Richard Desforges (@dickiedes), Communications Planning Director, went to an interesting talk by Roger. L. Martin, author and academic, last week. Here’s what it was about:
I went to Canary Wharf last week to see Roger L. Martin, Dean of the highly respected Rotman School of Management at the University of Toronto. He was in town to talk about his new book, which he co-wrote with A.G. Lafley; How Strategy Really Works: Playing to Win.
This is about business strategy, not just media and communications but there are some really interesting thoughts that I think we can learn from, so I’ve written up my notes below. It looks a little long, but is definitely shorter than reading the book!
Roger started by explaining the main premise of the book, which is essentially about simplicity, which appealed to me straight away. He talked about how we work in industries leaden in unnecessary polysyllabic jargon (!) and complexity, which we shroud our work and ideas in to try and make it all sound as complicated as possible. This, he explains, is not helpful and means people often think Strategy is either more complicated that it need be, or more difficult that it really is.
This is not to say it is easy, but he wanted to provide a framework for strategic thinking that would give businesses a way to work their way through the choices they face…as making choices is all strategy is really; choosing the things you should do and the things you should not do.
Roger claims we all make these choices, but often not consciously or clearly enough, which means there is no way to look back and review things properly and learn from our decisions to inform future choices. He lays his structure out around 5 interlinking questions:
1. What is your winning aspiration? Attempt to win or you’ll be killed by someone else who does
An aspiration is the guiding purpose of an enterprise – a reason to exist (beyond making money!). So, the first mistake people can make is to aim to do better or the same than they did last time out. To win you must aim against the market, not yourself. If you do not aim to win, i.e. take on the leaders, then someone else will.
An example he used was from working with Chevy. They were launching a new car in the mid-size segment, the biggest most valuable segment of the US car market. Their aim was to double sales, which seemed ambitious, until you put that into context. The current sales were a tenth of the market leader, so even doubling the target would still make this launch an also-ran in such a competitive sector. Looking at the product they had, there was a reason it scored below the market leaders on 9 key metrics: it was not a winning product. To survive, the business had to invest more money in R&D, building a better product that could score ahead of the competition and secure a place as a market leader…which the Chevy Malibu is today.
So make sure your aspiration is to win, and not to simply participate.
2. Where to play? You can’t win everywhere, so choose the right place to compete
A business’ market is not ordained by a higher power. Because it operates in one market now does not mean it always will or indeed should in the future. Markets are dynamic and businesses should be too, so the key learning here is to be aware of neighbouring markets, complementary markets, markets they don’t even exist yet…understand the opportunities they offer.
The example used here was of Intuit, who offered a home personal finance software pack. It sold in decent numbers and was the leader in the market. However, many people complained that they didn’t offer an accounts payable package. In time the business took note and started to get to know its customers a bit better. It turned out most were sole traders or SMEs, they weren’t using the product for personal finance – it was a business tool. Seeing this opportunity they created Quickbooks, a simple accounts payable package and the product now sells at six times the volume of their old personal finance product by winning in a bigger market.
3. How will we win? What you have to do to succeed
This is the nuts and bolts bit, the meat and bones…you know what you need to achieve, and where you need to play to achieve that – this is how you will get there. This often requires something new and unique in the market, or a fresh way of delivering or bringing a product to customers. Often the misconception here is that in established markets there is no way to win.
Starbucks is evidence that is not the case. Coffee has been sold for centuries, from all sorts of places, but by identifying the opportunity of a creating a new “third place” between home (the first) and work (the second place), Starbucks built an empire. By making their coffee shops a “community building”, like taverns used to be, they could be anchors of community life that facilitates and fosters broader, more creative interaction. They created a space people inherently desire (some argue, need) within their communities and are happy to pay £3 a coffee just to get into. Suzanne Roff, PhD, an industrial psychologist said, “The value added to a cup of Starbucks coffee is the safe, unhurried comfortable environment that is not home or the workplace. This has become its brand identification.”
4. What capabilities must we have? If you don’t have them yet, build them
Often we look at what assets, skills or resources we already possess, but sometimes we need to look outside of this and identify new capabilities we don’t have already in order to win(…otherwise it would be easy).
Burberry is a fantastic example of a brand that saw a gap in the luxury market in the digital space. Many had ignored it as being for the mass market, believing luxury consumers wanted real-life, in-store experiences, but as part of the brand reinvigoration led by Christopher Bailey they saw an opportunity to engage with a young online-savvy audience, through innovative digital brand experiences. This vision became central to the business, creating an innovation council for the entire organisation – today they are hugely successful and regularly are awarded as the best luxury brand in the online space. They are even flipping things on their head by designing their in-store experience to reflect the online experience now.
5. What management systems do you need? Making sure you measure success
A new strategy often means the KPIs change, which means new measurement is needed. Knowing how you are doing verses your ambition is imperative and often overlooked – feedback is needed to hone the execution of a strategy.
Four Seasons has a vision to provide the best service possible in the hospitalities market, so they not only needed to train and inspire staff to provide such a level of service, they needed to know it was being delivered. If you do not know when you are not delivering on your strategy you cannot improve. They built a glitch reporting system which involved all customer gripes however small being logged and reviewed daily – with each glitch having a service recover plan to attain 100% services scores. If HQ see’s a hotel with no reports, they know something is going wrong; it is not about eliminating errors, but always improving.
Finally Roger talked about how these 5 steps are not to be treated in isolation, but interlinked – this is the only difficult bit with strategy, apparently. An example was provided with each of these questions answered to show how important it was that each one reinforced the other.
OLAY was a decent brand, worth $750m, but it wasn’t growing as the average age of its customers got older every year (!)
- New aspiration – to be the biggest in the market, by being the biggest in the biggest segment (skincare)
- Play in a similar place – previous products were for the mass market priced at $4 vs Clinique at $25+…they wanted to stay in the mass market but steal customers from the prestige market by playing in a new “masstige” sector
- Win by making a prestige looking product for the mass market – appeal to the prestige market but avoid the worst part of it, the pressure to buy from pushy department store sales asssistants
- Need new product and new advocates – to gain credibility the product had to stand up to industry and customer tests, plus get the backing of the fashion media through PR, partnerships and endorsements
- Breaking the existing management systems down – forgetting the historical limits on trade spend, packaging or endorsements to deliver a completely different type of product.
Now OLAY is a $2.5bn brand, and joint leader in the market.
Other top tips…
- Success breeds copy cats – this is why ambitions need to be high: to make it harder / longer to copy, and give you more time to innovate once more
- Do not set the strategy in stone, allow for it to be flexed and tweaked to adapt to changes in the landscape – it needs to evolve with the market and consumers
- Everyone is a choice-maker – empower everyone to make decisions; no-one is just an implementer