Management in Action  >>  Strategy

Our automotive parts company employs about 2,000 people and has long history of technical and manufacturing expertise, but very little in the way of marketing. Here’s my problem: we currently have a product that is technically perfect, but customers aren’t buying it. (They prefer another, more advanced solution, made by a competitor.) Obviously, to stay competitive, we need lower the price, but I just don’t see how. Our costs are so well managed that outsourcing, even from China, India or Eastern Europe, seems pointless. Moreover, we have the most suitable manufacturing technology available, and our machinery depreciations are very low at the moment. What’s your advice?

For someone at a company of only 2,000 people, you sure sound like you have one of the most common symptoms of Big Company-itis: the Not-Invented-Here Syndrome, or N-I-H.

You know N.I.H. It’s when managers become very comfortable with the notion that their company is performing at its peak – so comfortable, in fact, that they create an atmosphere where there is little interest in using ideas from outside sources to improve how things are done. N.I.H. managers believe the company has it all figured out. After all, it’s been around for a while and had its share of successes. “This is the way we do it here,” they like to say. And should someone suggest a new practice, they typically come back with the refrain, “We’ve tried that before.”

Now, Big Company-itis in general is awful. Along with N.I.H.’s complacency, its other symptoms include inertia, bureaucracy, and risk-aversion. But N.I.H. trumps them all. It wrecks organizations, draining competitiveness right from the veins.

So let’s talk about cures.

In fact, let’s look at your situation. You indicate that you have costs so under control that they can go no lower, even with outsourcing. You also seem to believe you have best technology available, further obviating the need to seek alternatives outside the company. Overall, you seem genuinely stymied by your problem.

But perhaps you see no way out because you’re too inwardly focused. To us, your problem seems pretty straightforward. A competitor appears to have built a better, cheaper “mousetrap” than you and gotten it to market faster. The solution feels straightforward too: why not let go of the notion that you’ve tried everything – and try more of everything?

Innovation, basically, is what we’re talking about. Your company has to become fixated on finding a new process, product, or service that creates a value proposition the market desperately wants to buy. Maybe a new practice is what you need – a different way of purchasing, or a new way of communicating with customers. Maybe a new technology will move you forward – something you can develop or get from another company through a license, merger, or acquisition. With an open mind you’ll find the world of improvement possibilities is huge. In fact, keep pushing on the outsourcing front. Despite your excellent machines and low depreciation, there has to be a company in a country out there that can make your product’s components or the finished product itself for less.

Your greatest advantage at this time, ironically, may be your size. Your company is too small to have Big-Company-itis! With 2,000 people you should be able to move quickly to develop and push a new technology through testing, or to buy another company with a great add-on service, or change management and bring in the fresh faces who can break the technical paradigm. The biggest thing standing in the way is your attitude – an insular big-company condition you can’t afford to have yourself.