In a hyper-competitive space, everyone’s running the same race, and the only measure of success is who runs it the fastest without stopping.
That’s precisely what the metal container and manufacturing business was focused on — marginal improvements in a cut-throat, low-margin industry. For them, driving down unit costs while obsessing about economies of scale and running as fast and as efficiently as possible became the mantra.
They structured their businesses to secure large orders from major customers, enabling them to keep their production lines running around the clock. And by avoiding costly machine changeovers, they were running as fast and efficiently as possible, all for a miserable 4-5% return on assets.
What they clearly missed was perhaps a different way of doing things, as Crown Cork & Seal demonstrated by focusing on shorter runs, smaller customers, and rush orders. They did the exact opposite of what everyone else was doing and, as a result, were able to command a premium for their services, thanks to their strategic positioning.
The industry was suffering from imitation bias — where everyone was doing the same thing — offering the same services, trying to out-hustle each other by becoming faster and cheaper (aka efficient), which is always a race to the bottom. And when the whole industry agrees on one model, anything different feels like suicide, reckless, and definitely not strategic.
The scary part is that when the competition is tough, and your potential clients are also seeking the lowest bidder, it’s almost always a race to the bottom. And the worst part is that you might win! And it’s a pyrrhic victory at that — the margins disappear, and the customers will own you.