Strategy Changes

The optimal time to review and amend the strategic direction of a company would be when everything is going very well. We probably feel wonderful and disregard the need to undertake any critical analysis when profits and sales are up, personnel are performing and the clients are very satisfied. Of course this idea of testing and reviewing during a prosperous period in the cycle is obviously counterintuitive. There are compelling reasons to disregard the old cliché of ‘if it ain’t broken, don’t fix it.’ Consider this: the other two times we may think to perform serious analysis may be inopportune and too late in the business cycle and they are first when profits are flat and second when losses occur.

You may have selected a successful and appropriate strategy some time ago but things change. Let’s assume that the previously chosen strategy to maximize market share and support growth fit the conditions of that time. But while you weren’t looking the key factors became altered. Technology affects our decisions. Witness how email attachments have supplanted the use of faxing. What if you manufactured fax machines (or buggy whips?). Customers change their requirements and thus the demand for your product or service. A friend of mine was forced to open a textile processing factory in China next to his customer’s factory if he wanted to continue to be a vendor. Your key personnel may retire or relocate and if your strategy was built upon their unique talents, reevaluation is required. Trade laws and other legislation change. Quota was eased when China was admitted to the World Trade Organization. The DR-CAFTA (Dominican Republic-Central America Free Trade Agreement) is expected to become fully effective now. This law enables fabric mills to produce in the treaty countries and export to fellow trade partners duty and quota free. Cone Mills decided to build a $100 million denim mill in Nicaragua because of the benefits of this new treaty.

I’m sure there are other examples of circumstances that would alter your plans. The point is to review your assumptions on a regular basis - every three to six months. In the book, “All the Right Moves, a Guide to Crafting Breakthrough Strategy,” C.C. Markides, suggests some indicators of strategic health to consider: employee morale - what’s the energy level inside the organization?; customer satisfaction - they only stay if they are satisfied; trends in financial health - while you may be profitable now, in which direction are sales and net profits headed? What is the reason for any changes, distributor and supplier feedback - do they suggest paying attention to different areas of the market and are you taking advantage of technological improvements to add value?; changes in the industry and the company’s fit with the new environment - Will you be doing what the market needs tomorrow? Are you ISO certified as required for international trade?

The core of your business strategy should be your customer value proposition. What value do you provide to your customers? The warning signs of change and indicators will affect how you deliver the value your customer’s expect. Get to know your key customers better. Here are some questions and ideas that will enable a deeper and more valuable understanding: What are your customers’ needs now and how do they anticipate their needs will change? How can you work with your customer to reduce costs in the supply chain to offer lower prices without sacrificing profit margin? Is their constraint financing or personnel competency? Perhaps your customer would not mind paying you for a service that they can no longer adequately provide for themselves.

At Greco Apparel we added the service of supplying a full package on all products which includes providing fabric sourcing along with product development and cut, make and trim manufacturing. And we source globally. Many of our clients simply do not have (nor do they choose to have) capable staff to source fabrics or production. Their focus is on serving the needs of their customers and not performing the role filled by us as a trusted vendor. What do they anticipate will be key determinants of their decisions in the future? What value do your customers expect to delivery to their customers and how can you make improvements that will support those initiatives? In our industry, mass customization is an idea that has been in progress for a while. How can technology assist with better fit to the ultimate consumer while reducing inventory costs?

If you asked you customers how could you add value what would they say? Try this question which should open some creative responses. “If you (Mr. or Ms. Customer) could wave a magic wand, what would you wish for?” Take the opportunity when you least think you need it to pause and reflect on these questions and probable solutions. If you will allow one more cliché this year- “It’s difficult to remember you were sent to drain the swamp when you’re up to your ass in alligators.” Your creativity will be enhanced when you are not under pressure. Try meditation to open your mind to greater possibilities.

The available answers you seek will contribute to reducing stress while increasing satisfaction in the future. Isn’t that what we all wish for? I wish you a happy, healthy and prosperous New Year.

Joseph Greco is president of Greco Apparel. Visit them on the web at www.grecoapparel.com