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Five Trends to Track in 2015 (and What C-level Executives Need to Know)
If you’re like most business executives, by now you’ve probably seen your fair share of 2015 outlooks, predictions, and forecasts. We at Blue Canyon have as well. After culling through these articles and reflecting on our own work in 2014, we pulled together five key trends that we felt would be critical for B2B executives to be aware of in 2015. However, we also put ourselves in the shoes of many C-level and business leaders we work with and answered two very important questions: Why should this topic be important to me? And, what can I do about it?
Over the course of the year, we will be covering these topics in greater detail through our white papers, articles, newsletters, and blog.
1. Acquisition Activity Will Rise
Companies have cash on their balance sheets and are back in the game to acquire. Capital availability, strong deal flow, ample leverage, and a surplus of buyers, are all playing part in the M&A uptick. However, with a surplus of buyers, identifying and acquiring suitable targets will become more challenging. According to KPMG’s 2015 M&A Outlook Survey Report, among industrial manufacturers, the challenges of identifying suitable targets, and the difficulty of forecasting future performance were identified as two of the most common challenges to deal making.
What Should You Do?
When many others are shooting at targets with shotguns, the only response that makes sense is to take careful aim and use a rifle shot. However, before you do so, ask yourself if you have a clear understanding of what business you are in today and what new business platform makes sense for the future. If you haven’t started with these questions, and jumped to having an investment bank identify available companies to buy, you are skipping questions and decisions that must come first. Namely:
- What are your potential adjacencies, and which ones are better for your company and why?
- How can your company successfully enter the priority adjacencies that fit best with your company and avoid a “me too” strategy?
- What are the build, buy, partner options and preferred market entry approaches?
2. Activist Investors and Impatient Board Rooms will Become More Prominent
Whether viewed as good, bad, or indifferent, activist investors are here to stay. According to FactSet Research, activist investors have targeted more than 20 percent of industrial companies in the S&P 500 over the last five years. Most recently, the Associated Press reported on the rising tension between DuPont and Trian Fund Management.
What Should You Do?
Ask yourself these questions:
- Do you know your core markets? Your adjacent markets?
- Do you know your customers’ plans, pains, and priorities? Do you address their highest unmet needs?
- Are you segmenting on the factors that drive purchase decisions?
- Are your products/services differentiated in the eyes of those segments you are targeting?
- Do you have the relationship foundations that will allow your strategy to succeed?
At the heart of it all, activist investors and board members want to know that you have a sound, focused strategy in place. If that strategy is well-articulated and you don’t waver, chances are likely your board will back you. If, however, your strategy is unclear, poorly communicated, and/or in flux, you are putting your company at risk.
3. B2B U.S. Businesses Will Flourish…Especially Those Who Are Prepared to Meet Customers’ Emerging Expectations
It’s no secret that the U.S. dollar recently climbed to its highest point in 11 years, and that strength of the dollar tends to put U.S. companies at a cost disadvantage compared to foreign competitors. However, B2B companies compete in a global world and need to have a balanced footprint. Regardless of how the dollar performs, B2B companies need to ensure their products are available where customers need it. As a result, there is a movement to nearshoring. Keeping product on the ocean for two weeks no longer works.
What Should You Do?
To effectively compete in today’s bring-it-to-me economy, companies need to produce their products closer to their market and be prepared for more demanding customers, which expect faster delivery.
4. eCommerce will continue to Disrupt the Customer Chain
E-commerce has been both a blessing and a curse to business-to-business suppliers. While allowing end customers to benefit from directly purchasing certain products online in a streamlined fashion, e-commerce has also allowed new competitors to enter the market, empowering buyers to easily find and evaluate tailored solutions and compare prices. When buyers purchase on price alone, it diminishes the value suppliers provide and creates price conflicts. As e-commerce providers, such as Amazon Supply and Alibaba add products, their success will grow, allowing their capabilities to scale up and lower their cost to serve.
What Should You Do?
If you are a manufacturer, know your customer chain/value chain story. What value is being created by your channel partner? Look at all the activities along the value chain and identify any gaps that eCommerce suppliers cannot provide that customers are willing to pay for. Once these gaps are known, work with your channel partners to determine who should provide this value and fill in the gap to serve the customer effectively.
If you are just entering the eCommerce space or looking to build a competitive advantage in this channel, consider ways in which you can enhance your eCommerce capabilities whether through acquisition, joint venture, or hiring. Gone are the days when high-tech talent, focused on B2C eCommerce could only be found in the East and West. B2B eCommerce is the next big play and the Midwest is full of prime opportunities.
5. Big Data Will Continue to Disrupt Business Models
Big Data is probably the most overused expression of the day, but the reason is that everyone correctly perceives that the possibilities of Big Data are endless. In consumer markets, Amazon has revolutionized marketing and sales by using Big Data techniques to understand groups of customers, segmented in a very large number of dimensions. B2B markets have been slower to see the advantage on the marketing side, because customer groups are more compact and well-known. However, we see clients every day sitting on a treasure trove of information produced by their products and the services they provide. The potential to revolutionize may be even greater. For example, it will change the game in many service industries to anticipate service needs rather than respond to emergencies. The technologies to do so are often available combined with the Big Data experience of customers. However, the real question is how to be rewarded for changing the game.
What Should You Do?
Think of Big Data in the Big Picture it deserves. Ask yourself the big questions and collect the right information to answer them.
- Does the information at your fingertips have the potential to change the way your customers use and maintain your products?
- Does it imply that service industries will no longer be organized as they are today?
- Can you be ahead of the change and drive it, rather than resisting?
- What does that say about your traditional channel partners?
- Does it make sense to limit Big Data technologies to your products in order to have a competitive advantage, or is it better to make sure everyone has them so you can collect information about your performance compared to others?
Some of these questions might turn out to have “bet the company” answers.
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