by
Edward C. Gregor
Edward C. Gregor & Associates, LLC
Charlotte, North Carolina
May, 2000

INTRODUCTION

In today’s textile business environment, there is plenty of competition with a number of leading companies facing serious struggles, particularly as they seek to add to or expand sales and profits. Business growth, more than ever, is the top priority and a critical focus to all companies in our industry. There can be many decisions for companies to make. The trick is to learn from the experiences of others, including start-ups and multinationals alike, avoiding their mistakes while benefiting by repeating those ingredients that create success.

As one solution, this paper shares the experiences of the author and methodologies of specifically moving a new technology into the marketplace. Since there is no foolproof process, I will review approaches to identify new technology, how to keep it on track and then increase the odds for a smooth transition into the mainstream of the company. There can always be shortfalls along the way, but utilizing strategies based on sound judgment, a systematic approach and the marshaling of company resources will maximize the odds of achieving successful results. One lesson I have learned over the years is that technology first needs innovation and the second lesson is that innovation can be a mind-set and not necessarily a product in creating a final technology platform.

There are many examples of new opportunities and flawless executions. There are also external threats and internal mistakes. Sometimes only a fine line separates the two sides. Therefore, it’s the wisdom to understand the component parts contribute to the success and failure.

CURRENT SITUATION

In most market segments, there are typically 2-3 leaders and many followers having lesser market share. In a growing market with a reasonable balance of demand and manufacturing equipment, market prices are not severely challenged. However, in our industry leaders and followers are challenged in a competitive environment with seemingly few places for sales growth and increased profits. The reality is that there are simply too many suppliers and capacity chasing too few buyers and demand.

One choice is to make the best of it with the cards that are dealt. However, if you that’s the course, it’s impossible to maintain status-quo, as sales and profits will certainly deteriorate. The other option is to avoid letting circumstances dictate company fate. Rather setting new objectives, taking positive action and developing a strategy, is apt to create a healthier organization, which, in the long-run, will generate growth and improved profits.

BREAKING OUT

If an organization is not achieving it’s objectives and begins an initiative for growth and/or enhanced profits, it must do so with a plan. Although there may be product developments in the pipeline, events may not have allowed the company to capitalize on opportunities. Knowing what’s wrong and how to overcome stalemate requires experience, some luck, but most of all, an understanding some of the do’s and don’ts and components which increase the odds of success. Also crucial is the avoidance of common traps and the wisdom to perceive them in advance.

COPYING COMPETITION AS A MARKET STRATEGY

Sometimes growth and profits seem distant, so do new opportunities and a vision for success. Where to find new sales becomes an all consuming task. To find relief, companies take the route of looking at what their competitor is offering, in other market segments and copy directly from the competitors products and business. For some reason, marketing at these companies have a habit of thinking that they can take business from another company without a competitive response. Such a strategy does generate short term growth, but more than likely, new sales are only achieved when selling prices are reduced to gain a market position. In the process, attention is diverted from the core business. Then, when the inevitable competitive response comes, both the traditional business and the new business development activities come under intensified pressure, sometimes to the point of threating the very life of the business.

Why companies continue to think that copying competition cures growth shortfalls is beyond reason, but it happens all the time. Isn’t it wiser to seek growth in areas where there isn’t apt to be a competitive response or where a company can create a new market segment with proprietary technology or market position and the accompanying advantage it provides? Too often businesses, large and small, only pay lip-service to establishing proprietary positions. It’s a lot work and requires long-term corporate commitment and funding. What many fail to recognize is that ultimately it is far less expensive and more fruitful than most of the alternative choices.

Thinking beyond the immediate threat or need is not easy. There are many challenges, especially when a company is not meeting it’s goals. To rectify the situation, management must be innovative and strategic in it’s thinking and develop entirely new solutions. Innovation is a mind-set, not necessarily a product.

The following insights and recommendations are from the authors experiences of the ways a company can re-invigorate itself.

Identification of Market Opportunities

Taking sales away from a competitor is not an ideal business model. In fact, in the long-run it’s a potential trap. A company would be far wiser to identify and create entirely new market opportunities. However, in a mature industry, it is easier said than done. So, for a company to produce new opportunities, it must invest in business and market development. Remember, it’s more important that you determine what the marketplace needs, rather than what you can supply. The reverse is sure to fail. This approach forces companies to explore opportunities which are not immediately apparent. As a company invests in it’s future, it doesn’t require a large initial expense. One approach is give responsibilities to an internal “champion” with sufficient marketing skills and technical aptitude in a position of new business and market development. To succeed, business development can not be a collateral duty, but one where “champions” can immerse themselves in the position with the long-term support of management.

The champion assigned to this responsibility has many resources and choices from which to draw, including acquisition and divestiture possibilities with investment bankers, venture capitalists, and similar groups having knowledge of your market and related segments. It is also important to gather market intelligence by attending industry conferences, trade shows including adjunct industries, new ideas from third parties, marketing studies and analysis, consultant interrogations and exploration of expanded opportunities with suppliers will help establish a proprietary position for your company. The key external information and knowledge for “outside-the-box” thinking. It’s critical to avoid the trap of relying on internal knowledge, as your only principal source. Understand there must be a bias toward outside resources and knowledge to bring in true innovation. It also helps to avoid mistakenly pursuing products having overlapping technologies which will ultimately put you back into the same cycle.

Suppliers Will Assist and Cooperate

Forming relationships with suppliers can provide an enormous amount of information. Vendors obviously have an understanding of the marketplace with a different perspective or knowledge base from that of your organization. One note of caution, beware of traps where your supplier may have a special arrangement with your competitor, which either prevent them from providing you with certain knowledge or product(s). Your supplier may also view your company as unreliable and may not want to assist or may prefer guard new technologies for a better partner. Therefore, in addition to working with your suppliers, perhaps there are situations where you can even work with your suppliers source of supply who may have a new technology and who may be looking for customer like you to help them find their way into your market. Let’s explore some of these possibilities. How many fabric companies would you image look for new capabilities beyond their fiber supplier in the supply chain? They are rare. For example, why don’t more companies seek out new specialty polymers, from polymer producers, who have never supplied to the textile industry? Image the possibilities of a weaver, knitter or nonwoven company establishing a relationship with a polymer company who can’t get by the front door of your fiber producer or never thought of supplying the textile industry and you make a proprietary link. Every synthetic polymer was once new to our industry. Examples of situations where new polymers are now making market entry through limited relationships of this type include a melt-processable fluoropolymer (E-CTFE) from Ausimont, Inc. and polylactic acid (PLA) from Cargill-Dow Polymers. Both polymers with outstanding physical properties and potential market impact, but minimal textile industry experience. These are examples of how a company can control it’s destiny without the normal blocking factors inherent in traditional industry commerce. In addition to fibers from polymers, what about soft and flexible metal yarns made from stainless steel or even titanium from companies like MicroMetal Fibers, Inc. With many competing textile technologies, establishing a proprietary supplier position and the retention of a unique market capability can be critical to the success of any new development.

Another example, consider the possibility of going the other direction and linking a special development or technology with end-customers who will specify or use your product. Look at what Gore-Tex did. They created a need and now consumers look for the Gore-Tex hang-tag. The yarn, shell fabric weaver and garment producer are almost immaterial as a result. 3M did the same with Scotch-Guard and DuPont with Stainmaster. The key is a special product and market branding. Therefore, my point, think creatively, broadly, be non-traditional and you may be able to establish a proprietary position for your business.

Existing Staff Can Turn It Around

The best opportunity for a company is to have the current marketing and R&D staff develop new business opportunities or technological products and turn it all around. After all, they know the company. I mentioned that potential trap earlier. This is exactly why reinvigoration might be best left to others who are free of day-to-day responsibilities of the business to see the forest for the trees. One reason a company seeks new or alternative business growth may be due to the current structure or staff is either, not capable or too busy, to properly or fully address the future needs of the organization. Innovation, in the form of marketing or product development, is one of the most important, least understood and poorly executed functions in many companies. Often dormant or a money waster, innovation is the life-blood of any company and it deserves special attention. Bringing in outside resources or freeing-up staff skilled in the art of new business and technology development and specifically responsible for growth is a must. Growth is too important to fend for itself. It requires “champions” who know how to ask the “right” questions and create growth opportunities and achieve success.

How can research and development personnel be expected to develop knowledge or new ideas and opportunities when they are fixing product deficiencies and fighting fires and on-going problems to help keep production running. When will they have the time to create new ideas and concepts? On the marketing side, how can new products or entirely line extensions ever develop when they spend time copying competition or tied up with business reviews and budgets. There is a better answer and that’s a “discovery-team” of skilled marketing and technology personal who are unencumbered by daily business activities, but charged with the responsibility to take the business to the next level. This is where a fresh perspective from outside resources often prove helpful, especially during the accumulation of information stage.

Chasing Customer Development Programs

Companies must recognize when they are provided the opportunity to work with a customer to develop new products for them. On the surface this seems like fuel to the business, but it also a trap, if not managed carefully. Too often, companies desperate for growth will grab at opportunities without an appreciating what costs are involved. The cost may come in the form of poor market research or ill-founded expectation of sales by your customer in their own market for a component product you develop for them. What assurances do you have your customer will succeed if you develop the capability for them? One certain way to know is to understand your customers market and/or perhaps even your customer’s customer market. Consider the lost opportunity time for better developments by your company with far better chance of success if you had the knowledge throughout the entire value-chain. Is your customer funding your development work or are they holding out the prospect of new business, and perhaps unknowingly to you; your competitor as well.

So rather than constantly “grabbing for the brass ring” on the merry-go-round, ask your customer to establish a jointly funded project and a share of the financial burden. If the customer is serious, you have a partner. If they are not, you might want to pass this “exciting” opportunity to your competitor, who will waste their time chasing lost causes, while you make more effective use of your resources. As General George Patton told his troops, “ I don’t want you to die for your country, I want you to make the enemy to die for his”. Blindly spending precious time and energy without transparency throughout the supply chain is a dangerous practice that world-class companies never engage in with their customers. You shouldn’t either.

Perhaps a better practice is for you and your customer to jointly visit their customer to understand the opportunity before committing valuable resources. In all probability, the process will enlighten both you and your customer, possibly creating a product with a different construction or properties than originally anticipated. Take that of the filter fabric weaver who wanted a yarn with anti-static properties for use in a dry powder atmosphere. The first choice was to ask a yarn supplier for a yarn which was metal coated. Very little information was given by the weaver to the yarn supplier about the application and much of that which was provided was incorrect. After considerable work and cost it was determined the metal coating on the yarn would flake-off with the rigors of the filter fabric being backpulsed to remove particulate cake and clean the filter cloth. The weavers’ competitor then selected a special highly flexible 100 percent stainless steel yarn which had better anti-static properties and was not subject to flex degradation.

The above is a perfect example of not understanding your customers need, which they did not understand themselves, and not verifying the best available technology for the application in the first place. When competition ultimately gained the business and had their product specified, over $20,000 was wasted in product development. The loser was not only the first weaver, but the yarn producer who also was guilty of spending considerable sums to supply a metallized yarn without understanding the application. If only the yarn manufacturer or the weaver had asked for a visit with the ultimate customer they would have learned the fabric would be dynamically pulsed and not a stationary passive barrier. A simple bit of information, but time and money wasted chasing development programs with no clue to the actual end use.

Rapid Market Acceptance and Growth

Probably the biggest single trap encountered by companies is expecting rapid market acceptance for a new product or technology. This is a real and significant risk and a formula for large financial losses and personal failures. By way of example, it took over 40 years for air conditioning, developed by Willis Carrier in 1906, for use in cotton mills, to be widely accepted, for general use, after WWII. The automotive airbag was successfully tested in fleet cars in 1972 by Ford, but was not commercialized in the United States until 1990, when Chrysler introduced the first automobile bag. Computers and fax machines were available, in early forms and predate 1930. However, only in the 1980’s did personal computers and fax machines begin to realize their potential. The point is that to create a sustainable market requires marshaling of resources over longer periods than most companies believe. Although not all product introductions take decades, they can take years to gain wide acceptance. Therefore, think of your “need” to introduce an over-night success in terms of product refinements. True innovations take far more time. Also, if you rely on any single new technology or product as the company salvation, the odds of disappointment are very high.

Poor Marketing and Product Development

Companies sometimes have no vision for market leadership, nor understand how to compete for growth and profits in a competitive environment. They offer “me-too’ or ”knock-off” products and do not differentiate themselves from competition. Businesses can and should differentiate anything by making their product a value-proposition when the commodity seems to differ from competitor’s offerings only on price. Two examples, textile fibers for industrial market use, where performance is critical, generally have more value than in the apparel market. Also, a large number of small customers can be more profitable than a few large ones. Take Polymerland for example. They are a $1 billion subsidiary of General Electric with excellent profits in a highly competitive plastics polymer market. Their strategy is to sell the small user where the average sale turns out to be only $1,900.00. At that rate, it requires over 500,000 line-item sales a year to reach $1 billion in total sales. In the filtration market, why should a wetlaid nonwoven filter media supplier make a commodity paper medium and compete with every paper mill in America. When with little effort, they can work with suppliers of unique fibers and create a specialty business and new materials for an industry with customers hungry for new media to put in their pleated filters to differentiate themselves from their competitors. Clearly, companies have many avenues to achieve success. The problem is that too often they resort to what is comfortable, get trapped in overstated market potentials and fail to recognize the world is full of real opportunities, if only they made the effort to differentiate themselves.

Without proper marketing and innovation through appropriate product development the end result is a spiral of misery and a failure to achieve even a hint success.

INVEST IN SUCCESS

If senior management allows business growth to fend for itself, it can not achieve it’s goals. So how does a company begin to develop process of higher-value growth. It begins with an investment in business development and innovation. Innovation is a mind-set and not necessarily a product. It requires a pioneering spirit and the support of a business unit that is free to explore now opportunities without being encumbered with the day to day tasks of running the business. Organizations must recognize the importance of continuously re-inventing and differentiating themselves.

There are many examples of new opportunities and flawless executions. There are also external threats and internal mistakes. Sometimes there is a fine line between both. Wisdom is to understand the components and to do something about it in an organized way that will make the difference between mediocrity and a successful business.

	Edward C. Gregor & Associates, LLC © 2003