Customer-Driven Disruption

Businessman drawing global structure

By Suman Sarkar

Suman Sarkar has advised leaders at dozens of disrupting Fortune 500 companies. Executives, he says, focus too much on technology and short-term stock performance and not enough on the customer needs that are actually driving the disruption. Here he gives strategies for keeping ahead of the customer curve. As Jeff Bezos said: “If your customer base is aging with you, then eventually you are going to become obsolete or irrelevant. You need to be constantly figuring out who are your new customers, and what are you doing to stay forever young.”  Sarkar shows readers how to do this.

Disruption – the brutal roiling of markets, caused by customers’ ever-changing needs – drives business failure and success. Most people think technology drives disruption, but technology merely enables disruption; changing customer needs cause it.

Take a look at the packaged food industry. Food giants – Kraft, Kellogg, and Campbell Soup – are facing declining sales and responding with mergers, acquisitions, and changes to their leadership teams. But none of these address the real cause of the disruption: Customers – especially Millennials – want organic, sustainable, and locally grown food. Some companies delivered: Think of how WhiteWave took over the market with Silk nut and soy milks as well as Horizon’s organic milk from local cows. Across the food industry, old giants are floundering, and upstarts catering to the new tastes are flourishing.

This is true across industries. Consider the growth of Patanjali, an upstart consumer goods company in India. Once, this market was dominated by Hindustan Unilever. But when Indian consumers began saying that the multinational’s products felt harsh and unhealthy for them and the environment, Unilever merely added ingredients to mask the effects of their chemicals. Patanjali offered products based on Ayurveda, a traditional Indian medicinal practice. They used herbs and natural ingredients sourced from local farmers; customers loved them. After only eight years, Patanjali’s revenue is 25% of Hindustan Unilever.

Now multinationals are copying Patanjali’s strategy by introducing natural products, but customers are not coming back.

  Please login or register to continue reading... Registration is simple and it is free!

About the Author

Suman Sarkar is a partner with Three S Consulting and an international consultant who has advised more than forty Fortune 500 companies in strategy and operations. His new book, Customer-Driven Disruption (Berrett-Koehler, 2019), is a blueprint for showing how companies must adapt to ever-changing global demographics and markets. It draws on the author’s extensive experience and features case studies from companies around the world that have thrived in volatile, highly competitive marketplaces. He has published numerous articles in business journals and his first book, The Supply Chain Revolution, is an Amazon top-seller in its genre.

Reference
1. Julian Ryall, “Japan’s millennial men don’t drink, don’t drive, don’t worship work – what do they do?”, South China Morning Post, https://goo.gl/zaiDFt
2. Sharon Terlep et. al, “P&G, After Slight Sales Gain, Puzzled by Weak U.S. Consumer Spending”, The Wall Street Journal, https://goo.gl/udEQmk
3. Trian Partners, “Revitaz P&G Together”, Trian Partners White Paper, https://goo.gl/5hRa8J
4. Carola Frydman et. al, “CEO Compensation”, MIT, https://goo.gl/y9KU72
5. Jason Del Rey, “Blue Apron is stuck in a dangerous cycle that has nothing to do with Amazon”, https://tinyurl.com/y62cck5x
6. Retail Customer Experience, “Study: Brand loyalty not such a biggie for millennials”, https://tinyurl.com/y5ztlwhv

LEAVE A REPLY

Please enter your comment!
Please enter your name here