Monday, January 19, 2015
IS STRATEGY DEAD?
“There’s no one definition of strategy that is technically ‘correct’; however we all need a starting point, so here’s mine: ‘Strategy is a series of integrated activities designed to achieve and sustain a competitive advantage.’ This definition seems appropriate and operative for our type of business in two significant ways:
--First, it clearly focuses our attention on a series of integrated activities. This recognizes the reality that strategy is rarely one isolated idea.
--The second important notion in the above definition of strategy is achieving and sustaining a competitive advantage. This is the critical point that truly distinguishes strategic thinking and activity from operating thinking and activity.
In strategy, we measure our performance versus competition. For example, productivity is not measured in terms of how we perform against an operating (or marketing) plan…but it is measured in terms of how wide a competitive advantage we establish versus our relevant competition.”
--Bill Korn, Frito-Lay President
Anyone who has worked in marketing for a few years has probably heard the old expression, “That’s just a tactic in search of a strategy”—an expression typically meant to shut down an idea that, while on its own perhaps very clever, obviously has no clear “fit” with all the other integrated activities underneath a brand’s Marketing Strategy. In fact, we can recall a time working on Brand Coke here in the U.S. when, out of the blue, the senior vice-president of Coca-Cola USA Marketing summoned us to his office to see some new rough-cut ads he had developed on the sly and was excited about. These TV ads featured unusually stunning food shots—popular food shots that also featured, of course, a dazzling bottle of ice-cold Coke. The purpose of the ads could not have been more apparent: to dramatize the complementary taste benefit of Coke with foods that Americans loved (hamburgers, hot dogs, fries).
As the brand manager team on Coke, our first reaction went something like this: “Beautiful film! Great shots of Coke and food together! But, as an idea it is well off-strategy…because our longstanding communication strategy for Brand Coke is to dramatize Coke’s implied thirst-quenching and refreshment advantage—not its taste with food.” But you have to give that senior vice-president credit because his instantaneous response could not have been more creative: “This with-food approach is a flanker strategy!” Knowing that he had excited himself over an “execution in search of a strategy,” he had the fast-thinking cleverness (and no doubt previous experiences) to quickly link an isolated idea to something strategic…or at least something sounding strategic.
As we enter yet another new year, we find that strategy—particularly marketing strategy—weighs heavily on our minds. Actually, it has been weighing heavily on our minds for some time now because of a number of trends we have witnessed across virtually all of our clients (consumer, pharmaceutical, medical device), trends whose momentum has grown at a staggering pace. Before spotlighting those trends, though, a few more words about Bill Korn’s definition of strategy--from nearly thirty years ago now.
First and foremost, despite being written thirty years ago, we think Bill’s clear and focused articulation of strategy remains spot-on for today. While he leads with the concept that a strategy is not one idea but an integrated series of ideas, he leaves no doubt that the “necessary and sufficient” condition for anything calling itself a strategy is that it must be aimed at delivering a sustainable competitive advantage. The focus of strategy is always external not internal; and even more to the point, measuring the effectiveness, the success of any strategy lies squarely in documenting the degree of competitive advantage achieved.
We wanted to emphasize again the centrality of a sustainable competitive advantage to the concept of strategy because, if there is one over-arching theme to the trends suggesting strategy may be dead (or at least, dying) we’ve observed, it’s the abandonment of competitive focus, of winning versus the competition. For example…
- The proliferation of me-too products. Nowhere is this trend more apparent lately than in pharmaceuticals. Consumers in the US now routinely hear on TV about new drugs in an old class—such as diabetes or rheumatoid arthritis—drugs that have only one difference from others already on the market: their name. Sure, one can understand an Rx company wanting to recoup some of their investment in a drug finally receiving FDA approval. But why commission the company’s R&D team to develop a drug with no real or even perceived patient/physician advantage over competition in the first place? What kind of thinking engenders such development—“We don’t really need a competitive advantage to make some money?” Such thinking may result in a short period of volume and profit growth; but it definitely does not result in a sustainable competitive advantage—a strategy.
- The comfort with fair-share. As we have written in a number of previous DISPATCHES, it’s nothing short of astounding how rarely we hear any marketers talking about their plans to gain a dominant market share…to displace or de-throne a segment or market leader. It seems unnecessary for them to talk like this; all that’s needed is to simply get established as one of the “acceptable alternatives” in the market and to achieve and hold onto a share that is commensurate in proportion to the company’s marketplace investment. But then, with a me-too product why should anyone expect anything better than a fair share of the market?
- Obliviousness to competitive analysis and assessment. Does anyone in marketing take the time to infer the brand positioning strategy of their brand’s key competitors? For that matter, does anyone in their senior management demand a regular review of their competitor’s key strategies? And how about when a competitor introduces a new tactic—a promotion or perhaps a new communication? Does anyone infer and analyze the major strategic components of that tactic: the implied Target; the stated Benefits; the Desired Behavior from the Target; the legitimacy of any Insight behind it? For sure there is much talk internally about the “quality” of the tactical idea—good, not-so-good; done before, not been done before; BIG or not so big…but what about the strategy that drives the idea? Silence.
- Social media (tactical) obsession. Perhaps the single most telling trend of all that strategy is dead lies herein. Every brand now has added “Like us on Facebook” and “Follow us on twitter,” and a good many have fielded app after app and various related community-building programs…but we have yet to see any brand share a documented digital or social media strategy that conveys an integrated, competitive logic to them all. We don’t believe such strategies exist. Who has time to create one? Most marketers are simply overwhelmed by either (a) keeping up with the latest apps or connections available or (b) responding to their management’s intense pressure to “get something exciting going on social ASAP!”
A couple of years ago now a San Diego-based consultant named Denise Lee Yohn, writing in Brandweek about the downsides of the social media mayhem had this to say: “While there is no question that social media includes some very powerful communications platforms, we must not confuse tools with content. At the end of the day, the effectiveness of marketing is based on representing well the brand identity and positioning.” Positioning…the mother of all marketing strategy.
Richard Czerniawski & Mike Maloney
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