I’ve spent the last two days at the Riverside Company’s annual summit and have been getting my head filled with truly unique perspectives about how businesses operate. Talk about an eye opening experience. While I can’t share any of the specifics of participants’ stories here, there are two generic stories that were shared that are examples of thinking far, far outside the box.
A manufacturer of a durable good (I can’t remember which company it was) apparently was facing a plant closure due to environmental concerns. They were faced with having to close the plant and building a new one in a permitted area. The problem was, the local government told them the plant had to be closed in 3 months, and the time to build a new plant was at least 18 months.
What was brilliant was their marketing campaign – they approached all the customers of their product and said, here’s the situation. They laid everything out and then said, we’re going to give you the opportunity to buy two years of inventory at favorable pricing right now so that you can stock up and not run dry while we rebuild. Amazingly, almost all of their customers took the deal, which not only kept their business alive, but gave them the capital they needed to build their new plant without taking on significant debt.
The second story was about how to deal with the inherent competition between using a distributor and selling directly to the consumer, a fairly common problem. Distributors hate competing against direct to consumer sales because in many cases, the manufacturer can undercut them on pricing or eat into their margins. Some companies get around this by setting up territories or forcing exclusive agreements, neither of which is a strategy to increase overall growth.
Goodyear, the tire company, went outside the box and started manufacturing an entirely separate line of tires for their distributors that were not in direct competition with their direct to consumer goods. They were sold by distributors who could market them as Goodyear branded tires, but with different features and benefits than the direct to consumer product. As a result, Goodyear effectively doubled what it could sell and kept its distributor network happy and profitable.
These two stories are just a sample of what’s been an amazing event. My thanks to the Riverside Company for having me as a speaker and permitting me to participate in the rest of the event (it’s invitation only to select CEOs and CFOs).
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