Week 7 Discussion Question
Sitnasuak Native Corporation is headquartered in Nome, Alaska with almost 3,000 shareholders that are indigenous to that geographic area. I will be focusing on one of the industries within the SNC subsidiaries: SNCT Services (Tactical Apparel) for purposes of this week’s discussion question about meaningful differentiation.
In 2014, the Business Unit Income for SNCT was -$1.4 million. This was a devastating failure of performance compared to 2009 when the income was $16 million with a revenue of $212 million.
I served as the President/CEO of Sitnasuak Native Corporation in 2009-2010 for a one-year contract to gain control of SNCT operations. Later, I was elected to the SNC Board of Directors in 2014. In between 2010-2014, I was not involved with the company.
In 2014, SNCT Board of Directors approved the hiring of a new CEO for the subsidiary. This was a differentiating move by the SNCT board of directors because we selected a CEO with a 20-year history in successful commercial apparel manufacturing.
Prior to 2014, executives were from the military apparel manufacturing space; including executives of our competitors. This caused for a ‘red ocean’ fight over talented executive-level personnel among the top three competitors.
With the dire outlook of the 2014 income, it was clear that to defend keeping the tactical apparel line, we had to do things differently. Our operations, supply-chain, and organization were all cookie cutter and in line with competitors.
The SNCT Board made clear to the commercial CEO of the expectations and turn-around work he and his team would manage.
Since his hiring, he brought with him his long-time colleague, a Chief Operations Officer from the same commercial manufacturing company. The two of these individuals rolled up their sleeves and went to work to not only make SNCT successful in terms of military apparel manufacturing, but using commercial manufacturing principals, methods, and actions to skyrocket our firm beyond the norm that was in place for decades among the top competitors.
“Updates and automation of equipment has been key to our success, allowing Tactical Apparel and its affiliates to have one of the lowest costs per unit in the American industry while keeping quality and performance at its best. Our internal planning continues to add value”.
SNCT board of directors understood a game-changing move was necessary to regain market share, increase income, and protect the company’s credibility with shareholders.
SNCT embarked upon (what I now know to be) a Blue Ocean Strategy; to take the military client’s expectations of value to a level that is equal to or better than commercial manufacturing. Commercial manufacturing is incredibly more competitive, face-paced, and innovative in operations, production, and other planning.
SNCT broke the value/cost tradeoff, aligned the entire system of the company’s activities with its strategic choice of differentiation and low cost.
(One interesting note is that in 2018, there was $120 million in sales at SNCT with an income of $14 million. As noted above, in 2009 there was $212 million in sales at SNCT with an income of $16 million.)
Significant work, passion, commitment, candor, dedication, trust, and loyalty was reciprocal between the subsidiary Board of Directors and executive management team. These were all key ingredients to bring the tactical apparel line into stellar performance.
SNCT executives continue to implement strategies to expand market share and competitive advantage. The business unit is on track to continue its trajectory of increasing handsome profits; ultimately translating into shareholder equity, dividends, and other benefits for the 3.000 shareholders of Sitnasuak Native Corporation.
2018 SNC Annual Report, public document
Sherman, Leonard, “If You’re In a Dogfight, Become a Cat!”