DALLAS -- Produce executives who want to turn technology to their advantage could learn several lessons from an ancient treatise on war.
That treatise, "The Art of War," was written nearly 2000 years ago by military philosopher Sun-Tzu, according Bill Bishop, president of Willard Bishop Consulting, Barrington, Ill., speaking during the FreshTech '96 conference here last week.
"It is the preeminent text for competition in the military, and I would say, the preeminent text for formulating competitive strategy," said Bishop, donning a kimono for the presentation.
He adapted four major principles from "The Art of War" to 20th century produce industry. Those principles are:
Know the customer, the competition and one's self before initiating an engagement.
Make a detailed assessment of the competitor's capabilities vs. one's own.
Set objectives to yield results at the minimum cost possible.
First eliminate one's own vulnerabilities, then prepare to exploit the vulnerabilities of the competitor.
The first principle, knowing the customer, one's self and the competitor, consists of defining the market, Bishop said. Produce managers need to ask themselves what their customers are really buying, what they need, who those customers are and which customers are the most important.
"One of the things that's come out from the last year of focus on database marketing as it's migrated to retail is, almost
inevitably, 20% to 30% of your customers account for 70% to 80% of sales," he said. After accounting for those customers who take advantage of deep discounts and markdowns, that 20% to 30% of top customers are even more disproportionally profitable, according to Bishop. Bishop told an anecdote about one retailer who said if 10% of his customers -- those who take advantage of markdowns -- quit shopping at his stores, that retailer would make more money. The retailer planned to develop programs that would reward only the most loyal -- and profitable -- shoppers.
Retailers also need to understand their own capabilities, he said. That involves understanding each store's mission, strengths and weaknesses and opportunities.
Utilizing the second principle, making a detailed assessment of competitors' capabilities, requires a program of leadership, discipline, execution and clarity of purpose, Bishop said. "Retailers have had more than their fair share of shock treatment and cold showers," he said. "It reinforces the notion that retailers are competing as a marketing channel today, not necessarily as an independent entity."
Principle number three, setting objectives to yield results at the minimum cost, involves attacking another's plan. "Focus your competition on not competing directly in the toughest sort of body-blow-to-body-blow situation, but where you can out-think the competition," he said.
First, decide what assets should be protected. Also, avoid winning ugly, Bishop warned. Price wars are one example of winning ugly.
Eliminating one's own vulnerabilities, then preparing to exploit the vulnerabilities of the competition, is the fourth step, he said.
"Let's not race out to battle," Bishop said. "Let's think about what we need to do to be prepared."
Cost reduction, customer satisfaction, responsiveness and stability of supply could all represent internal vulnerabilities, he said. Many of those vulnerabilities can be shored up through technology.
Competitors also have vulnerabilities, and the three most common are pricing, service and responsiveness. Customer service represents the biggest opportunity today for exploitation, he said.