Competition and Cost Realities

Strategy is about making choices. But when organizations refuse to make the hard choices - about competition, about costs, about tradeoffs - they end up trapped between their past and their future, serving neither well.

The distribution company faced this trap directly when their major competitor made a bold move that should have validated their own digital strategy. Instead, it exposed how false beliefs about competition can combine with unwillingness to make cost tradeoffs to create strategic paralysis.

The Competitor’s Move

One of their major rivals began putting their entire catalog online. Full pricing transparency. Self-service ordering. Digital account management. Everything the distribution company’s CX team had been advocating for.

This should have been a validation moment. Here was proof that digital transformation wasn’t just theoretical - it was happening in their market, with their customers, by their direct competitors.

Instead, leadership saw it as an opportunity.

“Their customers are going to leave them,” the prediction went. “Technology makes relationships transactional. When they remove the personal touch, we’ll capture their market share.”

This reaction revealed a fundamental belief that had been driving their resistance to change: EASY = LESS VALUE.

The False Belief That Killed Strategy

The EASY = LESS VALUE belief seemed logical from inside the sales-driven culture. If customers could get what they needed without talking to a salesperson, how could the relationship be as strong? If pricing was transparent, how could they demonstrate additional value? If processes were automated, where was the personal service that justified their premium?

This belief led to a series of strategic assumptions that seemed reasonable but were completely wrong:

Customers who used self-service tools would become price-focused and disloyal
Digital interactions would replace relationship value with transactional thinking
Competitors who emphasized efficiency would lose customers who valued service quality
Making things easy for customers would commoditize their offering

The organization convinced itself that their friction wasn’t a bug - it was a feature. The difficulty customers experienced in placing orders, getting pricing information, and managing their accounts wasn’t a problem to solve. It was proof of their superior service model.

Reality Checks the Market Ignored

Meanwhile, the market was providing clear signals that the EASY = LESS VALUE belief was wrong.

Customer research consistently showed demand for the features their competitor was implementing. In surveys and interviews, customers explicitly requested self-service options, pricing transparency, and faster order processing.

New entrants began offering procurement technologies that integrated specifically with the competitor’s digital platform. These weren’t fly-by-night startups - they were established B2B software companies seeing opportunity in the market shift.

Digital disruption was accelerating across industries. Customer expectations shaped by consumer experiences were reshaping B2B buying behaviors. The evidence was everywhere.

But when evidence conflicts with deeply held beliefs, most organizations choose their beliefs.

The leadership team rationalized every piece of contradictory data:

Customer research was skewed toward price-sensitive segments
New procurement tools were just temporary market noise
Digital disruption was overhyped by technology vendors
Their loyal customer base was different from the general market

They had an answer for everything except the most important question: What if they were wrong?

The Cost of Refusing Tradeoffs

The distribution company understood they needed to invest in digital capabilities. What they refused to understand was what they needed to stop investing in to make room for those capabilities.

The math was straightforward. If customers could place routine orders online instead of calling their salesperson, each salesperson could handle significantly more accounts. Instead of needing one salesperson for every 50 customers, they might need one for every 100 or 150 customers.

This created an obvious efficiency opportunity: reduce the sales force size, maintain customer coverage, and redirect those salary and benefit costs toward technology development and customer experience improvements.

The cost savings would be substantial. The competitive advantage would be clear. The customer experience would improve.

But the organization couldn’t bring itself to make this tradeoff.

The Cultural Cost of Change

The sales team wasn’t just an expense line - they were the cultural heart of the company. Reducing headcount felt like an attack on organizational identity. Leadership worried about losing institutional knowledge, damaging morale, and signaling that relationship building was no longer valued.

They also feared customer reaction. What if loyal customers felt abandoned when their familiar salesperson disappeared? What if the transition period created service gaps? What if they were wrong about customer willingness to adopt self-service tools?

These weren’t unreasonable concerns. Change always involves risk. But by refusing to accept any risk, they guaranteed a different kind of failure.

Instead of transformation, they achieved expensive redundancy. They kept the full sales force AND built the technology capabilities. They maintained the old model AND created the new one. They tried to have it both ways.

The Expensive Overlay

The CX team became what consultants politely call an “expensive overlay” - new capabilities that don’t replace existing ones but simply add cost and complexity.

Instead of streamlined customer experiences, they created parallel paths. Customers could call their salesperson OR use the digital tools. They could get pricing through relationship conversations OR through online tools. They could place orders through traditional processes OR through automated systems.

This approach satisfied no one:

Customers were confused by inconsistent experiences across channels
Salespeople felt threatened by tools that seemed designed to replace them
Technology costs ballooned without corresponding revenue increases
The CX team couldn’t demonstrate clear ROI because they weren’t actually replacing anything

The organization was paying for two different business models without getting the full benefits of either.

The Competitive Reality Check

Two years into this expensive experiment, the competitive landscape had shifted dramatically.

Their rival’s digital platform wasn’t losing customers - it was gaining them. The self-service tools that were supposed to damage relationships were actually strengthening them by making routine interactions frictionless, freeing up time for salespeople to focus on strategic conversations.

New competitors entered the market specifically targeting digitally-native customers. These weren’t traditional distributors adding technology - they were technology companies entering distribution, with cost structures and customer expectations built around digital efficiency.

Most painfully, they began losing customers not to price competition, but to experience competition. Customers weren’t leaving for cheaper alternatives - they were leaving for easier alternatives.

The Strategic Tests for Competition and Costs

The distribution company’s failure to address competition and costs simultaneously created a strategic trap. Here are the tests that could have prevented it:

The Belief Test: What fundamental beliefs about customer value are driving your competitive strategy? Are these beliefs based on current evidence or historical experience? How would you know if they were wrong?

The Evidence Test: When market evidence contradicts your competitive assumptions, how do you respond? Do you investigate further or rationalize the contradiction? Who in your organization is responsible for challenging strategic beliefs?

The Tradeoff Test: What are you willing to stop doing to fund what matters most? Are you making real tradeoffs or just adding expenses? Can you articulate what you're trading off and why?

The Math Test: Do the economics of your strategic choices actually work? Are you building sustainable competitive advantage or expensive redundancy? What would have to be true about customer behavior for your strategy to succeed?

The Timeline Test: How long are you willing to maintain dual systems, parallel processes, or redundant capabilities? What's your plan for moving from the old model to the new one?

The Price of Strategic Paralysis

Five years later, the distribution company was forced to make the choices they could have made earlier. Their competitors had captured significant market share through digital capabilities. Customer satisfaction was declining due to outdated processes. The expensive overlay had become financially unsustainable.

They eventually reduced their sales force, implemented self-service tools, and embraced pricing transparency - exactly what the CX team had recommended years earlier.

But the delay cost them market position, competitive advantage, and millions in lost revenue. More importantly, it cost them the opportunity to lead transformation in their industry instead of following it.

The lesson isn’t that traditional relationship-based selling was wrong or that digital transformation was inevitably right. The lesson is that strategic paralysis - refusing to make choices about competition and costs - is always wrong.

Strategy requires choosing a direction and accepting the tradeoffs that choice demands. The organizations that succeed make those choices decisively, learn from the results, and adjust course as needed.

The organizations that fail keep trying to have it both ways until the market forces them to choose.

Photo by Rosie Steggles on Unsplash

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