It should come as no surprise that the recent announcements around the export of liquefied natural gas (LNG) are a sure signal of future growth for the natural gas sector. More importantly, this is exciting news for valve manufacturers considering the relatively flat market over the past few years.
The obvious question is, of course, how manufacturers should best prepare for market expansion and growth, the significance of which is yet to be determined. In essence, in order to capitalize on this impending surge in demand, valve manufacturers must prepare for growth.
To prepare, there are several significant areas that must be addressed if you want to seize the opportunity. But before you run off to gear up the sales force and let Finance know the good news, it is important to consider the impact an increase in demand will have on the entire business, and the starting point is with your business strategy.
I know what you’re thinking. “Now is not the time to visit our business strategy because it hasn’t been three years since we developed our last strategic plan.” Wrong. A business strategy should be a fluid document, one that is revisited each time there is a significant change in or to the business, particularly if those changes were not considered during the last strategy formulation.
The object of this article is to provide you with some ideas on what, relative to your business strategy, you should be looking at that will ensure you are prepared for the anticipated business growth. It could be that an increase in sales is not (that’s right “not”) something desirable based on your strategic objectives.
Have I grabbed your attention?
Great, then let’s touch on a few of the areas you should review.
- Are You Unique, Distinct or Competitive? In developing a business strategy it’s important to clearly understand how competitive your organization is relative to the marketplace, more specifically, what are your products, services and customer relationships like relative to your competition? Considering whether your products are competitive, distinct (stand-out in the market) or unique (market defining) allows for a clear determination of your market leverage. With evolving technology, tighter tolerances and increasing customer demands placed on valve manufacturers, a small and seemingly insignificant product alteration can lead to becoming a unique player in the market place. Your competitive position will determine how likely you are to capture increasing demand and expand your market share. Consider analyzing your competitive position.
- Watch Out for That Speeding Bullet For every client with whom I work, we spend considerable time during the strategy formulation in scanning the horizon. Specifically what political, technological and social challenges or opportunities exist on the horizon? How might this impact the business? Increasing exports of LNG will lead to growing demand for valves, but what other challenges or opportunities might this present? Will there be political pressures relative to supporting U.S. projects before those in other countries? What are the most common valve configurations that will be in demand, and how might technology help or hinder the production and application of these valves? Consider what lies on the horizon for your business and you will have further insights into how to align the business to meet growing demand.
- Let Your Vision Guide You Every company has a vision, but what tends to happen is the vision becomes a cliché statement that has no relevance in managing the day-to-day business. This is the wrong philosophy. A vision is a decision-making tool, and all significant activities and investments must be contrasted against how they support or hinder the vision. After all, what’s the point of having a vision if you don’t use it to guide the business? Recall my comment earlier about the fact that an increase in sales may not be your strategic objective? Consider a car company like Bentley. They’re not worried about how many cars they sell; they are concerned with retaining their reputation for high-quality vehicles. If they deliver on this vision, they in fact can make more profit. A shift in market demand as we are about to experience is a great time to dust off the old vision statement and either revisit it, or, if it is still valid, use it as a tool to guide your decisions.
How your strategy is formulated and the degree to which you have incorporated the rest of the business needs will ultimately determine your next steps. I would suggest if the information and input collected in the previously described areas are significant, then now is a great time to revisit your strategy.
Remember, as General Patton once said, to win the battle you must get there “Firstest with the Mostest.” If you can do this consistently, not only will you win the battle, you will also win the war.
This article is the first of a three-part series on “Preparing for Growth.”
Shawn Casemore is the president and founder of Casemore & Co. Incorporated, a management consultancy helping businesses improve their operational performance and profitability. For more information, visit www.casemoreandco.com.