How to Successfully Compete with the Big Dogs & Eat their Lunch

Like the kid who worries at bedtime about what's hiding in the closet, EOs and managers have a recurring nightmare in which they are confronted by the BIG dog, in the form of a well organized corporate competitor. In these horrifying visions, the better known, bigger and stronger "Big Dog" inevitably eats our lunch.

It's time to assign the scary and worrisome image of the Big Dog competitor to the same category of myths as the closet bogey monster. Oh, sure, they're out there, but the risk they present comes mostly from the energy we waste in worrying about them.

The fear the Big Dog inspires is real to the extent we allow it to be so. And in response to the scary presence of the big competitor we sometimes make poor decisions, stupidly positioning ourselves to forfeit the our own competitive

There are strategies to avoid getting crushed by large, well organized and resource rich competitors. The best advice is avoid direct competition. I'm not advocating surrender - just the opposite. To compete successfully pick your fights with the Big Dogs when it is to your advantage (and you have plenty of them), adopt a stealth mode in taking business away from them and compete hard where they are most vulnerable.

Know Yourself

All competition is about relative positions held in a many-dimensional marketplace. Whether you are big or small is not the key to understanding your market position… where you compete in terms of product, geography and level of services is. You need to know for sure where your organization is positioned in relation to those dimensions. Just as importantly you need to know the market spaces occupied by your competitors and the niche your clients perceive yours to be.

The aim is to occupy an unassailable position, closely identified with and connected to a steady client-base (by product/service type, geography and level of service). I know a very successful firm that dominates a peripheral urban market, specializing in good, not great, products. They make a ton of money, are known and respected by their clients and operate well below the radar of the local Big Dogs who cannot and do not want to compete in that market. Even if they did, the costs for a competitor to challenge the "little" dog would be prohibitive and marginally profitable.

Stealth Marketing

That's an unassailable market position and fortunes are to be made gaining a dominant niche in a well, precisely, defined market.

No competitor, except a monopoly, can dominate all the market space and even if they do, their coverage is unstable and vulnerable. Large organizations are always week on their borders and that's where you can slice off some of their marketshare. If you know and understand your competitor's market position, you know where their central unassailable strength lies. Stay away from the center and don't begrudge what they've worked hard to control. Look, instead, to the edges, where they are less equipped to meet client needs, quite likely to provide lower levels of service and less vigilant. Compete there.

Follow the lead of the Japanese auto industry. When they entered the US market in the early 1960s they sought the only position available… the lowest end, inexpensive, under-sized, utilitarian cars and trucks. Early Nissans and Toyotas were hardly luxury cars. For the next three decades the Japanese penetrated the market from the outside-in, using quality as a wedge on Detroit, slowly but surely slicing off higher priced brands… in the end becoming the Big Dog eating Detroit's lunch.

What's most interesting is that Detroit never saw it coming. Like the lobster slowly boiled alive in heating water, the American auto industry was so sure of its market dominance it overlooked, until it was too late, successful incursions from Japanese and Korean auto makers.

Exploit Your Competitor's Vulnerabilities

When it comes to competition, big is definitely not better. Big can mean slow to act (because decisions are made bureaucratically), hard to change (ruled by policy and procedures) and reluctant to offer customized service (their unit costs decrease with standardization). You can, however, respond in moments, you can adapt, you can customize.

There are other advantages on your side. Since many big competitors are nationally based, you always have the advantage of being local. You can exploit your local ties, knowledge and credibility as a competitive advantage.

Let their Big Dogs eat their lunch while you eat your own. When you compete, if you compete, pick do so where your clearly defined local market position (and knowledge), and adaptable style prevail.

 

For my Friends in Public Administration: Let’s Get Rid of the Public Meeting!

Having endured hundreds of hours of public meetings I can say, without the slightest equivocation, they are a waste of time. Not only do such meetings fail to provide the informative public input sought by policy-makers, too often they produce uncivil exhibits that demean public discourse.

The repeated broadcasts this summer of angry constituents confronting home-visiting Congress-members and Senators over health care reform should reassure no one. These were not displays of democracy at its best. We did not see a knowledgeable public illuminating an important policy debate. Instead we saw a system run amok, exploited by political interests.

I say it's time to get rid of the conventional public meeting and replace it with something that does a better job of guiding policy makers to better decisions.

It helps to realize there is nothing in our Constitution or history that requires public meetings. Yes, there have always been public forum all the way back to Greek and Roman city states, but they were never the open free-for-alls we see today.

Today's public meeting is a recent invention, a variant on the legislative public hearing, which emerged at the end of the 19^th Century. It was a tenet of the Progressive movement that citizens had a broader role in the policy process than voting and paying taxes; the public meeting was seen as a way to tap this community wisdom.

What began as focused legislative inquiry turned into a method for assessing public opinion. That was a mistake. The finite time decision-makers had for thoughtful discussion was diluted to allow for public input. That noble enterprise turned into the political performance art we see today. Worse, over time, the public came to believe they were entitled to their time to testify in front of legislative bodies.

I am not suggesting public opinion and input aren't important in the promulgation of good public policy. I'm simply saying the current devices of the public hearing or town-hall session are not the best way to accomplish inform the policy process.

If the public meeting no longer works, what does? The best way to capture public sentiment in a useful fashion is to keep function ahead of form. The function of public input should be to gather information that helps make policy. What the public can share of real value are their opinions as to what would be good policy… period. Many forms can do that.

The public is not making the policy (that's why we have elected officials), they are informing policy. It's really a matter of collecting data on a policy issue in which the question is: what would good policy in this area look like?

Note: you are not asking them what the policy should be. And unless they are experts in the policy area, you shouldn't. The general public is rarely knowledgeable enough about policy issues to make specific recommendations. What they do know better than anyone else is what they want (or don't) a policy to accomplish.

They may not agree and that's actually good, because the diversity of opinions over policy outcomes frames the debate. Once the criteria for acceptable policy are set, a good policy-maker can go to work finding an option that meets the greatest number.

I admit this is a centrist approach. I confess to believe the best policy is found somewhere between the extremes. Too often today, however, policy makers only hear the most extreme positions expressed. The great in-between, where most reasonable policy positions lie, is never revealed.

I do know there is a way to conduct public meetings in a manner that uncovers an array of policy options from one end of the discussion to the other and all points in between.

A model that works is what I call "managed discourse." It has a particular intent, it operates by specific rules and it is managed by the policy-makers who need to hear the discussion.

For this to work, it's necessary to keep this point in mind, the meeting is for the policy-maker, it is not for the presenters. People presenting already know what they think and have a good idea what they would decide if they had the authority.

But they are not making the decision… the people who convened the meeting are. And this is the conveners' precious time to do research into what the people want.

Managed in this fashion, the public meeting aims to solicit positions from the extremes, but strongly encourages moderate, intermediate expectations to be shared. Indeed, for the purpose of the policy-maker there is no necessity that any one position be heard more than once.

The rule of proportionality, that opinion is heard in quantities equal to the percentage of people who hold them, need not apply here. A hearing is not a straw vote or plebiscite. It is designed to draw out ideas as to what would make for good policy… it just might be that a value held by a single citizen opens the door to consensus.

Of course, there are times when decision-makers may want to know how ideas or opinions are distributed quantitatively. The best tool to learn that is not the public meeting, it is a survey.

The other key to a successful managed public meeting is for policy-makers to pose specific questions to the public. Open ended commentary does nothing to educate the policy-maker or the public. It is the responsibility of policy-makers (or their staff) to frame the questions and to ask them.

I use a process that keeps public input focused… I call it the accordion technique. The session starts when, with the accordion closed, policy-makers ask a specific question of the public in attendance. It could be, something like: what benefits would you expect to come from a proposed change in policy?

The accordion opens wide. Much like a brain-storming session people are encouraged to get as many ideas out as they can. I want decision-makers to hear and understand the full range of responses the question prompts.

The accordion closes by synthesizing everything that's been heard, restating the public input into clusters of ideas, option or criteria. It's useful to have a facilitator do this, but however it's done, the idea is to bring the discussion to closure (or at least a resting point).

Being able to show the public that they have been heard is validates the citizens who have participated; being able to organize the "data" (their comments) into a sensible array sets the stage for meaningful policy debate.

For my Friends in the Association Management: a Solution to the “Value Proposition” Problem

Associations continually struggle with the issue of what is commonly referred to as the "value proposition. From coast to coast the story is the same: leadership believes members don't recognize or appreciate all their association does for them… they don't see the value gained from the dues they pay.

Actually it's there to be seen, but you need a special lens for value to become visible. In this sheet I'll show you how the use performance measurement to reveal to your members the value proposition of your association.

Performance measurement refers to the system of determining goal achievement and tying it to association efforts. So far, so good. Don't let the technical aspects of what follows derail you… performance indicators refer to the items that are measured as representative of the association's efforts and achievements.

There are three kinds of performance indicators:

OUTPUTS indicate the variable amount of effort, expenditure or use of resource an association puts into achieving a specific program goal.

OUTCOMES indicate the variable amount of results or goal achievement that come as a result of the amount of OUTPUT applied.

EFFICIENCY indicators allow the ratio between OUTPUTS and OUTCOMES to be assessed in terms of the unit cost of a given level of output to outcome. It's assumed that there is one optimal ratio.

Sounds pretty technical… and it can be, but a little commonsense can turn this jargon into straightforward managerial practice to highlight the value proposition.

It easy to get started if your association has a good mission statement: whether it already conforms to a straightforward DO:GET format, e.g. this is what we do and what we expect to get.

The DO and the GET conform directly to the OUTPUTS and OUTCOMES of performance indicators. And the quickest way to get a list of performance indicators is to break the mission statement into its various components (program evaluators call this "deconstruction."

Don't get hung up on numbers and statistics, yet. It's the logic that matters here. While, by definition, performance measurement requires quantification, that does not mean that distinctions about quality cannot be made. Indeed, making quality distinctions for outcomes lends itself readily to performance measurement. I'd prefer to express all performance as numbers, but sometimes qualitative distinctions of good and bad is the best I can do.

The idea of performance measurement is not to create the perfect set of indicators (that would be an ideal worth pursuing), the aim is to determine how well we are doing at a specific point of time and point to directions for improvement.

Referring to a point in time releases the power of performance measurement. Measurement has little utility unless it is taken in comparison with something else. Those comparisons are called bench-marking… a way of determining whether your association's performance is better or worse when compared to something else.

There are three useful points of comparison:

• To yourself at some previous point in time.
  
• To similar organizations.
  
• To industry standards.
  

The first option is particularly useful because once measurement begins, the first assessment sets a baseline and over time it is used as a stable reference point from which to discern trends, even make forecasts.

Pushed a little further, it is possible to see whether budget allocations (spent dues dollars) produce anticipated results. That is the value proposition. Done properly performance measurement encourages viewing spent dues dollars as investments and levels of outcomes as ROI.

Pushed even further, good performance measurement can lead to performance based budgeting (PBB) a system by which leadership makes allocation decisions based on past performance. With PBB it is possible to "dial in" the exact level of service members want by adjusting allocations upward or down.

Pushed to its furthest extreme, an association could employ a "dashboard" with instruments that monitor real time performance along key dimensions.

The idea of the dashboard instrument panel may seem extreme, but a more modest approach, the association "report card," is a workable approach. Remember the report you got in elementary school? The teacher scored you on the topics relevant to grade school education in a way that communicated a lot to you, your parents and other teachers.

The same logic holds here. An association has a handful of really key performance indicators meaningful to members and leadership alike. Performance tracked on a quarterly or annual basis and noted on a report card, graded A through F (incompletes are allowed) can quickly show where the association stands. Put two reports back to back and you have a true bench-marking comparison.

The items to be reported should come from leadership and members. It's not difficult to pull together a couple of focus groups of regular members and ask them what they expect to see for their dues contribution.

The only tricky part in all of this is the actual process of measuring specific do:get pairs. As a social scientist, I can get pretty serious about issues of validity and reliability, cause and effect. When you get to this point you might want to get assistance from someone who understands the statistics of performance measures.

I do not, however, want to discourage you from starting, even though measurement may be qualitative and subjective. ANY form of measurement is preferable to none at all. Gaining consensus on what the report card items is a major step forward.

Here's an example. In June I worked with Rick Rielly and the Columbia-Greene Board of REALTORS® located in the beautiful Hudson Valley. These are the items they identified for their report card:

• Education and Training (# courses provided, attendance, evaluation).
  
• Quarterly meetings (# held, attendance)
  
• Newsletters (# sent, response)
  
• Financial Viability (revenues, perceived member value).
  
• Engagement/participation of members.
  
• Effective and efficient use of resources.
  
• Community involvement.
  
• 
  

This is a good start. As performance measurement its heavy on the do's, but there are outcomes specified. The selection of "perceived member value" is good.

The report card is an excellent management practice as well as helping explain to members the value proposition. It can point to areas that need improvement and demonstrate to members any increase in the value received from the investment of their dues dollars.

For my Commercial Real Estate Friends: More on Eating the Big Dog’s Lunch

The lead article on competition is an expanded version of a presentation I made to the IREM-CCIM Success Series in October. In this sheet I want to expand on the topic and speak directly to the commercial real estate profession.

Along with the points I made previously (know when and where to compete, adopt a stealth mode and hit them where they're vulnerable) there are seven things you can do to win against the large, well-organized, corporate competitor.

I asked a number of my friends to share their best strategies.

Know and solidify your market position.

As Patricia Lynn, of Lynn + Associates in San Francisco advised, "It's really a question of knowing how you best fit your clients. You have a unique set of skills and a deep, but boundaried knowledge of your market. You could, in theory, help any client, but in fact, there is a set whose unique needs are well fit to your unique talents". Ross Ford, the CEO of TCN Worldwide in Plano, adds: "Don't waste time pursuing business better served by your "big" competitor."
A point that Charlie King of King Industrial Realty in Atlanta reinforces: "We stay focused… and our focus is industrial real estate." Brian French of Realciprocity in Toronto adds: "Show absolute confidence in how assignments will be done."

Compete by slicing off the edge of their market position.

I think Scott Revolinski of RFP Commercial in Milwaukee has the right idea, "I go up against [one of the Big Dogs] all the time and my line is: if you want to list it use them; if you want to sell it use me. Then I promptly show them several similar projects they've listed but never sold. It's very easy since they email available properties every week. I just collect them and save them in a file."

Pick your fights

Josh Levering in Parsippany (NAI Hanson) says, "Know your competition intimately and know when (and how) to walk away… say no." Jeremy Larkin of NAI Miami contends, "Avoid trophy properties for sale. Target small value properties… fewer competitors. Even fewer qualified competitors. Higher commission rates." In Dallas at Transwestern, Sanders Thompson says, "Don't compete in their game; fly under their radar."
Or as Bill Almon of Almon Commercial Realty in Yakima says, "Know when to say 'that's outside our area of competence.' "

Exploit your advantages, their disadvantages

Owen Rouse of Manekin in Baltimore advises, "People hire national firms out of fear – fear that something will be missed… that will result in a negative event to the client. Sell against that fear." And Steve Blau at NAI Mertz in southern New Jersey expands on the idea: "The big boys are hamstrung by legacy systems… and cannot quickly adopt emerging technologies." Hans Hansson in San Francisco (Starboard TCN) is clear on this point: "Very simple. We can make quick decisions that our larger competitors cannot." In Chicago, NAI Hiffman's Dave Petersen adds, "We have no distractions. We have no unwieldy corporate structure to define business practice and process." David Zimmer of Zimmer Real Estate Services in Kansas City says, "We are the fabric of our community."

Supplement your size

Real little dogs turn sideways to look bigger when they meet a bigger one. Ross Ford of FM Stone in Elkhart understands, "We are the "big dogs" in our own market… most brokers, most listings, most SIORs and CCIMs." Dean Cotlow of Tucson's Cotlow Company agrees, "You must appear larger than life. Work on branding. It must be consistent and absolutely first class." From Toronto, at NAI Ashler, Howard Meier adds, "Act like the big ones. When we attend a broker's function, we attend in mass; we seem bigger than we are."

Establish your brand with superior, customized service

John Frager in San Diego at GrubbEllis BRE counsels: "You have to invest in your own brand… and have a well thought out marketing plan with consistent advertising and aggressive PR." Rick Kimball of GVA Worldwide in Boston suggests: "it can be harder for a smaller firm to build a relationship at the highest corporate level, especially when that person is not local. However, chasing down local or regional relationships can be just as valuable." Jeremy Larkin adds: "Out work them. Out service them. Be available 24/7. Respond quicker with more knowledge." From NAI MLG in Milwaukee, John Henderson says: " I make sure the client knows they are dealing with the people who will do the work, not someone brought in to get the business."

Adopt better tools, faster

Robin Zellers at NAI CIR in Harrisburg makes it clear: "We arm our professionals with every available tool to conduct business in an efficiently professional manner. We will not accept the notion that the big boys have better resources."

Great counsel from some of the classiest dogs in the business.

See the PowerPoint slides for this at:
www.pnwconsult.com/iremccim2.pdf

PROFILES IN LEADERSHIP: Jeff Lyon

We have worked together for so many years I tend to take his exceptional leadership skills for granted. So, this notice is long overdue. I met Jeff, a commercial realtor in Tacoma 20 years ago. He was just beginning his term as President of the Washington (State Association of) REALTORS®. He told me he wanted to get a lot done in his year and he wanted to team up with me, WAR's strategic planner, to streamline the association's operations. He did it, too.

That was just the first of many experiences I've had watching Jeff take on a challenge to leave a distinctive mark for the better. I learned what a force for change Jeff could be and, years later, can cite many times when Jeff's leadership made significant changes for his firm, his industry and his community.

Jeff is chairman and CEO of Kidder, Mathews in Seattle, active on the Board of GVA Worldwide, a CCIM instructor, an SIOR and a resource to his state and community. Although he would deny it, he's still an accomplished golfer.

What impresses me as much today as it did years ago is Jeff's bold vision and willingness to act on it. He has the foresight and courage to push organizations to unprecedented levels of performance and has never been one to settle for good. He demands of excellence, first in himself, then others.

Jeff's creative innovations and commitment to see others succeed, make Kidder, Mathews an industry leader.

The Strategic Gourmand: A Cheery Holiday Milk Punch

Please, pass up the grocery store egg nog and mix up a real holiday drink. This one has become such a family tradition in our household that we don't wait for holidays… it's great any time and always a treat at breakfast.

 

Remember, as with any great drink, presentation is as important as preparation.

 

1. The day before: mix up a batch of simple syrup (for enough to fill a pitcher (10 drinks) you'll need 2 cups of sugar and one cup of water. Mix them and bring it to a boil for five minutes. Pour into a container, chill down overnight).
   
2. Chill a large glass pitcher.
   
3. Into the pitcher add:
   

 

1¼ cups Bourbon (I prefer a smoother blend like Maker's Mark)

 

2/3
cup Simple Syrup

 

¼ cup. Vanilla extract

 

5 Cups Half and Half

 

Stir gently, but make sure everything is well blended.

1. Pour into high balls glasses, add several ice cubes, add a shake of nutmeg.
   

 

The drink is potent and it can sneak up on you if you're not careful. Of course, don't try driving, operating heavy equipment or even wrapping Christmas presents after two of these.

 

Happy Holidays!

You Have to Read This:

This book taught me to travel: Paul Theroux, The Great Railway Bazaar.

Published in 1975, his account of traveling by himself by trains roundtrip from London to Tokyo provides as many lessons about dealing with life's challenges as it does with travel. He taught me to look at things for myself, to distrust guides (written or human) and to arrive at your own conclusions. Theroux can be judgmental, even innocently ethno-centric at times, but he trusts his eyes and accepts what he meets on his own well reasoned terms. There is a recently published (2005) companion-piece, Ghost Train to the Eastern Star, in which he retraces his '75 bazaar. His keen observations are presented in lean, incisive prose that's satisfying to read and conducive to personal reflection.

Duke’s Rule #19: Data inform decisions; leaders make decisions.

There are systems that can be managed directly by changes in data without human intervention, but even my thermostat needs a tweak by me occasionally. Data are great for what they tell us, but people need to superimpose their values and judgment to add meaning to numbers. That's the hard part; and that is leadership, especially when data come at us from different directions suggesting the need for contradictory actions. We need data to inform decisions, but we need good human judgment to make them. (Thanks to Shannon Richards for stimulating me to think about this new rule.)

 

The Facilitator’s Toolbox: Making Order out of Chaos

Decision making is a messy process. What looks (always after the fact) like a logical stepwise procession from problem identification to solution is usually a series of explorative forays. Indeed, in the course of trying to solve most problems, it's likely you'll reach a point where the process is so overloaded with information
that conditions resemble the chaos of Thanksgiving morning.

 

You know what it looks like: a thawing turkey, raw cranberries, potatoes and yams and a bunch of vegetables, bread crumbs and hard-boiled eggs… no indication of the feast to come and plenty of evidence to predict a last-minute Chinese dinner later in the day. Somehow it always comes together, because as anarchical as it seems, there is an underlying order to cooking that leads to a successful meal. You realize, after a few years, to trust the process.

 

And that's the lesson to be learned about decision-making. There is an inherent process and once you understand, trust and follow it, the chaos of crisis and the mid-air uneasiness of not having a solution disappear and order prevails.

 

What's the process? In keeping with our metaphor, it's as simple as cooking Thanksgiving dinner. First, gather and prepare all the ingredients… for problem solving this means to collect all the necessary data.

 

Second, follow the recipe, assembling each dish with its proper ingredients. In decision-making this means to organize the data… convert it into information that will "inform" your decision.

 

Third, keep in mind what you are preparing. Good cookbooks offer up more than recipes, they give you an idea of what a dish will look like and how it will taste. For problem solving it's important to have a vision of what you are trying to solve and what represents an acceptable solution (or resolution, which may be a very different thing). Solving a problem is not just about making a decision, it is about changing conditions from problematic to "non-problematic."

 

Finally, taste it before you serve it. Try out proposed solutions. Small prototypes, even simple models, point up how a good solution can become a better one.

 

The trick is to stay organized and trust the process.

Looking Forward to the NEW Year!

The best thing most of us can say about 2009 is that we survived… and that's a pretty strategic achievement all by itself. I've never a published at the end of the year, so whatever you chose to celebrate, from Christmas to Kwanzaa, Chanukah to the Winter Solstice, accept this newsletter as my gift to all of you with best wishes for a prosperous, healthy and happy new year.

 

Duke Kuehn

December 11, 2009