The First Place To Look for New Growth Opportunities: Exploiting Unexpected/Hidden Successes
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Editor's Note
"No other area," wrote Peter F. Drucker, "offers richer opportunities for [successful growth] than the unexpected success."
The unexpected success is usually treated as a nuisance. Nobody is looking for it; nobody wants to be bothered by it; nobody is assigned to seriously look at the possibilities of exploiting the unexpected success.
More often than not, profitable new opportunities for growth are right under the noses of executives - if they only took the trouble to systematically examine them.
In this article, we examine the importance of identifying unexpected/unseen successes…and how "opportunity meetings" are used as a practical tactic to force focus on neglected opportunities – especially, unexpected/unseen successes.
Introduction
A few simple (and true) examples show better than any theoretical discussion how the unexpected/unseen success usually presents itself, and how it can be converted into a new growth opportunity.
Our first example involves a colleague of ours. During the summer months, he purchases food at a seasonal market that specializes in a variety of pre-prepared meals. Their soups are truly unique and extremely nutritious.
For many years, he purchased about 75 soups at the season's end to last through the fall/winter months. He froze the soups in his basement freezer.
The owners of the market were happy, but found the special soup order a little inconvenient - but profitable.
Truth be known, their mindset was, "We're just keeping a good customer happy and satisfied."
It was a standing joke – whenever he shopped at the market, he was identified as the fellow who purchased all those soups for the winter.
He was usually introduced to customers/friends of the market owners as "This is the guy we were telling you about… The one who buys all those soups and freezes them for the winter…"
This was usually greeted with eye rolls indicating disbelief or being in the presence of insanity…and it was usually followed with a manufactured Ha, Ha.
Our Story Continues… Turning a Courtesy Into a Profitable Opportunity
Now the story gets good. The son of the owner of the market graduated from a top business school and entered the business. He was versed in the teachings of Drucker.
It should be mentioned – indeed, emphasized – he was knowledgeable about Drucker's principles and practices not because he learned about them in school, but rather because our colleague gave him several Drucker books as a Christmas gift when he was 16 years old.
He remembered to "look for opportunity in the unexpected success" statements of Drucker.
So, what did he do after his first year working at the market? You guessed it!
He began promoting/labeling soups and many other items as freezable for the winter.
Now, the market does a box office business in selling soups and other freezable food items. Sales are reported to have dramatically increased – the major factor being sales to existing customers purchasing freezable items.
Simple? Yes! But not easy to do. Why? Because, typically, there is no formal system for identifying the unexpected success and no mechanism for assigning required resources for capitalizing upon it.
Are you "sweeping your unexpected successes under the rug?" Are you systematically attempting to identify unexpected successes and purposely exploit them?
Lessons Learned?
Management must look at every unexpected success with the questions (1) What would it mean to us if we exploited it? (2) Where could it lead us? (3) What would we have to do to convert it into an opportunity? (4) How do we go about it?
This means, first, that managements need to set aside specific time in which to identify the unexpected successes; and secondly, that an individual or a team should always be assigned to analyze an unexpected success… and to think through how it could be best exploited.
A Useful Digression
According to Drucker, the typical business meeting is concerned with the care and feeding of problems; successes are usually ignored.
One of Drucker's major principles stresses the importance of OPPORTUNITY MAXIMIZATION as opposed to profit maximization.
Said Drucker: "Resources to produce results, must be allocated to opportunities rather than to problems."
Problems have to be dealt with, but when crises receive all the attention, congratulations (and promotions) are usually reserved for those that prevented problem(s) from getting worse.
Yet, in the final analysis, problems have to be minimized and efforts focused on opportunity maximization.
Alfred Sloan – long-time President, Chairman and CEO of General Motors – Drucker observed, was very cautious about promoting executives that worked harder and harder, but tended to work on the wrong things.
Instead, Sloan looked for executives that were opportunity-focused (consumer-oriented and entrepreneurial-minded) as opposed to being superior arsonists, that is, spending all their time putting out fires, that in many instances, they themselves created.
The pertinent question is how to find the right things to do (that will produce healthy growth) and how to concentrate resources and efforts on them.
Systematically identifying unexpected/unseen successes is one route to producing significant growth in sales and profits.
To repeat: struggling with problems at the expense of opportunities quickly produces a famine in resources – especially, highly competent people assigned to problems rather than to maximizing opportunities.
You’ve Got To Select Leaders Equipped To Identify and Capitalize Upon Opportunities
Drucker, in Adventures of a Bystander, tells us how Sloan put into practice the selection of leaders with a proven track record for opportunity maximization… as opposed to a proven record for maintaining the status quo and "putting out fires."
Decisions on people usually provoked heated debate in the GM executive committee…
…Once, the whole GM committee seemed to agree on one candidate for president of an operating division who had handled this crisis superbly, solved that problem beautifully and quenched yonder fire with great aplomb…
…Mr. Sloan, finally, broke in. ‘A very impressive record your Mr. Smith has,’ he said. ‘But do explain to me how he gets into all these crises he then so brilliantly surmounts?' …
Two Kinds Of Meetings
The key question is: How does an organization systematically discover unexpected/unseen successes?
Drucker suggested organizations have two kinds of meetings – namely, one meeting to discuss problems and another meeting to discuss opportunities with special emphasis on unexpected successes gone unnoticed.
Most meetings discuss only problems. People only react to what is presented to them; what is not presented to them is not acted upon.
In essence, Drucker's principle of opportunity maximization must be converted into a practice that can be practiced.
Indeed, careful readings of Drucker reveal he, first, discusses principles... and then specific practices for converting the principles into doing.
The principle, in this case, is opportunity maximization. The opportunity meeting is the practice/tactic, that is, a practical way to make opportunity maximization a way of life within the organization.
Opportunity meetings are the ideal venue for identifying and discussing unexpected successes and what to do about them.
Opportunity meetings provide an organized way to focus attention on opportunities.
Further, preparing for an opportunity meeting, in most instances, requires executives to drill down on "aggregated sales data" in order to discover unexpected successes.
Take-home message: By making opportunity meetings an established practice, organizations can go a long way in finding the right things to do, and to concentrate resources and efforts on them – especially, with respect to the unexpected/unseen success.
An Unforgettable Drucker Example of Exploiting an Unexpected/Unseen Success
A constant background theme in much of Drucker's business writings is the importance of detecting and exploiting an unexpected success. A good example of an unexpected success is Cadillac back in the 1930s.
During the Great Depression, Cadillac could not sell its high-priced cars. Indeed it was about to be liquidated. Yes, liquidated.
The only question, according to Drucker, in his Adventures of a Bystander, was whether it would be abandoned altogether or whether the nameplate should be kept alive.
Most of GM's senior executives wanted to cut their losses and abandon/eliminate Cadillac from their product line.
Nicholas Dreystadt – a virtually unknown middle manager for Cadillac –intensely analyzed (disaggregated) Cadillac's sales figures.
He identified, by breaking down the sales data into distinct segments or subgroups, who was buying Cadillacs and further analyzed why (or for what reasons) they were bought.
"It was then that Nicholas Dreystadt – whom none of the members had ever met – gatecrashed the meeting of the executive committee, pleaded to be given 10 minutes, and presented a (marketing) plan for making Cadillac profitable again within 18 months."
Dreystadt wanted to "position" Cadillac against other status items rather than against other automobiles.
"Mink coats, jewelry, skiing vacations and other prestigious items were Cadillac's real competition," said Drucker.
More importantly, by purposefully disaggregating Cadillac's customer data to the appropriate right level of detail, Dreystadt discovered a "neglected" market segment/niche – namely: wealthy blacks.
Dreystadt's Data-Driven Insights Saved Cadillac From Extinction
Dreystad numbers astonishingly revealed Black entertainers, Black lawyers, Black realtors, Black doctors and the like were buying Cadillacs.
According to Drucker,… "It was company policy not to sell Cadillacs to Blacks… The Cadillac salesmen aimed at the 'White prestige market'….
…But the wealthy Black wanted a Cadillac so badly that he/she paid a substantial premium to a White man to front for him in buying one…”
… Dreystadt, according to Drucker, investigated this unexpected phenomenon and found a Cadillac was the only success symbol the affluent Black could buy in the 1930s; he/she had no access to good housing, to luxury resorts or to any other of the outward signs of worldly success.
And so Dreystadt, in the depths of the Great Depression, said Drucker, "aggressively pursued and developed this neglected market segment (or niche) – and soon enough sold enough cars to break-even and then eventually made Cadillac into a big moneymaker."
What Are the Implications of This Story?
First, without a Nick Dreystadt or a formalized marketing planning system, no one, typically, even looks at the areas where a company has done better than expected… or for the unexpected success that could be successfully exploited.
Second, unless properly disaggregated, sales and profit figures will not show the unexpected success.
Finally, and the central point of our narrative, before making an abandonment decision, formally analyze the market/customer data in an attempt to discover unexpected successes that could/should be exploited.
There are many other "discoveries" that can be made with a formalized marketing planning system that forces executives to ask the right questions with respect to market structure changes that could be capitalized upon… neglected market segments…markets served and markets unserved/underserved and host of other opportunity areas.
In future articles, we will detail a specific marketing planning system coupled with Drucker-inspired insights that improve an organization's ability to focus on opportunities.
Summary & Conclusions
Drucker viewed the unexpected success as a product or service embedded within the business that was not recognized immediately for its true value.
For example, "specialty items such as pharmaceuticals, pre-prepared delicatessen foods, and flowers produce substantially higher margins than typical food items, but supermarkets were initially hesitant in supplying the financial resources and training to offer them – even though where they were being offered with success in a limited number of supermarkets within given supermarket chain.
Indeed, in many instances, even when they were offered, they were overlooked by C-suite executives because the numbers presented were (in many instances) buried in overly aggregated numbers.
