In light of maturing markets with increasing numbers of products clamoring for limited shelf space, Niraj Dawar’s book,TILT: Shifting Your Strategy from Products to Customers is a compelling exposition to why and how companies must shift their value creation efforts from the upstream activities of product manufacturing to the downstream marketing activities in order to gain sustainable competitive advantage.
The book is divided into four parts. The first part, “Your Center of Gravity,” is a veritable history lesson in how companieshave focused on leveraging economies of scale to optimize production costs. Mass production resulted in cost bulge shifting to downstream activities – how the product is handled by consumers along the entire path to purchase. Dawar purports that, sustainable competitive advantage today will result by finding the value of how consumers buy products not simply how efficiently they can make product. The strategic question to find the value in the downstream is by asking what costs and risks can be reduced for customers in their search for, purchase of, usage and disposal of your product. This becomes a launch pad for innovation. In the end, the market is the ultimate test. Staying focused on upstream advantages limit competitive advantage to focus completely on product costs or better products. Competitive advantages from downstream efforts are less prone to erosion by creating a reason and trust that consumer’s risks and costs are reduced.
Part 2, “The Perch: Mapping Market Networks,” gives concrete examples of how unexploited knowledge can be a company’s greatest and undervalued asset as a source of unique insights only they possess that are a starting point for creating the downstream value for customers. Companies can begin to see new value in customers by performing business reviews to give them a snapshot of how they are performing against competitors and in the marketplace. This service is something that customers don’t know and can’t find out on their own because of constraints, such as too narrow a focus on their own experiences. Assembly of data points will uncover predictable patterns and trends and even blind spots to which your company can provide unique solutions. This results in a relaying and connecting platform to discover what else customers want, and reducing their cost of searching, evaluating, comparing and decision making – reducing risk of choosing the wrong product. Ultimately a company stands to gain customer engagement and market stature by becoming the conduit through which customers learn the larger context of their business, find solutions and avoid dead ends.
Part 3, “The Deep Dive: The Competitive Playing Field Inside the Customer’s Mind,” explains the downstream focus of a brand. It weighs the value of being first to mind versus being first to market as being a sustainable advantage. Being first to mind is based on the ability for a company to align their brand along the criteria that customers consider important. Since no consumer’s mind can absorb the vast information in the marketplace, there exists a serious imbalance between available information and available mental processing. This principle of cognitive economy drives the fact that focus on brand, with strong associations to well-defined criteria of purchase, tend to win over the long term as the brand itself becomes the criterion for purchase. Associating brand with criteria of purchase is the first step in influencing customer behavior. The following strategic goal is convincing as large pf a segment of the market as possible to use cutoff criteria that favor your brand. Next is to ensure membership of the set remains as exclusive as possible in terms of size and composition. Once inside the consideration set, the game changes and requires constant evaluation of the purchase criteria to ensure your products remain relevant.
In part 4, “The Bottom Line,” Dawar’s focus on downstream competitive advantage destroys myths in marketplace wars such as:
To win against competitors you must have a better product;
Competitive advantage is gained by listening to customers and giving them what they want;
You can’t choose your competitors;
Innovation means better products and technology;
Technological improvements drive the pace and evolution of markets; and
Competitive advantage gained in the marketplace is “just marketing”.
Further it introduces and unpacks the ideas of network effects and cognitive inertia as the reasons that downstream competitive advantage is sustainable. Finally, Part 4 discusses how an organization must fundamentally change their strategy from the top down, focused on the locus that resides in the downstream, and organize in order to focus on defining why customers buy from you.
TILT: Shifting Your Strategy from Products to Customers is illustrated by numerous business cases of those firms that stayed so married to their upstream efficiencies that they failed to stay relevant to their consumers - leaving themselves prey to those companies that understand that providing value is in the downstream. It has checklists of critical questions at the end of each chapter to help you evaluate where your firm is on the fulcrum of upstream versus the downstream continuum. This is recommended reading for new product development (NPD) practitioners and professionals (NPDP) who need to incorporate downstream value in their efforts to gain sustained competitive advantage.
Lisa Welton, MBA, NPDP, is a Product Manager for Tyson Foods, Inc. at the worldwide headquarters in Springdale, Arkansas. She received her undergraduate in Business Administration and Marketing from the University of Nevada Las Vegas, and earned her MBA in General Management from Touro University International while deployed in Iraq in support of the War on Terrorism. After a proud twelve year career in the United States Army, she decided to resign her commission to pursue her two passions in life – her family and a career with Tyson Foods. She currently resides in Springdale, Arkansas with her husband, two of their children, and their two Jack Russell Terriers. She is committed to community service benefitting children in foster care. In her free time she enjoys Geocaching and 4-wheeling with her family, culinary arts, Jazzercise and studying piano.
Released: May 13, 2014, 7:20 am
| Updated: May 15, 2014, 9:24 am