Strategy Essay – Week 2
This week’s essay focused on finding a company that seems to be following a ‘parallelism’ strategy and assess whether it is working for them in terms of profit and response to environment. Beinhocker describes Parallelism as having multiple experiments allows you to take risks without ‘betting the farm’. The company I researched is called Grace Manufacturing, they took a radical step in changing their industry and product but a remarkable stroke of luck opened a new market for them and they managed to move and adapt to maximise the opportunity presented to them and taken on board this strategy moving forward.
Grace started out in the 1966 as a contract manufacturer of etched steel parts, such as printers. They had developed a proprietary process for making precise steel shapes, which meant the edges of the steel being razor sharp and patented the process. However, sharpness was a liability and workers had to be careful handling the parts. With the emergence of dot matrix printers in the 1980’s, they realised their cash cow business was under threat and so looked into different areas.
Grace didn’t take the natural progression to looking at adjacent areas such as dot matrix printers or other high volume complex machine pieces. Instead they realised they were good at making things sharp, so went into woodworking tools and developed the microplane in 1985. Grace had some success with the woodwork tools but in 1995 a new product category opened up for them when they discovered chefs were using the microplanes for grating and shaving. Apparently in 1994, Canadian Lorraine Lee was frustrated with her zester and grabbed a microplane her husband bought and used it on an orange. Her husband owned Lee Valley Tools that sold the microplane, so she changed the product description in their catalogue. Chefs bought them and loved them, with this the kitchen gadget market was born. Grace tweaked the design of the microplane for kitchen use and launched the new product in 1998. Now they produce more than 40 products for the kitchen including pizza cutters, herb mills, salt shavers and graters. The success of the microplane in the culinary marketplace has been attributed to that it was not premeditated. Sales of the culinary tools, based on the original woodworking application, account for 65% of the company’s revenue. Estimates of Grace Manufacturing revenue is approximately $25 million, which indicates that they are successful. The company appear to be adopting a parallelism strategy still, as they have also moved into the medical industry using their expertise in sharp products, producing an ‘acetabular reamer’ used by surgeons to prepare hip sockets for implants and a device to grind bone into paste. Other markets they have ventured into include personal care with a microplane foot file and hole saws based on their strengths of making things sharp.
Today the company operate in the following industries: * Kitchen Products * Personal Care * Computer terminal and other computer peripheral equipment manufacturing. * All other miscellaneous general purpose machinery manufacturing. * Metal coating, engraving and allied services to manufacturers. * Saw blade and hand tool manufacturing. * Surgical and Medical instrument manufacturing.
References:
1. http://www.arenasolutions.com/blog/post/a-cheese-grater-worth-stealing-from-the-ceo-it-must-be-a-microplane/ 2. http://www.kitchenproject.com/history/Microplane/ 3. http://www.arkansasbusiness.com/article/90573/microplane-shaves-off-18m-market?page=all 4. http://companies.findthecompany.com/l/14869053/Grace-Manufacturing-Inc-in-Russellville-AR 5. http://www.nytimes.com/2011/01/12/dining/12united.html?_r=0&pagewanted=all 6. http://blogs.hbr.org/2011/01/lessons-in-adaptive-strategy/