Control Points

Volume 9 Letter 6

Remember those slimy bars of soap that used to sit beside the sink in a small puddle of goo? Sometimes they could leave you wondering if you were washing things onto your hands rather than off. Also, if left long enough, the soap would cement itself to the sink making it impossible to remove from the shiny white porcelain. To solve this sticky problem someone came up with the brilliant idea to liquefy the soap and put it into a pump bottle to sit neatly by the sink. Envisioning that consumers would rush to replace their bars of soap with liquid pump soap he also foresaw that the major soap manufactures would quickly copy his idea and overwhelm his start up company.

Thinking that he needed at least six months head start to get established he formulated his business strategy. Unfortunately there was no patentable product as everything was readily available. Liquid soap, the container and the pump mechanism had all been around since…well forever, but no one had put them all together as a household product. Still looking for a competitive advantage the inventor discovered that there were only a handful of manufacturers of the pump mechanisms. In a brilliant strategic move the inventor bought up worldwide excess capacity in pump mechanisms. It would take the pump manufacturers at least six months to ramp up enough production so that other competitors could enter the market – the six months he needed to successfully launch and establish his brand.

Like a martial artist who overpowers a much larger opponent by putting pressure on one small area of the body – a business can do the same. Control points can allow an upstart to exercise control over a whole industry as in our example above. When looking at your market, look for control points – points that will allow your business to shape the market direction. All markets have them but they aren’t always obvious. To find control points:

  • Map out the value chain – every step that takes your product / service to your customer.
  • Look for points in the value chain that can be used to control the market; limited distribution, a special process needed by a client, a vital piece of a larger system etc.
  • Use these pressure points to gain market share, build superior profits or control over an aspect of the industry.

Control points don’t have to be big and often aren’t obvious. They can also be time dependent and short lived. Buying up all the pump mechanisms effectively gave the inventor of liquid soap dispensers control over the household soap market at least for a short period of time. Find the control points of your industry and take command of your market.

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