Tilt: Shifting Your Strategy from Products to Customers Hardcover – 5 Nov 2013
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Included in Forbes "Eight Noteworthy Books of 2014" list. "A Top Shelf Best Business Book pick of the Year: Marketing" -- strategy+business magazine "Tilt is a must read for business heads as it will allow them to have a relook at their strategy. Investments made in understanding consumers and designing specific solutions for them have a much bigger payoff than upstream investments, which can be outsourced to a large extent." -- Business World magazine "makes a strong argument for marketers to actively dictate and manage the expectations of the markets in which they operate." -- Quirk's Marketing Research Report ADVANCE PRAISE for Tilt: Don Tapscott, best-selling author or coauthor of fifteen books, most recently Macrowikinomics-- "Dawar deftly explains why competitive advantage is being seized by companies that understand how profoundly customer relationships have changed in a networked economy, and how your company can achieve similar success." Russell S. Winer, William H. Joyce Professor of Marketing; Chair, Marketing Department, NYU Stern School of Business-- "In this highly readable and important book, Niraj Dawar offers marketing managers a road map for obtaining a sustainable competitive advantage. By 'tilting' toward their customers and their interactions with them, marketers will move from product-centric to customer-centric thinking and increase their success in today's highly competitive marketplace." Arkadi Kuhlmann, CEO, ZenBanx Inc.; former Chairman and CEO, ING Direct-- "Tilt challenges us to place customers at the heart of strategy. With product cycles shortening and product costs shrinking, this book brings to life a deeper understanding of how strategy can be made more powerful. A must-read." Chris Barrow, Chief Strategy Officer, Heineken N.V.-- "Given the changes in the consumer goods industry, Tilt really got me to think in a different way. It puts a new focus on understanding and leveraging any organization's customers and consumers. An essential read for all current and aspiring C-level executives." Rohit Deshpande, Sebastian S. Kresge Professor of Marketing, Harvard Business School-- "The democratization of technology, the flattening of the earth, and emergent market disruptors are fundamentally changing how we should think about competitive strategy. Niraj Dawar makes a powerful argument for tilting company resources from upstream to downstream value creation in order to capture and retain customers. Read this book." Vivek Mehra, Partner, August Capital-- "This book will shake the faith of any tech start-up's product obsession. It provides a fresh new way of looking at market dynamics, customers, and competition. Tilt is essential reading for entrepreneurs and executives building successful businesses, not just better products."
About the Author
Niraj Dawar is a strategic thinker and author who has worked with leading organizations on three continents. He is Professor of Marketing at the Ivey Business School in Canada and Hong Kong. He has worked with senior management teams in companies in the technology, banking, and consumer goods industries. His published work appears in the Harvard Business Review, MIT Sloan Management Review, and in the leading academic journals in marketing.
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Top Customer Reviews
We put so much effort into making the product better that it consumes all our efforts. If we put the same amount of effort into matching our product with customer needs and owning their buying criteria, we build a much stronger and more enduring competitive advantage.
Read it - it will change your business life forever.
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What other strategic changes are involved in the "Tilt" from upstream to downstream? According to the author, the changes include:
* The customer, rather than the factory, becomes the core of the business.
* The central strategic question changes from "How much more can we sell?" to "Why do customers buy from us?" and "What else does the customer need?"
* Businesses now need to focus on how to reduce customers' costs and risks.
* Competitive advantage can be gained by managing the flow of information in marketplace networks.
* Competitive advantage can be gained by using marketing to convince customers that particular criteria (which happen to favour your products) should be used to determine purchasing decisions.
Among the many useful insights contained in this book, I was particularly struck by the importance of reducing customers' costs and risks, and by the author's assertion that any business has information about its customers which customers don't know and can't find out on their own. Nearly all businesses work on the assumption that the price which they put on their products or services is the price at which customers value their products and services, but the reality is that customers factor in costs and risks when evaluating different options, and the seller can command a higher margin by delivering a solution with lower costs and risks.
This is definitely one of the most interesting and insightful books on marketing that I have read. It demonstrates that old-style marketing (pre-social-networking) is not dead, but it also shows that a clear understanding of the customer purchase decision is more important than ever.
The author argues convincingly that in most industries upstream competitive advantage is difficult to attain and even harder to sustain. He calls for companies to "reformulate their strategy for the downstream" and gives an amazing blue print to do so. This is highly appealing because it humanizes business and recognizes the consumer as a person rather than the last bit of the production line.
The book works on many levels. It is equal parts wakeup call, relevant business history, best practice guide, and fresh approach for gaining competitive advantage. Aspects that really resonated include the insight that "innovation itself becomes a treadmill." We have been taught to believe that business can innovate itself to success but Dawar cautions against this game of "R&D roulette". As a marketer I greatly appreciated the section that implores businesses to find and make sense of the unexploited knowledge of their customers. There are patterns that exist and it is the marketer's job to find them.
Throughout, Dawar reaffirms the value of branding but prefaces brand success on creating trust in the relationship with the consumer. What was undeniably original in this area was the need to take control of the criteria for purchase. I am definitely going to use this in work with my clients because it means taking control of the category and the most desired customers.
Dawar draws on business history throughout. This works for me because I believe marketers ignore the past at their own peril. He also brings theory to life with examples and cases ranging from Nestle and the pod coffee market to Sainsbury's private-label wine to the Zagat Survey. I respected the use of these cases versus the usual suspects that show up time and again in marketing and business books.
He writes with a smooth, confident style. The richness of research and depth of Dawar's thinking is always present yet the book reads like a conversation. And once that conversation concludes you feel compelled to rush out and apply all you have learned as quickly as possible. When properly applied, you will improve your business while reaffirming the role and purpose of marketing.
Dawar organizes his material within four Parts: First in Chapters 1-3, he sharpens the "upstream-versus-downstream distinction"; next, in Chapters 4-5, he takes a Big-Picture perspective on the global marketplace "and shows how business can harness and channel information flowing through marketplace networks to reduce customers' costs and risks [to] create lasting competitive advantage"; then in Chapters 6-8, he enables his read to "drill down to the level of the individual customers to draw implications from the dynamics of competition and the information networks insider the customers' minds" ; finally, in Chapters 9-11, he reviews and consolidates the strategic implications of a downstream tilt and addresses several key questions such as "Can you choose your competitors"?
These are among the dozens of business subjects and issues of special interest and value to me, also listed to indicate the scope of Dawar's coverage.
o Your Center of Gravity (Pages 4-7)
o A Road Map for Tilt (13-16)
o Value Shifts Downstream, and, Percolating Downstream Value (29-34)
o Downstream Innovation (50-52)
o Identifying Innovation Opportunities, and, Operational and Informational Solutions (64-67)
o Breaking Out of the Wells (72-74)
o The Big-Picture Opportunity (82-84)
o Obstacles to the Big Picture, The Big Picture's Potential, and The Big Picture as Business Model (93-98)
o Relaying and Connecting (102-110)
o The Boundary of the Playing Field (127-129)
o Challenging the Established Order (137-141)
o Customer Involvement (166-170)
o Listening to Customers? (175-179)
o Technology as the Driver of Innovation? (183-184)
o Cognitive Inertia (191-198)
o The Global Competitive Landscape (212-214)
In the final chapter, Niraj Dawar suggests several implications for strategy, observing, "The tilt to downstream competitive advantage carries three implications that go to the heart of strategy. First, its locus is no longer within the firm, but resides increasingly downstream, in the marketplace, in interactions with customers. Second, forms have an opportunity to aim for more than merely [begin italics] sustainable [end italics] competitive advantage; they can build [begin italics] accumulative [end italics] competitive advantage. And third, the skills and resources required to make and move stuff can be bought or brought in, while those required to connect and engage with customers need to be owned and honed." Here in a single volume is just about all the information, insights, and counsel an executive needs to help her or his organization navigate the perilous but promising journey downstream to gain accumulative advantage before its competition does.
Today, as Dawar explains in this book, the center of gravity has shifted to downstream activities. Manufacturing and even new product development can easily be outsourced, so there is no longer any competitive advantage in controlling upstream activities. The key resource is now the customer’s mind. In this new world, companies compete on economies of scope: rather than asking “how can we sell more of what we make to customers?”, they are asking, “what else does the customer need?” A great example is Amazon, which doesn’t sell better stuff, it sells stuff better.
To succeed in the new tilted landscape, CEOs and marketers (and may I add, salespeople) need to be asking themselves new questions.
• Why do customers buy from us?
• Why do potential customers not buy from us?
• What else does the customer need?
• How else can we slash the customer’s costs and risks?
• Are we criterion takers, or criterion makers?
• My own addition: how else can we help them grow revenues or serve their customers better?
How does a company compete for downstream competitive advantage? Although the book considers both B2B and B2C companies, I’ll focus here on the former. In Part 2 of the book, Dawar explains how a company can use its “perch”, or higher and wider perspective of the market, to bring innovations and fresh insights to customers. Because they deal with large number and wide range of different customers, they can see the whole forest, and use their knowledge to relay and connect ideas, provide benchmarking information, and make predictions that add value.
The second section of the book dives deep into the scarce resource that we should all be competing for: the customer’s attention and cognitive effort. Dawar poses an interesting thought experiment. If Coca-Cola somehow lost all its physical assets, would they be able to raise funds to restart their business? The answer is clearly yes. But if somehow the entire world got partial amnesia and forgot about the Coca-Cola brand, would anyone invest billions of dollars in the business? Clearly not. The point is that a brand, or a customer’s perception of your company, is a critical asset because it lowers the customer’s costs and risks of making a decision to buy. They don’t have to expend much attention or think very deeply about their decision.
That’s why downstream competitive advantage can be not just sustainable but accumulative. Through network effects, habit, and confirmation bias, the rich brands tend to get richer by gaining more and more mind share. One interesting insight the book provides is that what is important is not being first to market, but first to mind. Anyone remember the Erwise browser or Chux disposable diapers?
The incumbents have managed to define and dominate the customers’ purchase criteria, and the only ways for a challenger to overturn this dominance is to either provide an offering that is clearly superior in the important criteria, or change the criteria of purchase. You can either be a criterion taker, or a criterion maker.
There’s so much more I could write about this excellent book, but I’ll let you take it from here. Let me just say that if you aim to be an intrapreneurial sales professional, you need to read this book soon, and you need to sit down and seriously reflect on the six questions above.