Profitable Marketshare

Profitable Marketshare

In principle, there is nothing wrong with 'profitable marketshare'...actually that is what we all want, don't we?

The problem comes when you add the time variable to the sentence. 

As most companies are slaves of Wall Street, they look for short term profitable marketshare; what the heck is that? 

Well, lack of leadership and strategic view, together with a 'smart' guy playing with Excel 'Goal seek' function.

We must seek for long term profitable market share, even if it means short term losses. I think it is pretty obvious; we do it every day:

• You 'lose' short term money paying your degree or MBA, expecting future profitability thanks to a better job.
• You 'lose' short term money when you buy a car, expecting future benefits like a more convenient, faster transportation.
• Actually, you 'lose' money every time you eat healthy food, but we all do it as we expect that when we get to our golden years, we will be better.

Now let's have a look to a true strategic visionnaire's thinking, Jezz Bezos': 

1. When you have a window of opportunity, go for the jugular – even if you have to exhaust a huge number of resources. 

2. Think long-term meaning 5 – 7 years, not 5 – 7 months. 

3. Long-term market share is more important than short-term profits because without long-term market share there will be no long-term profits.

4. It’s ok to make mistakes but it’s not ok to be timid.

5. Obsess over Customers. 

6. Be first in a big market. 

More details here


Even if Bezos doesn't care much about short term profit and wall street, have a look at AMZN stock:

Short term "profitable marketshare" is also a symptom of different Business Units, even Product Categories within same Business Unit, working in silos; "everyman for himself!"

The Boston Consulting Group explained long, long time ago that you must use your cash cow (today's profit) to invest into your raising Star (future).

It is easy, it just needs leadership and vision to decide losing money on some categories to secure the future and forgetting about Wall Street.

Key take aways:

1. Forget about Wall Street
2. One size doesn't fit all...you cannot pay all your Sales Reps and Category Managers with the same Sales Plans; some of them might have Margin on their Sales letters, but many other must not have it at all, but Market Share
3. VPs and above must have Companywide targets, and not BG/BU focused ones.