When -meanwhile multi-billionaire, hiphop mogul and serial entrepreneur- Dr. Dré rose to fame in the late ‘80s, it was due to a song called “Straight outta Compton”. The song and his band (NWA) marked a landslide shift in terms of the geographical point of gravity in the rap industry, moving it from the East Coast to the West Coast of the USA. The title of the “Straight outta Compton” song was also a subtle hint to the fact that nothing positive had ever come out of Compton, a depressed and poor suburb in the surroundings of Los Angeles. Still, Dré would manage to establish himself as a new ruler in the –then- niche market for rap, hiphop and related music genres for decades to come, both as a singer-entertainer and music producer and later on entering into co-creation ventures of premium music goods (like the Beats by Dré headsets).
The person that enters the idyllic village of Lazkao in the beautiful Goierri comarca of Gipuzkoa (Basque Country, Spain) would not expect either that this town shelters an industrial powerhouse that is building up momentum to disrupt the power balance in the market for heavy duty lifting and mooring hooks and adjacent components that are being used under extreme (marine) conditions. Whereas Dr. Dré’s hometown was allegedly too negative to bring forth something positive, Lazkao may seem to be too peaceful and rural to bring forth a nimble and globally competitive company like Irizar Forge (see: http://www.irizarforge.com/ ), which is the company we are referring to. Moreover, the fact that this company is located in a town with no coast or sea within sight at all, makes the fact that Irizar is challenging the status quo in this global industry all the more remarkable.
So what makes this company so special and what explains its competitive advantage? Whereas many firms, in the wake of crisis, recur to diversification to spread risks and try to tap into multiple sources of revenues, this company stuck to its knitting. In fact, with every new generation of this family-owned business that entered, the level of specialization for specific niches grew. While pursuing such a focus strategy might in theory lead to a narrowing down of the clientele to address -thus making the firm more vulnerable to downturns, in practice it allowed the firm to excel in front of a selective and highly demanding user audience, ending up facing very little competition on a global scale as they entered territory where only true specialists dare to go.
Reaching the kind of unexplored and potentially high-profit market spaces as Irizar Forge is doing, is something that requires courage, vision and continued efforts in innovation and interaction with users that have extreme needs in order to set new standards in the industry; allowing to go where others are not prepared to go or are not able to enter. By reaching out and experimenting with lead users, Irizar Forge has been able to move to the cutting edge of what its industry is able to purvey and push its limits even further. At present, this translates into a situation where new regulatory standards (for resistance, for safety, etc.) for lifting and mooring hooks and adjacent components will be defined in correspondence with Irizar Forge’s expert judgment. Undoubtedly, this will permit the firm to stay in pole position vis-à-vis the higher-end segments of its target markets.
The strategic and competitive patterns that can be discerned in the case of Irizar Forge correspond to a true hidden champion fairytale. Starting off with highly generic business activities, like forging and other metal shaping techniques, this small-sized company embarked on a path of niche definition until it found its perfect match in hooks and other components to be used in lifting and mooring systems under extreme conditions (for deepsea and off-shore applications in particular). Attractiveness of this niche stems also from the premiums that can be reaped in a market that demands products with technological complexity and sophistication of unrivalled heights. A further positive aspect to addressing a specialized customer group like the one Irizar Forge is serving, is that it remains out of sight and reach for most contenders. I.e., since it does not represent a mainstream market but a very narrow niche, it stays under the radar of many other supply side actors. In analogy with (or as a refinement to) Kim and Mauborgne’s concepts, the market and clients on which Irizar Forge concentrates do not even constitute a “blue ocean”! In fact, their clientele is much too confined and selective for that. We should not even be talking about a “lake”, but rather about a “water well” or a “gold artery” that is being plumbed worldwide to capture and exploit its full potential. Consequently, the “hiddenness” and invisibility of this kind of niche markets gives companies like Irizar Forge stealth power and the possibility to build up first mover advantage and aspire to obtain genuine market power, which is what the company –through smart strategizing, sharp market research, high encounter situations with its (potential) customer base and continuous investment in R&D, innovation and advanced manufacturing- is working on.
In addition, the story of Irizar Forge’s rise to market leadership in its business niche is one of disruptive innovation. Whereas casting and plating solutions formed the point of reference in this market, Irizar Forge is disrupting this status quo using their forging skills as an invading “technology” due to its superiority in terms of durability (especially under extreme wear-and-tear circumstances), lesser need for maintenance, suitability for use in inaccessible places, etc.
Demand for this product range is scattered all over the planet, requiring the firm to establish worldwide outreach to get to global scale and scope opportunities. Consequently, Irizar turned itself into a niche multinational in order to become a global player.
Although competitiveness is a journey that never ends, Irizar Forge is a company that clearly shows it has the navigation skills to create and adjust the roadmap to stay on course for sustained competitive power. As such, it is a text book example of how a small town company can make it big in a globalized corporate world.
For the latest on Irizar Forge, see: http://www.irizarforge.com/
For the latest on Beats by Dré: http://www.extremetech.com/computing/182158-apple-acquires-beats-for-3-2-billion-confirms-dr-dre
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