[NOTE: Because of our strict NDAs protecting our clients, these cases do not include identity indicia. We never post a client situation that can strictly identify them or could adversely affect them.]
Competitive disruption from larger, better-financed companies and low-cost importers threaten a small company in the center of a classic barbell market.
The Test and Measurement world powers research and development, innovation, repair and education.
It’s both a deep and wide industry, covering everything from biotech to chemicals, aerospace, automotive, materials research, electronics, construction, food safety and more. The list is almost endless.
Within some of the broader areas, a few major higher-cost, high-quality manufacturers and a larger number of low-cost, lower-precision companies generally dominate.
That tends to squeeze companies in the middle — products of good (but not the best) quality and reasonable (but not the lowest) cost.
These companies in the middle lack the large budgets for marketing, sales and operations to grab a larger share of the market.
Many companies in a barbell market either languish in the middle, take on an extremely narrow niche, or try to compete with lost-cost, often low-quality competitors in a race to the bottom.
That race has ultimately destroyed brands and companies, and not just in test and measurement.
Our client was in the position of severe losses if this situation was not rapidly addressed.
Fortunately there are those like our client who sought to innovate, develop and differentiate their offerings. And, disrupt their industry.
How We Addressed This Critical Challenge
Traditionally most test and measurement equipment’s functionality — what it can do for buyers — is baked in and difficult to change.
Part of the manufacturer’s motivation for built-in limitation is to drive buyers to upgrade their costly proprietary hardware over time and create different price points for different models.
We put our client on a different path: determine how their technical customers would like to use their equipment — even if they’ve never worked in those ways before.
Essentially, it was rethinking their customers’ test and measurement potential paradigms.
Through that, we saw the requirement for a flexibility in use that baked-in systems simply couldn’t handle.
We migrated our client from a focus on hardware to a new focus on augmenting their equipment through software — a service view rather than a more expensive (and costly to build) product.
It was a change in their niche’s business model, but to avoid being crushed in the center they were willing to take a well-calculated leap.
Using existing digital connections on our clients’ equipment, we created software that would connect the devices to common, inexpensive computing technologies — and offer an almost limitless variety of capabilities for their customers.
Those capabilities could be changed and upgraded easily over the Internet.
Most importantly, the devices became customer upgradeable in the field.
No need to send back a device to the factory for an upgrade as they had done before, or buy expensive modules that had to be shipped to the consumer.
That removed expensive and slow facility builds for new manufacturing facilities, and reduced return and replace services.
This allowed customers to use the test equipment as a service platform. That platform became potentially more powerful and undeniably more flexible than either the high-end or commodity competitors could offer.
It added an ongoing, subscription platform in addition to the traditional one-and-done model.
And, it was done at exceptionally low cost for our client.
This inexpensive strategy pulled our client out of their existence-threatening barbell situation, creating an entirely new niche that changed the way their customers viewed test and measurement products.
We — and our client — think we changed the industry together. And in that process, addressed a seemingly inescapable, complex and most critical situation.
This product and business model change had minimal impact on the operations of the company.
Costs were lowered as noted above. And revenue was multiplied as both internal sales and external sales representatives were excited to sell “infinitely configurable” and extensible products, still at very reasonable prices.
As can be seen across Silicon Valley success stories, software can have incredibly high profit margins — “write once and sell endlessly.”
Product improvement costs were also reduced as it’s far easier to tweak and upgrade software than hardware.
And hardware development was not impeded — just extended.
This seemingly intractable situation had to be dealt with at a reasonable cost, and with speed. This is our specialty, and we were excited to help our client survive — and succeed — at scale.