I’d like to make a few points on something I understand is extremely difficult — seeing your products’ irrelevance and ultimate market share decline before it happens. Seeing your company’s product fade is by no means easy. In fact, it may often be easier for those outside looking in than those on the inside heads down making the products.
While I feel bad for picking on Samsung so often, they provide an excellent case study in many things. However, their struggles in mobile and the actions they took to gain market share and now, lose market share, provide valuable lessons. Many of our readers will know I have been pointing out Samsung’s peaking in mobile phone sales for quite some time. Part of this is because I had the data in the charts below.
I’m showing you four of ten markets I have detailed smartphone data for. In every one of the ten markets, Samsung’s line is the same shape. In many of them, Apple is one of the significant reasons for their decline. In markets like India, LATAM, Africa, and several others, it is a combination of local brands and Chinese companies like Huawei who are challenging Samsung’s brand and product offerings. There are many reasons for the shape of their line. What’s most interesting is how their peak in many markets happened in the 2012-2013 time frame. When you ask industry insiders about this, most would say it was late 2013 or early 2014 but, in reality, their peak was much sooner. The question is, could they have seen this coming? If so, what could they have done about it?
It was clear at the time Samsung was not investing in a sustainable differentiated strategy. The weakest point in their entire offering was Android. While this was not fully understood by upper management, I do know there were a number of people in Samsung who agreed. Hence Tizen, and the many manifestations before it, was an attempt to control their own destiny. However, it was too late as the Android train was too powerful to fight against and had too much momentum. I’d argue Samsung was simply never in a position to control their own destiny and no matter what they did, any tactic was a prolonging of the inevitable.
What is interesting about this is how we are learning from history and the new dynamics we are still learning from the globally maturing consumer tech market — that many companies may be stuck in industry dynamics they simply can not get out of. Looking at how the life cycle of many companies is shortening, I think this is a significant observation and trend I don’t see ending due to these new dynamics of the industry.
There are many great books on strategy and management but I want to offer my top three recommendations when it comes to keeping your company relevant.
Understand Your Market
Given my primary job function is to study consumer global markets, I find it very interesting how many companies do not truly understand their market. This is true of public companies and shockingly true of many startups I do late stage due diligence on for the VC community. I’m often quite surprised how much money has been given to a startup when, after spending time with them, it becomes clear they don’t truly comprehend their market.
While I understand how difficult it is internally to do this, since I know how difficult and time-consuming it is, it is still absolutely fundamental. Understanding your market at a base level helps you understand customer needs. More importantly, it helps you recognize how those needs evolve. Ideally, your product will move your customers needs forward. Markets are dynamic, not static. They change both as needs evolve, competition increases, and a range of other factors move a market forward.
This is ultimately Samsung’s struggle today. They are operating the same way they did in 2012 and 2013 and believing these tactics will still work. Unfortunately, the market changed and Samsung did not change with it. Perhaps it was impossible given their structure to change, but that is a separate topic.
A key part of understanding your market is also understanding why you are successful. What is it about your product or service that is resonating with customers? Understanding the why behind the what may very well be the most profound thing you can focus your attention on. This knowledge plays a major role in how you adapt and innovate strategically for your target market. Talking to customers, understanding their needs, how your solution is solving real problems, and more are all things you can do to discover the why behind the what.
Have a Monopoly on Something
There are many ways to slice this but what do you have that your competition doesn’t? This could be any number of things, but this is key for differentiation. In relation to Samsung as a case study, a primary cause of their struggle was they use the same operating system as their competitors. Contrast this with one of the fundamental reasons Apple can do what they do — they have a monopoly on their operating systems.
What this teaches us is the importance of a primary engagement point as something you own. Price is not a good monopoly since it is likely someone will always come in and find a way to do it cheaper, unless of course that person is you. But, even then, price alone is dangerous place to be. This could be the trickiest part of a long-term strategy but finding what critical piece of the puzzle you have a monopoly on is key to maintaining relevance in the long-term.
Invest to Solve Future Problems
Lastly, and this is related to the first point about understanding your market, make investments in future problems. Customers needs will advance. Invest to lead them down this road. As your customer base and the market matures, anticipate these needs. Sometimes this means creating something new, sometimes it means disrupting yourself, but your customers needs trump the desire to hold on to yesterday. Take risks but having a deep understanding of your market and your customers’ needs — the why behind the what — are all things that can be done to help minimize that risk.