Plantes: Recession a time for company soul-searching, author says
By Brian E. Clark
Companies that fail to differentiate themselves from their competitors will face increased difficulties and even possible failure, economist and author Kay Plantes says.
Plantes, an MIT-trained economist who wrote ``Beyond Price,'' said companies need to do more than trim costs, lay off staff, work harder, step up marketing and put more emphasis on branding.
To be successful in recessionary times and be poised to soar when the economy picks up, she said those who lead firms must rethink what their “business is all about.''
WisBusiness audioSaid Plantes: “Even before these hard times hit, we were seeing a rise in bankruptcies. So if companies aren’t in growing markets like health care, they are going to be in a real trouble. There is a lot of price pressure in the market and there can only be so many Wal-Marts.”
Plantes said it's especially important during a recession for business operators to step back and look at how they can focus on their strengths.
She gave the example of Robert Finfrock, an Orlando, Florida-based engineer whose company makes custom-designed precast-prestressed concrete building components.
Like Lego blocks, these components were sold to general contractors and used for parking decks, retail spaces, college dorms and mid-rise offices.
Though Finfrock was an expert, low-cost competitors were eating away at his market share, said Plantes, who was a Finfrock consultant.
Instead of competing by lowering his costs, she said he stopped “out-working” and began “out-smarting” developers, who were in some cases getting his expertise for free -- which saved them millions of dollars.
What emerged was a new design-build general contractor – along with keeping Finfrock’s precast business – that sold Finfrock’s knowledge of structure, mechanicals, electrical, plumbing and other matters as a package.
Since 1994, the company has grown at a rate of about 20 percent a year, despite cyclical downturns, she said.
“Furthermore, his new business model has created opportunities for two new-to-market products that he will sell nationally to other precasters,” she said.
Locally, Plantes worked with Datex-Ohmeda, now owned by GE Healthcare. It reinvented its business from “A full line of anesthesia equipment” to “We improve anesthesia safety” by finding ways to help doctors prevent mishaps and have better outcomes.
Other firms that changed their focus include QTI, a human resources company, which now offers solutions to help other companies grow and succeed. And MDC, Inc., a graphics firm that expanded from paper to working with plastic.
“All these companies out-smarted their competition by differentiating their businesses in ways that really matter to customers and that competitors cannot easily copy,” she said.
Quoting Austrian economist Joseph Schumpeter, Plantes said recessions are sometimes seen as “creative destruction that reallocates capital to the fittest competitors.
“Now decades removed from my economics training, I see recessions as nature calling us to find the hidden potential in our businesses and in ourselves,” she said.
In this downturn and in the recovery ahead, she said the companies that will prosper are those with unique business models that competitors cannot easily copy or that uniquely benefit customers.
--For more information on Plantes and to see her new blog on innovation, go to www.plantescompany.com/blog.