Over on Supply Excellence, Ed Bockman has authored a definitly worthwile post discussing the paradox of a buyers market where buyers are scared to act. He writes:
In my observations from the trenches, I think you can chalk up the hesitation of many organizations to a mix of once-bitten-twice-shy jitters, patiently waiting for “the bottom”, overstocked inventory of direct materials and a lack of demand for their finished products.
In times like these it might be useful to recall that the downturn that we are seeing now is not only due to an extrordinary financial situation but owes much of it’s depth to a significant structural shift. Old ways of doing business are on it’s way out the door and this is in fact adding fuel to the fire.
The good thing about changes such as this is that new markets will replace the old. The bad part is that change hurts; and as humans we strive to resist change (and many of us do this until no other opportunity is available). If we don’t see major rewards on the other side; chances are that we’d rather stay put instead of getting our feet wet.
So as a reminder I’d like to offer some success stories from past structural shifts:
- In the mid eighties Cisco Systems completely changed the telecom industry and in doing so put a high number of telecom developers, manufactures and works out of business.
- General Electric was founded and started to flourish during the Long Depression of 1893-97.
- Kellogg’s became a household staple during the Great Depression of the 1930s. An era that also saw the Golden Age of Hollywood.
So this is indeed magnificent times for two reasons. From a business perspective those that can exploit the structural shift are in a golden position. From a purchasing perspective; those that exploit the current situation can deliver great value to their corporations. I recently co-authored a perspective on this subject entitled “Sourcing in a Downturn” which discusses ways to identify tactics to exploit the effects of the current situation when sourcing IM&S. Hardcopies of the perspective is available free of charge from www.ibxgroup.com.
December 6, 2008 at 10:22 am
The notion that “new markets will replace the old” reminds me of Joseph Schumpeters “Creative Destruction” where some businesses must die and give way to new opportunities in order for the economy to grow. It may be a hard fact and bitter pill to swallow, but maybe it is what is necessary to achieve a structural shift towards a more sustainable economy.
December 11, 2008 at 6:20 pm
Very true, in these times it seems like everyone is looking for government aid instead of taking a hard look at themselves to see what it was that once made them successful. But as you say, it is a very bitter pill to swallow.
December 11, 2008 at 6:24 pm
Regarding Joseph Schumpeters “Creative Destruction”, McKinsey Quarterly recently talked to Richard Foster regarding his book: Creative Destruction: Why Companies That Are Built to Last Underperform the Market—and How to Successfully Transform Them
http://www.mckinseyquarterly.com/Strategy/Growth/Creative_destruction_and_the_financial_crisis_An_interview_with_Richard_Foster_2268
December 12, 2008 at 12:14 pm
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