Tell me again why I should be scared???
Things are really good. I am selling a lot of stuff. I am making money and growing the business. I can sell everything I can produce, my sales people are turning in more and more business every day and now my website is getting me both leads and orders.
I need a lot more of everything. I need more capacity to build product, I need more sales persons and I have to grow customer service to try to keep everyone happy. All I have to do is keep fulfilling the demand and buy a bigger boat.
North American has been blessed since the end of World War II. At the end of WWII North America was the only place in the world that could fulfill the world’s peace time demands for cars, appliances, airplanes, TVs, trains, etc. Every other place in the world was missing something: talent, resources or the infrastructure.
From 1946 until the 70’s North America was uniquely in a fulfilling phase. Capacity was the answer to every question – more manufacturing capacity, more resource capacity, more shipping capacity, more labor, more capital, etc.
During this fulfillment-phase sales and marketing were really little more than show. Neither sales nor marketing had to be really good since almost everything that North America built was going to be consumed by someone at some price. Fulfillment is about making buyers aware and taking orders. It might feel like there was competition but that competition was more about being first and who likes who.
In the 70’s, things changed. Japan and Europe were back and very competitive. They had fewer resources, which worked out well for them in the long run. They developed better processes, they focused on the customer, they had a much better cost structure and they were making more money per unit.
The game was on – by the 90’s cars, TVs, electronics, computing and telecom were already battles lost by North America or at fever pitch. Today the playing field is completely flat. Everyone uses the same software, goes to the same colleges, reads the Harvard Business Review and the Wall Street Journal (on line of course) and off-shores or outsources to China and India.
When someone thinks like our North American Poster Boy they will wake up some morning and there will be a very bad surprise in their email or on their voice-mail. That surprise will be that there is a new “quality competitor” in their space (just like the auto industry) or the economy is in a slide or the technology has changed or one of a hundred other things that changed to move the market from fulfillment to competitive.
While our North American Poster Boy was growing and making money he was also developing a lot of bad habits. First, his cost structure is way out of whack, because in the fulfillment phase he doesn’t care (lots of margin to cover problems). Second, pricing is anything but strategic and since there is no real cost structure the pricing was not based on either value or operational excellence, which leaves the price in a non-competitive place for the next phase (neither high quality nor low price). Third, the brand of a fulfillment company is about nothing in particular (think GM vs. BMW). There are also many other issues but the lack of strategic sales and marketing (both talent and direction) may be the biggest.
In the fulfillment-phase sales and marketing are more about taking orders and shotgun communications than focused strategy. In the middle of a fulfillment bubble, orders come in almost regardless of the sales model, the branding, or marketing and in spite of the random pricing.
Now, after the bubble has burst, or a tough competitor is on the field or the economy has gotten rough these undisciplined fulfillment habits are difficult or impossible to change.
If our North American Poster Boy had applied the Science of “Revenue Generation,” he would have been able to predict the end of fulfillment. When you know fulfillment is going to end you start preparing for that from day one vs. waiting until it is too late.
The fulfillment period is VERY profitable and it is also VERY forgiving of mistakes or organizational problems. That makes this is the time to build a GREAT organization, a dominate business model, a strategic cost structure and a long-term Revenue strategy to dominate one or more niches.
This early fulfillment period is when to develop the disciple that will defeat any new players and weather every downturn. This is the time to say NO to any opportunity that is not aligned to your brand or the niches you dominate or your cost model.
Do not let the fulfillment period mask the predictable end of the fulfillment bubble and your probable demise. Use this time to become more disciplined and more strategic than your future competitor who is starting in a garage on a shoestring and will someday be formidable with a new efficient business model.
We all deserve good luck. Fulfillment is about good luck and we know that good luck is always followed by bad luck. So with the knowledge that fulfillment is a period of good luck, don’t be surprised that it will be followed by back luck. If, during fulfillment, you make yourself a great company than you will be prepared for the bad luck. So do not buy a boat when things are great – take this time to make your company great.