Exercises in Innovation #7: Keep digging until you find the emotional connection
Write down your thoughts on what sort of emotional connection customers have with your products.
The world’s top 5 tool makers control more than half of the power tool industry’s $51 billion market. Stanley Black & Decker at No. 1 and Hilti at No. 5 represent two opposing strategies to achieve market leadership. While Stanley used acquisitions to bring on board the capabilities they needed, Hilti went in search of what mattered most to their best customers.
They now own popular brands that include Black & Decker, Sears Craftsman, DeWalt, Bostitch, and China’s Guoqiang. On the industrial tool side, they bought, Mac Tools, Blackhawk, Virax and more. Similarly, the made purchases of top brands Latin America, Asia and select emerging markets. As long as there are top brands to buy, this can be an effective strategy, but it will come to an end someday. In any case, acquisition is not cost efficient in the long run.
Liechtenstein’s Hilti went the opposite direction. They concentrated on tools for construction and energy industries and rose to the top all alone, while mergers came together furiously all around them. Hilti took the time to understand their customers very well, spending time with people who were repairing, maintaining, and taking care of their tools. They found the emotional connection workers feel for high performance tools.
Hilti has benefited from double digit growth over 2018 with sustainably high profits. If they continue to play the game well, they will have much better return on equity than Stanley Black & Decker.
You have to know customer in fine detail to figure out what kind of emotional connection they have with your brand. Anthropology is the only pathway into the secrets of their hearts.
Ps. Download the complete paper here Ds.