The view from the other side of the pond

It is not necessarily about being the biggest and out muscling all our competitors. We know who our ideal customers are, and we work really hard to give them products they love and want to buy.

A great sentiment but certainly nothing I ever expected to hear from a General Manager of a rapidly growing, American manufacturing company.

Then it got even better as he continued; “By focusing on having quality inputs, great supplier relationships and technologically advanced manufacturing we not only have great products but great integrity and creditability. Customers are smart, you have to be transparent and honest with them but if you do they will buy into what you’re doing, not just buy your products.”

In years past I would have probably choked on my terrible coffee at my breakfast meeting in a very non-descript Mexican-style diner in Monterey, California such would have been my shock, but these sentiments were being echoed repeatedly on my recent trip to the US.

I love my time each year in California for so many reasons. One of the main reasons is that it gives me a great feel for what is important to US businesses. I get some insight into their mood and what is driving the success of the good companies. We in Australia are certainly not lemmings blindly following the lead of US industry leaders – far from it – but many of their thought leaders’ opinions filter through to us. On previous trips I have seen, and felt, some very noticeable phenomena; the massive support for start-ups, the huge investment in data capture and analysis, the sudden selectiveness in venture capital which caused so many start-ups to shut their doors and now a need to show customers how and from where you source the elements of your product or service.

This is most evident in any business that involves food or health and wellbeing. Restaurants noting where their meat and other products came from is very common all over the world. Supermarkets needing to do the same is also almost mandatory nowadays. However, this interest in the inputs to a manufacturing process has permeated all industries. Bicycle wheel manufacturers tell me they are being asked where they source their hubs and rims as well as where they manufacture. A high voltage plug and coupler manufacturer explained to me that they are including the source of their polymer in their advertising material.

Of course, none of this is new. Quality inputs and superior craftsmanship have always been genuine sources of competitive advantage. However, like fashion where styles come in and out of favour, these elements are certainly on trend at present. Everyone had an interesting opinion on how this will affect companies but personally, I see it providing an advantage to boutique, niche operators but this will be manifested differently in all industries and for all companies.

Very large, multinational companies who have thrived for many reasons, not least of all, economies of scale and purchasing power and, in some instances, finding this trend difficult to deal with. Every business is different as is every industry but I think Australian businesses will be well placed if they consider this when making their strategic decisions coming into the end of the financial year.

Lastly, and on a different topic, a note of public thanks to our great friends at Intertrust who I enjoyed catching up with and who, as always, provided so many contacts and insights.