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Prepare Adequate Defenses |
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The best defense is a good offense. |
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"We will encircle Caterpillar and become the dominant producer in the industry," declared Komatsu a decade ago. Many observers predicted that Caterpillar would join the long list of American corporations that have fallen to the Japanese. |
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After surviving Komatsu's attack, Donald Fites, chairman and CEO of Caterpillar, said, "The biggest reason for Caterpillar's success has been our system of distribution and product support and the close customer relationships it fosters." The backbone of that system is a long history of quality relationships by Caterpillar with its world network of independent dealers. So when Komatsu's attack began, the strongest unit of defense, the dealer structure, was in place. Of course, this alone was not enough to overcome Komatsu's cost advantage; Caterpillar also had to make the organization flatter, meaner, and leaner. However, Komatsu could not overcome the marketing strength provided by Caterpillar's network of dealers with strong customer contacts. Understanding the strength of personal relationships has long been a weakness of the Japanese. Today, Caterpillar's share of the world market for construction and mining equipment is the highest in its history.
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Smaller companies or brands have achieved a strong defense by owning very strong positions in a niche or particle segment of a product line or business. When they own a position in the customer's mind, they can hold off the big competitors. Witness Makers Mark in bourbon, Danner in boots, and regional grocers or pizza parlors in your home town. |
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Even on the defensive, the rule is to seek every opportunity to seize the initiative and achieve results by offensive action. When you are constantly in a defensive posture, you seldom can win. If you stop the attack, there will be another one. |
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Too often, the strategy that strengthens the defense is characterized by finding some way to redesign your existing product instead of getting out in front of the trend or the technology. The mistake is to try to serve the old market better in a new way instead of going where the market is growing. The defensive is not achieved by building better buggy whips. |
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