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Companies Go Bad


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I read this article in Harvard Business Review. It was published in 1999 and applies very much today. The article is by Donald Sull. No it is not about metal detecting. However, it pertains to the companies we love. Hopefully some of them will take time and read the entire article and learn from it. Some of you may find it interesting.

 

By Donald Sull

“One of the most common business phenomena is also one of the most perplexing: when successful companies face big changes in their environment, they often fail to respond effectively. Unable to defend themselves against competitors armed with new products, technologies, or strategies, they watch their sales and profits erode, their best people leave, and their stock valuations tumble. Some ultimately manage to recover—usually after painful rounds of downsizing and restructuring—but many don’t.”

 

You can read more on the Harvard Business Review

https://hbr.org/1999/07/why-good-companies-go-bad

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2 hours ago, Steve Herschbach said:

If you read the article it basically boils down to companies getting stuck in the past.

You are right Steve. You must change or you will be bought out or go under.

Imagine metal detectors being TV's and you are the owner of a company that manufactures analog CRT TV's. How many people are going to buy your product. As a business owner, you must lay out a 5, 10 , and 20 year business plan that constantly evolves with technology. In today's market place, you can not afford to rely on 10 year old technology to keep you afloat much less 2-3 year old technology.

So you say what does this have to do with metal detecting. Personally I think a lot. If the American metal detector manufacturers don't wake up and stop relying on the past and show that they are leaders in technology. They won't be there.

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Steve,

You are right that this is just a general business article.  Mike sees the connection between other technology companies like computers and phones and I think it applies here.

I think this applies to Minelab as much as anything.  Look at what they had just a few months ago ... the most expensive 'line' of metal detectors in the industry.  Sure we could argue it was the best technology but what could be next for them along those lines?  (More expense when competitors are gaining market share?)

Now they have somewhat 'reinvented' themselves with lower price, lighter, potentially more functional detectors that have excited the industry.  They have staved off technical obsolescence.  They are relevant in every discussion about metal detecting for gold, relics and beaches.

This will result in some cannibalization.  The alternative business plan would be to ignore the much larger market.  That market is now an international collection of metal detectorists seeking to replace an existing detector with a maximum 'bang for your buck' purchase.  Their new products can also appeal to the newbie market as well.

Innovate or die.

Mitchel 

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Funny, I think just the opposite. This applies more to the "old school" U.S. manufacturers in my opinion. Minelab was nothing more than some little upstart from down under. Mainly because U.S. manufacturers thought that gold prospecting would never be anything more than a niche market, Minelab innovated and largely captured what is now the largest metal detector market worldwide. Then Minelab's BBS and FBS machines made huge inroads in the silver detecting market and via the Excalibur the water detecting market.

In the last few years while Minelab has focused on the gold market, another upstart out of France saw that "heavy, slow, and expensive" was not what the European market demanded and addressed the heavy and slow items in a stunning way. Price not so much but still way less than a CTX. They made huge inroads in Europe in particular. They are far rarer in the U.S. however then forum people think.

The U.S. company that in my estimation has had the best read on the U.S. market has been Garrett, with high value detectors and a grasp of social media the other companies lack. The AT series plus Pro-Pointer and now Z-Lynk is a family of great products that integrate well. But no high end innovative product. The GTI 2500 is still the flagship? Really?

White First Texas has dithered, another upstart, Nokta/Makro, has been making inroads with detectors that hit most closely at the First Texas Fisher and Teknetics product lines. They are still a very minor player but aggressive and moving fast. 2018 will probably bring more from them as they move at a speed that makes everyone else look sluggish. Their main gig so far has just been good product at competitive prices, but that will probably change going forward as they seek to introduce more advanced detectors. They have a long way to go before they are a real threat to the established players.

White's and First Texas have been most conspicuous in their absence with any truly new product. The MX Sport was a decent try on White's part but in most ways it is just a MX5 single frequency variant in a 4 pound plus package. Not the innovation we are looking for from White's. And First Texas......?

Now Minelab is striking back at XP and Garrett, once again seeking to be a major player in the coin, jewelry, and relic market.

I keep seeing commentary by people thinking Minelab would never undercut E-TRAC and CTX sales with a detector far less expensive. That is exactly the kind of thinking this article is discussing. People who think holding on to old expensive product is more important than just moving on and letting the chips fall where they may. If I were Minelab I would go all in with this new direction. Continue to make the E-Trac and CTX for as long as they sell and make money, but focus all resources on simply moving forward to the future. And I just do not see the future of coin/jewelry/relic detectors being 4-5 lb machines selling for $1500 or more.

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I just read on another forum that people were canceling their orders for the AT Max in order to purchase the Equinox . If all I read is true. Garrett may have a large surplus inventory. If Garrett, First Texas and White's have something to offer, It needs to be in the market before the Equinox. Yes, There are people that are brand loyal. However, I think the main clientele wants a quality new technology detector with bang for the buck. I beleive the mass market does not have a arsenal of detectors in the closet.  Maybe 1 or 2. Catch up is a hard game to play.

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Garrett has probably not made enough detectors to satisfy current demand and they really do have a huge and loyal user base. Those who were looking for the AT Max to be multifrequency will jump ship perhaps along with some others. All in all though Garrett is doing a good job for their customers and while this may slow their sales a bit I think Garrett will be just fine. It's First Texas and White's I most want to see pull rabbits out of hats.

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