It's become a cliche that companies can use downturns to their advantage. Now there's an analyst from Bain & Co. who actually has the data. As he says in a piece on NPR this morning, it's like companies use the curve in a car race to gain advantage against stronger competitors, while using the straightaway to hold it.
The Bain analyst, Darrell Rigby, has data to show that market share changes the most in the chaos of the downturn. It's not surprising: at best, the downturn changes the game. At worst, it brings out all the weaknesses in a company.
Since they start out with the most market share, the biggest companies have the most to lose. They have deeper pockets, but they also have inherent inefficiencies that come with any large organization. These are the inefficiencies of running a global sales network, of running operations across many end-user sectors, across multiple technologies, and so on. There's a cost to doing all that.
Companies with the next generation products may not be doing well now, but they will seize market share coming out of the recovery. This favors fiber lasers, LED lighting, and new imaging tools like OCT and optical molecular imaging.
But let's admit it: luck also plays a huge part. We deal in macro trends at Strategies Unlimited. But it's my view that, at the micro scale, a lot of business is just dumb luck. Companies are simply in the right place at the right time.
That may feel insulting to the many hard-working engineers and sales staff who nurture relationships, often over years, to bring a product to market. When things go well, it's natural to give credit to all that hard work. But looking at it from a statistical point of view, some will get the new business and some won't. Many of those who lost the business also worked hard, and even did the right things, but the business simply went elsewhere.