Competition - act like you have a 10% chance of survival

I was recently at the PPG MVP Spring conference and one of the key note speakers commented “in order to compete we must be better today than we were yesterday”. You can interpret that comment in several ways: today vs. yesterday as a conceptual time line, or literally….we must improve every single day. In business, we all need to compete; do we do it on a conceptual basis, or are we competing daily?

My professional experience is split 50/50 between the collision industry and the technology industry, so I tend to view ideas from both viewpoints. I draw on experience from both, and what surprises me most often are the parallels between them and what can be learned about competition from the other. My interpretation:

Speed of Change

Technology – The technology industry changes rapidly, both from a technical and business perspective. Companies can go from valuations of zero to millions, even billions, in the span of a couple years. Technology companies don’t reject change, they embrace it. Change is woven into the foundation of their businesses.

Collision – The collision industry is undergoing dramatic changes. Some repairers choose to embrace change and look to the opportunities it creates, while others choose to ignore it and hope it goes away. As they say…”hope” is not a business strategy, so the non-changers may face a difficult future.

Efficiency            

Technology – Technology companies are hit and miss when it comes to efficiency initiatives, at least from an internal workflow perspective. Some see it as a competitive advantage, others don’t. I believe the same reluctance to adapt exists in the technology industry. It’s easier to identify inefficiencies in a visual process (e.g. a repair on the production floor) than in a conceptual one (e.g. a software development project), but the end result is the same – waste.

Collision – You could substitute “lean” for efficiency if you like; leading collision repairers and suppliers have embraced lean and, in turn, made it an industry wide buzz word. Repairers that are willing to admit that the old way is not necessarily the only way and are able to tweak processes to gain efficiencies are beginning to reap the rewards through lower costs and more predictable businesses.

Competitive Landscape

Technology – As you would expect, the technology industry is extremely competitive. Few companies get funded, fewer survive, and fewer still succeed. To illustrate, Angel investors (early stage investors) look for a potential return of 30:1 at exit before they will invest money. Angels typically hold 10 investments (that due diligence says meet the 30:1 opportunity), hoping 1 of them produces the 30:1 return. A couple more meagrely survive, but most will die.  If 1 out of 10 (that got funded!) succeeds, that is extreme competition.       

Collision – The collision repair landscape is not as competitive as the technology landscape… yet. With crash avoidance technology and driverless vehicles on the horizon, is a survival rate of 1 in 10 completely out of the question? Probably a little premature but if you plan on passing the business onto the next generation you may want to get the competitive juices flowing now.

Takeaways from the collision to technology industry comparisons: 1) Collision repairers need to accept change as a constant; resistance is either futile, or fatal. 2)  Technology companies should learn lean principles. Just because waste is not easily identified does not mean it isn’t there. 3) Collision repairers need to compete harder. The success rate may not be as miserable as the tech industry’s but the number of collision repairers continues on a downward trend with no end in sight.

In a prior blog post I suggested that the performance differentiator was a collision repairers’ state of mind vs. a more tangible asset or influence. Pursuing daily improvement is a mindset that improves focus and instills a sense of discipline and urgency in the business. Let’s view it from a pure investment perspective: if you were investing your money in a collision repair business and the ROI was pick the winner or lose it all, who would you invest in?