There are three corporate strategies — and you have to pick one
There are only three possible strategies for your company to pursue -- and as much as you may want to claim all three, you can only deliver one. Steve Brody, a Vistage International chair and President of Naviond US, shares his advice for leaders making strategic decisions.
Robin: Hello and welcome to Brandonomics, an inside look at top brands and their marketing strategies. I’m Robin Tooms, VP of Strategy at Savage Brands, and my guest again is Steve Brody. Steve is currently a Vistage International chair and President of Naviond US. Steve, welcome back to Brandonomics.
Steve: Thank you. Good to see you, Robin.
Robin: Well, one thing I didn’t mention in your intro is that you were also a Senior Marketing VP at Coca-Cola, so you’ve had a lot of marketing background. And what I like about your experience is you really overlap brand strategy and business strategy, because in my mind, those two are forever intertwined. We can’t create great brand strategies unless the company has a solid corporate purpose and corporate strategy behind it. So, I wanted to spend a little bit of time getting your advice on how companies should be approaching those two together so that we have the best brand foundation possible.
Steve: Well, and the audience again that I deal with mostly — which is business owners, CEOs of companies that are in the B-to-B segment — they don’t have a lot of attention or focus on strategy, and so that’s a challenging role to try to push them towards having a strategic discussion. I like to use a tool: one of the best sources, I think, of engaging in a conversation about strategy is from a book some years ago called The Discipline of Market Leaders by Michael Treacy. Now, the interesting thing about this book is that his findings are that any company only has three different strategies that they can choose from. Only three that I’ll describe in a minute. But the key — the difficult part is that to be great at something, they have to pick one of those. They have to pick one and just be ok at the other two, but they can’t do all three.
Robin: You can’t do all three, great.
Steve: You can’t do all three, and you’ll see why in a minute. So, I’d like you to imagine a triangle. Imagine a triangle and there’s going to be three different strategies that we mentioned. At the top of the triangle is going to be someone who is a product or service innovator, who likes to be first in the field. Think of Apple Computer, or Nike, or Microsoft; people who are very service or product-oriented, but focusing on innovation. That’s one strategy; and by the way, that’s expensive. You almost always have to be premium priced if you’re focusing on that strategy.
Now if you go down to the lower left-hand corner of the triangle, it’s an area we call Operational Excellence. That’s companies who focus on the most efficient and reliable way to deliver their product or service, normally at very reasonable cost; not necessarily the lowest cost, but either the lowest or very, very reasonable. So, think of companies like Wal-Mart, or Southwest Airlines, or Dell Computer. You don’t get a lot of added value. You get something that applies to almost everyone at a reasonable cost, and its people who are obsessive about how to save the next dime or the next dollar. That’s not about product innovation. You can’t do both of those.
Now, go to the third corner. The bottom right corner is a strategy we call Customer Intimate, and that’s where you’re trying to actually deliver something the way your customer wants it. Think of Nordstrom’s or Ritz Carlton. These are people who always want the customer to be happy; that the customer can never be wrong. If you want to return something, you don’t have to bring in your receipt. They’ll never ask you for a receipt. This is hard to do because companies will say, oh well we need to do all three of those. You can’t.
Robin: Not as a focus. Well, one thing that I’m thinking of, in the B-to-B space especially, it’s the employees that are delivering on whatever chosen strategy you’re pursuing to focus on. How do you advise someone to say this is what employees need to be doing to deliver on that?
Steve: Well, and this comes back to the role of the leader and the CEO, because the employees really need to be the ambassador of this message. So this is not just a marketing person or an ad campaign. This is all of your people needing to be very centrally focused on what is it that you stand for as a company, and what you don’t stand for. So, it goes back to the concept of narrowing your business as opposed to trying to be all things to all people, but all your employees need to be consistent in what they’re saying, so that’s not easy.
Robin: Right, but very important. Yeah, thank you so much, Steve. This has been another edition of Brandonomics, an inside look at top brands and their marketing strategies.
Vistage International is a peer-to-peer executive coaching organization, providing CEOs, business owners and executives of small to mid-size companies leadership training and business coaching to help them grow their companies. Founded in 1957, Vistage has more than 18,000 CEO members in 16 countries. http://www.vistage.com/