Focusing on growth and sustainability of market; NOF ENERGY iN ASSOCIATION WITH.
So whilst, like many, we've seen a reduction in the average order size and a lengthening in the time it takes to get an oil and gas order 'over the line' due to the increased scrutiny on spend, by having a presence in these other two energy sectors we've been cushioned to some extent from the adverse effects of the recent downturn in the oil and gas market.
We as a business have a strong desire to continue to grow and we want that growth to be sustainable. To me, the sustainable piece of the growth equation comes from establishing a prominent position in a number of key areas, as opposed to being a dominant player in only one.
Our goal is to provide engineering expertise in at least three niche skill set areas, in at least three different markets, across at least three separate regions; the idea being that if one niche skill set area, market or region is down, then we can 'take up the slack' as it were in the other two skill set areas, markets or geographical regions.
It means that we need the best people who have a thirst for change and can adapt to an ever changing landscape and it means that we need to run an agile business where we can make good decisions, fast.
In my view, diversification done well mitigates your risk, it fuels your growth and it enhances your profitability. However, diversification done badly will have the opposite effect, so I'd proceed down the diversification route with a large degree of meaning and purpose, but it should be underpinned by a balanced dose of sound research and caution.
When you look to break into a new market, I guess you could take one of two approaches; one would be the 'revolutionary approach' where you develop a new product or a new service that is fundamentally different to what you've done in the past and you apply it to a brand new application area.
The second would be the 'evolutionary approach' where you take an existing product or an existing service and you apply it to a similar application area, albeit it in a new market sector.
I'm not saying that one approach is better than the other and I'm sure that at some point in time both approaches will have their place, but we chose the latter. We researched the market sectors in each of our three geographical areas of interest in terms of their annual spend and their predicted growth.
We then did a simple exercise to determine which of these new markets had similar application areas and asset integrity and assurance needs to those that we currently support in the oil and gas industry. Having shortlisted the relevant application areas, we then identified the key players. Thereafter, it's been a case of adapting our so-called 'value proposition' to the new markets, getting in front of the right people and starting to build a new network of new contacts.
The 'take away' points for me from our diversification exercise are that you need to make the time, then take the time, to do the upfront research on the new market sectors, understand the key industry drivers, have a clear value proposition or benefits statement, identify the key players in each tier of the market, know where you fit in the supply chain, look for and take the easy wins as a means of securing that all important first order and establishing a track record and commit to it and be in it for the long haul; it will take time.
Paul Charlton, CEO, of Hexham-based PDL Solutions (Europe) Ltd, and chairman of NOF Energy
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|Publication:||The Journal (Newcastle, England)|
|Date:||Nov 5, 2015|
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