Repositioning An OEM To Enter New Markets & Stay Competitive
EAC/Integrated Power Solutions was a business built by an entrepreneur that specialized in highly customized battery design and manufacturing. When we began working with them, they believed their job was to take battery-design specifications from clients and build batteries for them—a typical original equipment manufacturer (OEM).
Unfortunately, volume was flat and growth came only from their 22 best customers, representing almost 90% of their business and a good deal of their repeat business. The other 150 clients contributed very little to their volume or profits. Plus, consolidation in their industry was beginning to worry them.
SAMC’s Approach. When their CEO Mark Schmidt engaged SAMC, he had just discovered Blue Ocean Strategy® and was one of our first clients. It was a wonderful experience to work with Mark and his team. They could see the value of exploring new markets and searching for emerging trends where they could leap-frog over the competition and get out there first.
Together we began drawing the company’s Strategic Canvas. They quickly realized that they really knew very little about themselves and their competition. How can you diversify if you don’t know who you are? Or improve sales against those who are solving power options in other ways? Their competitive set looked like spaghetti.
Visual Exploring Worked. So we went out “exploring.” We accompanied members of the management team and talked to their customers and non-users within those customers—people other than purchasing and engineering. We wanted to hear what the marketing, customer service, R&D and design folks were thinking.We spent time on factory floors, listened to telephone conversations and watched what was happening both inside and outside the company. We went on sales calls and listened in on sales meetings. Mark even took us to China to see their new factory and meet their team there.
Equally valuable were our culture probes with new customers who had actually come to EAC through the Internet. New customers were searching for them and found them—remember, this was 2007, not today. Each of those new customers had never been contacted by a sales person in advance. They arrived pre-sold on choosing EAC for their battery needs. They helped us begin to “see, feel and think” in new ways about what was coming in this industry.
SAMC’s Strategy. Unmistakably, with mounting environmental concerns over disposable batteries, there was a great deal of interest in rechargeable batteries, something our client did not manufacture. There was also a lot of interest in integrated power solutions. And people wanted things faster—speed was a very important part of every discussion. Power was also a competitive advantage; virtually every discussion ended up on the topic of how to make the customer’s product more competitive through power solutions.
Our client was fascinated by what we were finding. Integrated power solutions. Competitive advantage. Environmental concerns. Faster turnaround. Ideas that helped the customers live better. What was very clear was that trends were moving their clients in new directions, yet they still thought of EAC as an OEM in the battery business. Rechargeable batteries were sending customers to other vendors. “Lighter, longer, stronger power solutions” was what people wanted, as one client said to us at a culture probe session. Batteries? They were “ok” but not the power solutions they were looking for.
The Solution? Finally, EAC realized the world was changing. For the company to thrive, or even survive, it had to change as well. Leadership repositioned the company and ultimately sold it to a larger battery manufacturer that wanted EAC’s talent and innovative integrated power solutions. Mark, the CEO, still believes that Blue Ocean Strategic thinking was instrumental in changing how his company saw their market and enabling them to open up a new one for EAC/Integrated Power Solutions.
