BMW versus Mercedes versus Customer
For 10 straight years Bavarian-based BMW has been the world’s top-selling premium carmaker. But shock, horror…the icon from Stuttgart, Mercedes-Benz is hot on BMW’s trail and on track to take BMW’s crown this year. The irony is Merc have achieved this dethroning by de-emphasizing their market share mission. They simply went back to designing and making great looking cars. The new designs have helped customers rekindle their passion for the brand and they’re proving their love by buying cars. During the first nine months of 2016, Mercedes-Benz sold 1.54 million cars. Meanwhile, BMW sold 1.48 million cars in the same period, according to a company statement. The difference isn’t much, but Mercedes has outsold BMW every quarter in 2016 and that’s a big turnaround. According to sources at Mercedes, the company has reached their target four years ahead of schedule. It owes some of its success to its new crossover and SUV models, as well as its E-Class sedan, but it’s a savvy shift in strategy that’s made the difference.
So, where is the lesson in this for owners and managers of small medium enterprises? I think it’s pretty simple. Avoid getting lost in hubris and avoid irrelevant activities like the plague. Keep the main thing, the main thing. And that’s making sure your buffed and shiny strategy and business model delivers for customers. If it doesn’t, fix it, and fix it fast. Seeing the big picture and being strategic is important, but it’s a complete waste of time if the business can’t connect meaningfully to the people who reach for their wallets. Think hard about your Value Proposition. Also, watch out for unnecessary value draining distractions – they’re everywhere. Make sure management meetings focus on the right issues too. They need to facilitate and support business momentum, not restrain it. If it doesn’t then it’s a waste of time and it won’t add value to anything or anyone. Equally, just because you, the advisory board, the C-suite execs or management decide something should work, it doesn’t mean your customer agrees. Test stuff, ask questions, do your research. Keeping entrepreneurship alive and maintaining customer insight is critical too. Remember, this is probably why you were successful in the beginning. Staying close to customers makes all the difference.
Immerse yourself in their world and reverse engineer your way back to your value proposition. Start thinking about delivery from here. Some call this design thinking. It doesn’t really matter what you call it. What matters is you stay relevant to your customer and that’s surprisingly easy if you look, listen and learn. SME’s have an advantage here too. It’s one of the few times a lack of scale can be a competitive advantage. Small equals, or should equal fast, agile and flexible. Something I suspect the Mercedes Benz Juggernaut would have found hard to enact while they were locked into their growth strategy. Can you imagine what was involved in shifting their strategy from a focus on growth back to a focus on design. There would have been a board meeting or three and a few reports.
Opportunity identification is an entrepreneurial skill. Creating a business model capable of leveraging the opportunity is a strategic skill, and making it all work in real life is a commercialization skill. Weaving these three elements together and bringing them to fruition in-market takes some selling skill too. Don’t forget, you need to find and win customers. Sounds simple, but staying ‘tuned-in’ to customers and competitors takes commitment. You need to bring your ‘A’ game. And as Mercedes Benz demonstrates, it isn’t easy even for the best of the best. All businesses get things wrong. It’s the response to those mistakes that matters most.
Best of luck.
By Jim Wilkes