Mature markets and mature mindsets- a story from GESachin Mohan
At some point market of a specific business can reach maturity stage and then organizations have to look for the ways to seek growth. There can be two ways to achieve this. First create a new market through innovation (Blue ocean strategy), where your business is not competing as there is no competition. Second is to change the business mindset. Sometimes market is not mature but looking at the same business with changed mindset opens up a door for opportunity.
During 80s and 90s GE followed strategy of being number 1 or number 2, Fix, and sell or close any business that is not either number 1 or number 2. When they looked at the same business from different mindset and redefined the business in such a way that they have no more than 10% market share in segments, it changed the scenario. All the market looks like a big growth opportunity. This can be either moving into close adjacency of core business (Low risk) or trying something away from core (High risk) depending upon the risk appetite of the organization. So, with the same portfolio GE was able to double the revenue growth rate during late 90s.
But can this strategy change any “?” to “star” quadrant? (referring to BCG matrix)! Redefining the market has the potential to change “DOGS” to a “?” position, but to change it to star it requires calculated and well defined strategy. Another takeaway of this story, according to me is strategically expanding your market. Take a bite that you can chew well. So once a business defines a market and achieves target market share in that segment, it must redefine it a little broadly. Achieve a target share in newly defined market, and expand a little more. This will in future help business to develop dynamic capability as well!