They say that if you fail to do something today, there will be consequences in the future. When it comes to strategy, this “eternal” slogan is doubly true, as the impact is best measured in the long term, and the results will come to fruition years later. In other words, whether we have built a good or a bad strategy, we will only see its real results when we cannot really intervene in the process and are forced to accept its consequences. The two-tier business strategy is no exception to this rule, and even at the stage of its creation, it is a huge watershed as to whether or not the company in question has the capacity to build a new fortress on top of its current core business. After all, if a company has not paid attention to its core business in recent years by developing real, strong professional knowledge, processes, and products that set it apart from the competition, it has no chance of starting the fight against today’s crisis fully armed!
The ownership merry-go-round
A significant proportion of companies are focused on the present, and even when planning is taking place in an organisation, it often turns into a well-paid pastime for management. When dozens of people are already working on the future of the company at a strategic level – as is common in large multinationals – not much good comes out of it. In this respect, smaller, local companies have an advantage, if the owner is willing to look beyond their nose and really plan for the future. This is not an easy task because, since the Great Recession of 2008, business decision-makers have tended to focus on the day-to-day management of the business, and this has been exacerbated by the pandemic. Development has also focused on solutions that can be monetised immediately, so that the real “unique expertise” – the unique knowledge and background that differentiates a company from others in the market – has not been developed for most businesses. It has taken a lot of conscious work and a willingness to excel for an owner to work on this in a meaningful way over the years. To use the examples of ENDORIENCE and TRUSTED, it is not certain that this will happen or to the same extent if a change of ownership does not take place at the very beginning of the pandemic. Moreover, it is important that the new owner did not have to be a “newcomer” to the business, having been an employee of the company for many years, as the head of business development. Thus, taking ownership was more of a free hand to implement the half-baked and ready-made ideas already in his head. Every business developer is taught that when the market environment changes significantly, you have to look at the company as if you were starting a brand-new business, of course, based on what you already have. Well, this was inevitable in the case of ENDORIENCE-TRUSTED, as the new owner obviously wanted to run the company more efficiently and successfully.
Old and new values
But how do you know if a two-tier business strategy is really working? Only the process of creating the product concept will tell the whole story. Can the strategist clearly define and separate the concepts of “core business” and “new premium direction”? To do this, it is necessary to have “something to cook with”, i.e. a level of expertise within the company that can be shared and that can remain strong after the distribution of both packages. After all, the core business must be the clear market leader in its field, and, above all, it must be able to outperform the other players in the market in terms of service and expertise. In the case of TRUSTED as a core business, the separation was not difficult, since the problem was basically that their unique professional expertise was already pushing the boundaries of the traditional POS design environment, and they could express this at an above-market price level, which the partner circle, knowing the service they provided, paid without any problem. As a result, TRUSTED’s specialists became increasingly close to the partners’ top decision-makers, as the company was no longer just about production, but also about design effects, concepts, planning, and consultancy, and this was becoming less and less part of the market image that was used to traditional pricing and service. In this case, it is justified to strategically move upmarket, because more and more consultancy work is being generated in the core business, which the market is no longer willing to pay for, i.e. the work efficiency is deteriorating. However, there are also two-tier strategies, where the strategist is responsible for defining and developing the professional services portfolio and for giving the core business the task of deciding in which directions it should develop. The challenge for ENDORIENCE, as a consultancy focused on the design and development of a premium point-of-sale environment, was just how deep it wanted to go into a partner’s business strategy. After all, point-of-sale promotion will be critical in the coming years, and it’s a very specific area of marketing that is understood by those who are specifically involved, from the planning of the process to the completion of the execution. Thus, in the case of ENDORIENCE, the consultancy field itself is currently defined, but will certainly push its boundaries upwards along the wishes of its clients. They can do all this, of course, because the professional development of the past decades has been a constant expectation within the company, and to this end, they have been given a dynamic new ownership approach that retains the old values but also understands the new premium expectations.