Reader
Responses To:

Lessons From History

Dear Professor Michael Knetter:

I read your article in the Update magazine and would like to comment on a few items. From my classes in economics at UW Madison, the one thing that always impressed me was the fact that the salary of an individual was only part of the economic impact in an area. I was taught that this person's salary needed to be multiplied several times to show the effect it had on the local economy. This person would not simply save his money but spend it and this would help others have jobs. Your comparison to relocating jobs from one of the United States to another should have equal effects provided that the salaries remain the same. I seem to miss the point how sending my "high-wage" job offshore will help the United States' economy. If this concept of offshoring is so good, we should do it with all of our jobs. What is limit? Unfortunately, only the few remaining workers whose jobs cannot be sent offshore will be able to buy merchandise cheaper. If my "high-wage" salary is sent offshore and am able to be retrained, there is still no way that I would be able to make anywhere near the "high-wage" I make now. I would not be able to send my kids to college, make alumni contributions and pay your salary. I realize that this offshoring will continue and do not have an answer to the issue but PLEASE do not say that it good for the U.S. economy. Thank you.

 

Response to Lessons from History

Good morning,

I enjoyed the article Lessons from History. I believe that US companies will continue to rise to the challenges of global competition. One way that US companies can stop the outsourcing of jobs is to Strategically Reposition themselves in the marketplace.

Companies that successfully position themselves to leverage their strategic competencies and stay exceptionally close to their customers are able to not only survive but also thrive in these increasingly difficult times.

Strategic Repositioning is a process that focuses on expanding a company’s internal and external knowledge as well as capabilities to compete more successfully in today’s marketplace.

The 5 Keys to Strategic Repositioning are:

1) Recognizing that success involves change

2) Understanding what your company does well

3) Discovering unarticulated customer needs

4) Exploiting your company strengths to meet those customer needs better and quicker than everyone else

5) Building a culture around market intelligence and customer focus.

Here are some examples of how US companies successfully demonstrate the 5 Keys of Strategic Repositioning.

Success Involves Change –
When Keith Peterson bought Humane Manufacturing in 1997, he knew he had to make some big changes. The 90-year old company was known as a steel fabricator of cow stanchions and stalls on dairy farms, but also made rubber mats for the dairy industry. By 1998, Peterson had sold off the less profitable steel division and bought an additional production facility. With the added capacity and change in products, he needed to bring in new customers and new work.

To do this, Peterson realized that he needed a lot more information about his customers and markets and he needed to let customers know where the company was headed. This CEO became intimately involved with his customers and his sales process, sending a strong message both to his customers and his employees that Humane was changing. “Just the fact that the president of Humane is there, 75-80 percent of the time we’ll have an order before we walk out of there – just because the CEO cares about the customer,” said Peterson.

Know What You Do Well –
Titan, Inc., of Sturtevant, uses its considerable engineering and technical talents to design and build complex equipment to test electrical, hydraulic, and mechanical manufacturing quality for its OEM customers. President Greg Petro knew that Titan’s growth strategy would require finding new ways to deploy their strengths in order to add value for their customers.

Petro formed a cross-functional team, which identified strategic competencies.

These competencies include company strengths that meet three criteria:

1) they add value to the customer

2) they differentiate the company from the competition

3) they are difficult to copy.

After the internal team agreed on a dozen strengths, the team asked key customers for their evaluations of Titan’s competencies. The result was a clearer understanding of what Titan does well – from their customers’ perspectives as well as their own. This knowledge is a valuable resource for focusing the search for customer needs and discovering new markets.

Discover Unarticulated Needs –
When Debbie Simmons, President, started Kelle Company, she had little experience with the dance performance/dance costume industry. A successful clothing designer, she had neither taken dance lessons as a child nor been a parent to a dance class student. However, knowing that she needed more information to be successful in the design and marketing of her products, she made a bold decision. She called the customers.

“You would be surprised at how much the dance studio owners and teachers appreciated talking directly to the owner of the company,” Simmons now says, “Of course, I was even more appreciative as it was really informative and helped me understand how to help our customers be more successful at their business.”

Instead of specific costume design issues, Simmons focused on the Dance Studios’ business processes and listened to the many frustrations the owners and teachers had with the dance costume industry. She turned many of these customer frustrations into key elements of Kelle Company products and policies. By putting a focus on customer service and delivery as well as keeping Kelle Company’s designs fresh, Simmons has made Kelle one of the fastest growing companies in the industry.

Exploiting Strengths and Meeting Customer Needs –
Thermal Spray Technologies, Inc. of Sun Prairie grew out of a desire to improve the durability of lawn mower blades. In the late 1980s, Richard Wilkey, president of Fisher-Barton, Inc., a manufacturer of mower blades, began working with researchers at UW’s engineering department to achieve this goal. The research indicated that thermal spray coating demonstrated a dramatic increase in wear resistance.

Realizing a wide potential for thermal spray coatings in other industries, Fisher-Barton established Thermal Spray Technologies in 1992. Today the company serves many industries – aerospace, agriculture, automotive, food processing, marine and medical devices, among them. The company has developed a coating for electro-surgical devices used by surgeons that eliminates the need for suturing and promotes faster recovery times. Thermal Spray Technologies, which started with three people in 1992, now employs 50, and has tripled its plant size.

Build a Culture Around Customer Focus –
There are few better examples of a company that has built a company culture around its customers than Harley-Davidson. It is the longest continuous manufacturer of motorcycles in the United States and has outlived nearly all of its competitors.

Since its near demise in the early 1980’s, Harley-Davidson has focused almost completely on creating a company with a customer-focused culture that is unparalleled. In the twenty short years since Harley-Davidson started their Owners Group programs, it has grown to over 500,000 members, each who own at least one motorcycle.

Is there any other consumer product in the world that will prompt customers to travel over several continents to be part of an “experience” such as the company’s five-year anniversary parties? Customers and employees alike take great pride in their affiliation with the company and this continues to make Harley-Davidson one of the great success stories of our time.

The companies that take the initiative to leverage their Strategic Competencies and get closer to their customers will continue to successfully compete in the global marketplace and help stop the outsourcing of US jobs over seas.

Hershel Schabel
Alumni- Marketing 2001

 

Dean Knetter's June article

He wrote, "The U.S. economy has thrived relative to our counterparts in Europe and Japan in the last decade."

Who cares? Most of the money goes into the bank accounts of the few in any case. The dribble-down result was slight, and has already disappeared. He, like most Americans, appears to be simply parochial and not able to admit (or perhaps even to know) that most people in most of "Old" Europe live better now than we do. This is no longer 1947. The Europeans have better health care (an easy target since health care is so pathetic and paper-bound in the U.S.), longer life expectancies, better public schools and cheaper public universities, better public transportation, less money wasted on the military, a better and more varied press, more time off overall, shorter work weeks, better land-use controls, better hotels at any given price in many countries, better restaurants (although junk food has made inroads), better food supplies (although capitalist supermarkets have made big inroads on local suppliers), better public radio (at least no disgusting ads in France such as NPR bores one with), better supported cultural institutions generally, lower crime rates, lower incarceration rates, virtually no "War on Drugs", and Europeans are probably more suitably housed (i.e., well housed but not fruitlessly overhoused in slumburban sprawl as so many Americans are). Taxes are high in Europe and that is good; it means that funds are available to maintain civilized life.

I have been going to Europe pretty regularly for the last forty-eight years, and now, in retirement, go four times a year to my house in Burgundy and roam around the rest of Europe (not Britain to be sure) a lot. It is simply a pleasure to be there and observe that the slightly greater average incomes in the U.S. (not greater, however, than Luxemburg) do not lead to a higher quality of life.

Taking France only, there are only two things there that I know of that are below American standards: local public libraries are not as good in France as here; collections there are smaller and hours shorter. (That statement definitely does not, however, apply to the Nordic countries or Germany.)  Secondly, French cities are unreasonably noisy because of the uncontrolled proliferation of two-stoke, essentially unmuffled, 50 cc mopeds and scooters ridden by adolescents and, in addition, Harleys (and similar) ridden by "adults" who are apparently personally insecure. This Harley problem is not absent in America either, especially in the rustical sectors, but even so it seems not as grave a problem as in France.

Dennis K. McDaniel, Ph.D.
(UW MA's 1969 and 1977)

------------------------

Michael Knetter's interpretation of current and historical economic events, and his belief in the positive-sounding terms such as productivity, competition and free trade is just like a million other shallow-thinking disciples of growth, growth growth.

It is common-sense that too much growth is not a good thing. Cancer is one obvious analogy.

Business schools and economists need to get their heads out of the clouds, before it is too late, before we no longer have a sturdy environment to lay our factories or companies down upon, before we no longer have healthy workers capable of endurance, and before we no longer have enough people who can afford to consume our products and services.

Considering their frequent use of the buzzword "globablization" , It's astonishing to me that economics refuses to become more global and broad-minded, more interdisciplinary. Many other fields of study and departments on the UW campus have been realizing this and doing so.

Rose Gapinski