Competing November 2004 Edition

“It’s Not Fair”

• It’s not fair that our competition’s labor costs 10% of ours.

• It’s not fair that our health care costs rise 20% or more each year

• It’s not fair that our raw materials (steel, petroleum products) are sometimes scarce and their costs are rising by double digits.

• It’s not fair that my competition out sources administrative, technical and even customer support service functions to India and/or China for 10% to 20% of our domestic costs.

• It’s not fair that we have so many regulations on our business.

• It’s not fair that our taxes are so high.

• We are no longer competitive and it’s not fair

We all hear these comments almost daily and sometimes we hear ourselves saying them. It doesn’t matter what part of the United States your business is located or what your products or services your business provides, it’s basically the same situation.

We all wish there was a way to level the playing field. I know many of us feel like a football coach with 9 players on the field competing against 11 players. It’s clearly not fair.




Well…what can you do about it? First of all, forget about feeling sorry for yourself. The current business climate is reality and you have to respond to that reality.

The best source of information regarding what makes your customers and prospects buy are your customers, prospects and even your competitors. In the “Little Red Book of Selling” Jeffrey Gitomer says selling is about value creating relationships, and that it’s more effective to compete on value than on price. One of my favorite Gitomer quotes is: “If you offer no value, all that’s left is price”. My experience over that past few years is that if you compete with China or other low wage economies, selling on price is the kiss of death.

Here are some suggestions as to how to move from price-based competition to value creating competition:

1. Ask your customers to talk about their operational problems. If you can, audio or video tape the conversation. Play it back at least SIX times……..take notes…….this information is gold.

2. Value Stream Map your process. This should result in the identification of overproduction, excess inventory, repairs/rejects, unnecessary motion, process inefficiency, waiting and excessive transportation and other wastes in your process. Waste is your enemy.

3. Implement your “waste reduced” (working towards waste free) Future Value Stream Map.

4. Measure and monitor key results. You will make mistakes. Make the mistakes short lived and obvious by auditing critical functions frequently. Meet with your continuous improvement teams frequently and adjusts your plan as required.

5. React more effectively to customer demand. Focus on money, yours and your customers. Make it flow as fast an often as possible to collectively build trust and wealth. It is possible you can work with them, and your vendors too, on a mutually beneficial, and profitable, partnership.

6. Keep your eye on the target! Continuously improve or die. Competition will continue to be fierce. A company with a continuous improvement culture will win most competitive battles. Become that company.

Creativity is key to winning in today’s competitive marketplace. I am sure you can add to my suggestions. Please do. In fact, do whatever it takes (if it’s safe, legal and moral that is) to create value in your customer’s eyes. Work hard to outpace your competition. I believe, creativity, hard work and clear thinking are competitive advantages. Get started by putting these advantages to work for you today. What good will it do you to wait?

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