This is article is part of a series of monthly articles produced by Harbour Results for PMA’s MetalForming Business Edge e-newsletter. Click here to view the full collection of articles.

There once was a company that made ducks.  Not all ducks but ones that were a little special, like say a blue-bill duck, for which they were able to charge a premium.  Not everybody wanted their blue-bill ducks, but those that did were willing to pay a little more because they didn’t trust just any duck maker to make their blue-bill ducks.  Therefore, the company didn’t need to be the most efficient or lowest cost duck maker.  But the company thought that they were the BEST blue-bill duck maker.

The company wanted to grow, so they told their salespeople to go get more duck business.  And they did.  They brought back requests for quotes for lots of ducks: mallards, canvasbacks, marbled and wood ducks.  The engineers didn’t want to make some of those ducks, so they padded the cost estimates to raise the price.  And for other ducks they did want to make, they expected the same prices they had for blue-bill ducks.  As a result, the company didn’t win much of that duck business.  The company blamed the salespeople for not winning new business, so they fired their salespeople and hired new ones. 

One of the new salespersons said, “The duck business is old news –a flat business at best.  Customers want pucks and trucks now.” 

Being frustrated with not winning any more duck business, the company went out and bought a company that made pucks.  And the duck-making company assigned one of their own to be the VP of Sales for Trucks and Pucks.  After all, trucks, pucks and ducks were all made from “uck.”  How hard could it be?

Setting Out On A New Direction

The new VP of Sales for Trucks and Pucks very enthusiastically went out to the market to find opportunities for trucks and pucks - and he did. But you see, the people who wanted trucks were not the same people who wanted pucks. So, he had to work twice as hard or spend half his time on each.  And by splitting his time between trucks and pucks, he didn’t have time to figure out what made trucks or pucks different from ducks. He didn’t have time to figure out what truck or puck customers really wanted, and he didn’t have time to figure out how to make trucks or pucks and how to cost them or price them. He just had to bring back requests for quotes for trucks and pucks as fast as he could because the company was running out of orders for new blue-billed ducks.

But what about the puck company they bought? Well, the company centralized the sales, engineering and quoting process to the duck-making company. The people at the puck-making company would say, “That’s not how we price pucks” to the duck-making people. But they were outnumbered by the duck-makers and weren’t listened to, so the puck makers left the company.

With centralization, and no one else left, the VP of Sales for Trucks and Pucks brought back the requests for quotes and gave them to his duck-making engineers. But now one engineer was assigned to estimate the costs for pucks and another engineer was assigned to trucks. Those engineers figured out processes to make pucks and trucks alright, but the same way they made ducks: using the same equipment they had, with the same operational inefficiencies, and the same assumptions about quality and risk. Naturally, those engineers cost and priced the trucks and pucks like a duck – but not any duck, a blue-billed duck. 

They didn’t win very many orders for trucks or pucks. But because they won sometimes, the duck-making company didn’t see a need to change how they made things, or how they priced things. They thought they just needed to “try harder” or get better salespeople, or better training for salespeople so the salespeople can educate the customer about why they should be paying blue-bill duck prices for pucks, trucks and other ducks.

Without real success in pucks or trucks like they had in blue-billed ducks, the company decided to search elsewhere for some market for success.  They were convinced that there was some market segment out there that would be a perfect fit for them in which they could have the same success that they had in blue-billed ducks. So once again, all new salespeople were hired. These new salespeople saw the “uck” connection and brought back bucks and woodchucks and hammocks and roebucks and mukluks –anything even close in hopes that something would be the new big thing. This company, who knew how to make blue-billed ducks, approached every one of them like a blue-billed duck with a blue-billed duck price. The engineers and operations people saw those things and didn’t want anything to do with them anyway because they weren’t blue-billed ducks. All of those things already had established suppliers who were good at making them and knew how to price them. So the blue-billed duck maker didn’t win any of these new things either.

Could This Be The End?

Many times, the story ends here - with the blue-billed duck maker shrinking into history as one of the last best blue-billed duck makers back when people wanted to buy blue-billed ducks. But there is another possible ending to this story.

With business shrinking, and all of the sales and company management focused on bringing in everything even close to “uck,” there was pressure on the plant manager to cut costs but no direction on what to do about it. So she decided she would be the best and most efficient blue-billed duck maker she could be. She sought outside help on how to make things better. She attacked overall equipment effectiveness to improve quality, performance and availability. She dramatically shortened set-up times.  She managed inventory levels in line with forecasted customer demand. She increased labor utilization and machine production rates. She tried kaizens and kanbans, visual systems and gembas. She applied statistical controls, design experiments and eliminated sorting from their manufacturing operations.  She attacked bottlenecks. She cross-trained her people.

With all of the improvements, she began to make even more money at their dwindling blue-billed duck business. And with that profit improvement, she challenged her blue-billed duck engineers to take more risk in quoting other duck work. With her encouragement, they began to win work for other ducks – at the lower market prices but now with just as much profitability. Her blue-billed duck engineers began to broaden their horizons to learn about the ways of making other ducks and how to make ducks even better.

With all of their successes in ducks, what about pucks?  Well, they found someone to apply the same vigor to process improvement in the puck business. More importantly, they hired an estimator, engineer, and a salesperson who understood the puck business. With focus on real improvements and a team that understood the customers and market, the puck business began to grow again also.

And trucks? This was a product of a very different kind that they still wished to enter organically. It took a small cross-functional team – again hired from the truck industry – to build a factory-within-a-factory one job at a time. This was run as a skunkworks with dedicated project management, engineering and sales to grow.

 The Moral Of The Story?

The lesson to be learned from the tale of ducks, pucks and trucks is that there is no magic market to instantly find success – even from adjacencies. What this company forgot was all of the hard work they had to put into learning how to make blue-billed ducks and the time it took to learn what the customers really wanted. To find success in another market, first, be sure to be the best at what you do. Then do your homework to understand what it takes to be good at something else. Lastly, invest in the people with the right skills and relevant past experiences for that something else to be successful.

About the author: 

Jason C. Brewer, a Director at Harbour Results, helps clients develop business strategy and assists them with improving their operations and sales processes to achieve their strategic objectives.  In addition to over a decade of experience consulting manufacturers, Jason has held engineering positions in manufacturers, management and executive positions in business development and strategy.  He is a licensed Professional Engineer and certified Strategic Management Professional by the Association of Strategic Planning.