Professor Suvi Nenonen, Director of the Business School's Graduate School of Management, urges New Zealand companies to tap into the power of market-shaping.
Shaping the market
Market-shaping turns traditional strategic thinking on its head. If typical companies try to succeed by analysing their operating environment and then adjusting their operations accordingly, market-shapers do it the other way around. They don't take the environment as a given, but they try to shape the environment so that it creates more value for the company and their customers.
Becoming a market-shaper requires a subtle but significant change in how you think. Market-shapers understand that the business of business is not just to produce and sell whatever you are selling, it is to create value for your customer. And the value for the customer is not only dependent on your product, it is also dependent on the system that helps the customer to use the product correctly.
An example, which Suvi says is slightly embarrassing for her as a Finn, is the smartphone industry, and how that developed. Nokia was the biggest mobile phone manufacturer in the early 2000s, and they were also the first to introduce their own smartphone. But unfortunately, Nokia didn't really understand what makes the smartphone smart. It is not just the device, it is the apps. Nokia didn't actively foster the creation of app developer ecosystems so that entrepreneurs could be developing apps for their smartphones. Apple, on the other hand, understood that very well, and of course ended up being the dominant player in the smartphone market.
Collaboration is absolutely key to market-shaping because you can't have a market-level change unless people first change how they behave. And also, very few companies are powerful enough to shape the market alone.
One example would be current developments in the electric vehicles market. You don't just need the electric car, you also need the charging infrastructure. So, you need companies who are developing the batteries, and government providing places for the charging stations and so on.
There is a beautiful New Zealand example about the power of collaboration when it comes to market-shaping – the New Zealand screw-cap initiative. A small number of New Zealand wineries coming together made screw-cap closure a dominant way of closing a wine bottle globally.
There are many other examples of Kiwi companies shaping their markets very successfully. But unfortunately, we are not seeing that as much as we do in other countries of similar size. According to our research, New Zealand companies are punching way beyond their weight when it comes to the antecedents of market-shaping. So, they truly understand value creation and the systemic nature of their markets, but for some reason they are not proactively shaping them.
In summary, New Zealand produces wonderful products and services, but what is needed is for us to become more courageous and start proactively and collaboratively shaping local and international markets.