA, to the surprise of no-one and again led by Google, was  the unveiling by the OHA of Android, the open source mobile phone platform or operating system based on the Linux operating system which today has replaced Blackberry the O/S market share growth leader.

RIM remained committed to its proprietary operating system and did not join the alliance (now 80 members) in the key formative years.  Only in March 2011 did they announce that their PlayBook tablet would be Android compatible. Time will tell of the impact on RIM for their resistance to Android in their battles with Apple, Samsung and Motorola but certainly in many ways RIM is now into a reactive strategy shift in a marketplace of heavyweights. Although RIM is still the leader, Android is the fastest growing Smartphone platform for application testing. Android's parent company, Google is by far the largest computer software and web search engine company with over 100 major acquisitions over the past decade that include over 6000 Intel patents, one very rich, very tough competitor. Add Apple, Samsung, and Motorola among many others into the mix. Also, with the filing of patent infringement law suits among all the players at every turn of the road, the legal profession is also already a clear-cut winner.  Time will tell.

The Boys Just Got too Comfortable

Bottom-line profitability, vision and growth of the market share leader as well as their corporate culture can quickly be eroded. One of the well documented minefields out there for Senior Management is the ‘complacency syndrome' of a market leader. A like minded senior management team can most times be viewed as ‘a strength' but in times where the operative word is ‘change' like mindedness can be the enemy.  "The boys just got too comfortable'.

In the previous articles, companies like Eastman Kodak, Xerox, Sony, RCA, Nokia, IBM, Blockbuster, Bell, and Amazon are all in different businesses but all may have been guilty of the complacency syndrome. Harley Davidson is also clearly at risk with the likes of Honda, Yamaha, Kawasaki, and Suzuki. Again, time will tell.

In the 70's the Big Three car companies ignored the arrival in North America of the Japanese automakers; Honda, Toyota and Nissan.  They collectively became responsible for changing car design, product quality and power train technology before the big 3 finally woke up with the helping hand of a few government bailouts as an assist to avoid bankruptcy.  Evinrude and Johnson (OMC) in many ways ignored the evolutionary changes to outboard motor technology with the arrival of Honda, Yamaha and Suzuki in the outboard motor industry. Nokia, still a huge player, ignored the arrival of multi-functional handset technology and are scrambling for their financial lives. IBM was far too slow in reacting to the emerging desk-top, laptop and now tablet computer world. All the way to the decision by RIM to remain outside the Open Handset Alliance and the Android handset operating system and go it alone with their Blackberry proprietary handset operating system against Apple, Samsung and Motorola, among others.

Qualitative Market Research can become the Strategic Plan Achilles heel. Market Research that has identified certain competitive issues as significant when in reality; the actual significant issues in the SWOT exercise, Weaknesses and Threats have really not been identified or addressed at all, thereby bringing the Strategic Planning Process into question and placing the company at risk. What does your research say?

Business Process Management Tools

The high profile examples used in this article are for illustration purposes only. The business disciplines put in place through Business Process Management tools are not defined by size. They provide the ‘critical success factors' with guidelines, structure, process, and reporting essentials across the entire organization – big or small.

About the Author

Bob Ferguson – President/CEO Business Transitions Group Inc.

Email: bferguson@businesstransitionsgroup.com

Website: www.businesstransitionsgroup.com

BTG is a leading provider of Business Process Management tools and templates. Bob Ferguson has had a business executive career that spans over 30 years with the most recent 15 years as President/CEO of a broad cross-section of companies in the United States, Canada and Overseas.