A pattern of different demands can be seen to repeat itself in the Spiral as the two Cycles are developed.
The L2-Power and the → L5-Kinship transitions represent efforts to escape market forces. The former seeks to neutralise the effect of competition by market-domination or price-maintenance, and the latter aims to remove customers from the marketplace.
The L2-Power → and the L5-Kinship → transitions demand greater attention to company development. There is substantial investment in promotion (Cycle-1) or in innovation (Cycle-2) with unavoidable risks in both cases, together with the need for focus and sacrifice of possible opportunities.
The L4-Community and the → L7-Reality transitions demand a belief that market realities will triumph in the end. In Cycle-1, it is about providing recognizable value, while in Cycle-2 it is about anticipating emerging needs. Companies get into trouble when they start believing their own hype, cheating customers, or viewing over-engineering as innovation regardless of what people want.
The L4-Community → and the L7-Reality → transitions enable companies to strengthen their business with minimal risk. In both cases the assumption is that profits are likely to be enhanced if all involved stand to benefit i.e.proper handling of stakeholders (in Cycle-1), and if top management realistically tunes the business concept to align with the grain of the market (in Cycle-2)
► Building on its profitable operations, the company seeks to escape market forces by controlling competitors or fixing prices with them.
► The limitations of this strategy lead to investing in the company’s future via promotions adapted to customer preferences.
respect market forces by ensuring customers get a good deal.For an enduring effect, it is necessary to genuinely
► Once an ethos of reciprocity is established, it is relatively easy to re-focus the company so as to enhance profits via appropriate incentives for a range of stakeholders.
► From the position of strength at the end of Cycle-1, the company once again seeks to escape market forces, this time by bonding with customers and effectively removing them from the market.
► To sustain these bonds, investing in the company’s future is required, which is primarily about keeping up to date in numerous fields.
respect for market forces and is able to analyse diverse possibilities, often outside its current policies and competencies.The resultant innovations will only be successful if the company has
► Anticipating the market makes it easy, once again, to re-focus the company and, if necessary, to re-invent the business in a stronger, more profitable form.
You can review the principles in all the Stages in a matrix,
proceed to an even sharper focus on profitability.
Originally posted: July 2009