When I was a teenager, I wanted to get a great view of the annual Fourth of July fireworks display. I spent several weeks trying to find the right location. Eventually, I happened upon a secluded location next to the railroad tracks. It looked like perfect spot. It was up on a hill above where most of the crowd would be, so the view would not be blocked. It was a difficult location to get to, so many people would not know about it. Even if they knew about it, they probably wouldn’t know how to get there.
This was a great location, I told myself. Only one in a thousand people would ever think of trying to see the fireworks from here.
I was excited about the prospects of seeing the fireworks perfectly without having to fight the crowds. I wouldn’t have to get to the fireworks park several hours in advance just to get a spot. I would just lazily ride my bicycle up the hill at the last minute to reach my special spot next to the railroad tracks. The cleverness of the idea made me feel proud.
However, on the night of the fireworks, when I got to my “special” spot, I found it already crowded with other people who wanted to see the fireworks. “My” spot was already taken. Then it occurred to me that the city I was in had a population of 100,000 people. So even if only one in a thousand people would think of this location, that still meant that 100 people would have thought of it besides me.
I ended up riding my bicycle down the hill to fight the majority of the crowds in the park for whatever spot was left—and had a bad location for seeing the fireworks.
In the story above, I was trying to find the ideal position for seeing the fireworks. In strategic planning, one is also trying to find the ideal position—the best position for his or her brand in minds of potential customers.
The ideal spot for seeing the fireworks was one that had the following characteristics:
• A desirable position (for getting a good view of the fireworks)
• An uncrowded position
The ideal spot for positioning a brand tends to have the same characteristics:
• A desirable position for your intended customers (providing a benefit your customers are looking for and willing to pay for)
• An uncrowded position, where only your brand is seen as the obvious choice in providing this benefit, thereby making your brand the one selected.
One of the key goals in strategic planning is to find such a desirable position for your brand as well as:
• A means for obtaining that position in the mind of the customer; and
• A means for defending that position from attack.
In the story above, I thought I had found a clever way to obtain my position to see the fireworks by following a narrow bicycle path up the hill. However, when I got up the hill, I found out that I had no way to defend the position. Anyone who knew how to climb or ride a bicycle could also take the same position. In fact, they had gotten there ahead of me, preventing me from taking that position. This left me having to look for an inferior location.
The same problem can occur in strategic planning. You may think you have found the ideal strategic position for your brand. Unfortunately, you are never able to hold that position because others are able to get there first and you cannot stop them. Either that, or there are so many brands fighting for the same position that none of you end up owning it.
In our cleverness, we may think we have found a great and unique position for our brand. Unfortunately, it is very difficult to come up with an idea so clever that no one else will have thought of it. Even a one-in-a-million idea on this planet will have been thought of by over 5,000 people. It takes more than a clever idea to win.
Strategic planning needs to be more than just clever ideas or cute slogans. An advertising campaign may be a good way to communicate a position, but if that position is unattainable, unbelievable or undefendable, then it is nothing more than a clever phrase.
Good strategic positioning work goes beyond dreaming up mere superficial words. The true task of great strategic positioning is to build an entire system—including an infrastructure of competencies and capabilities—that make it possible for only your firm to win with that position. Ideas can be easily copied or stolen. Lots of people copied my idea of a position for viewing fireworks. However, copying an entire system for doing business in a particular manner is much more difficult.
Southwest Airlines did not succeed by just coming up with a clever idea to advertise lower prices. All other things being equal, “Low Price” is one of the easiest positions to copy. Instead, what Southwest Airlines did was create an entire system that resulted in a significantly lower cost of doing business. That system included such activities as:
• Using only one type of airplane, making repair and maintenance less costly.
• Limited Service: no seat assignments, no meals, no interline baggage checking, no premium service
• Simplified automated ticketing system
• Simple point-to-point flights, rather than complicated hub and spoke systems
• A different labor and compensation system
Unless you copied the entire system, you could not effectively compete with Southwest Airlines on price. However, even if an airline copied everything done in the Southwest system, they would end up alienating much of their largest and most profitable current customer base, the frequent business traveler. Hence, Southwest is successful because they built a unique system of competencies and capabilities that uniquely allows them the ability to hold a profitable position that others cannot effectively attack without:
• Having to totally reinvent their infrastructure (at great cost); and
• Having to lose much of their current profitable business.
Hence, it is not the cleverness of the positioning idea (low price) that made Southwest successful, it is the cleverness in building an entire strategic system that allowed only Southwest to effectively benefit from choosing that position. That is the difficult, but extremely valuable work of strategic planning
Strategic planning does not end after thinking up a clever position. That is just the starting point. The real work is in designing an entirely unique business system that makes your position achievable and defendable. If your position is based on having low prices, what can you do differently that others cannot effectively copy which will get you a meaningfully lower cost structure? This has to be something more than just doing the same thing that others do a little less expensively. To truly win at your position, you should be rewriting the entire thought process to create quantum leaps in cost savings.
For example, Michael Dell wanted to sell computers at a lower cost. Rather than copy the traditional system and try to do it a little better, he came up with a totally new way of doing business:
• Rather than selling through retail stores, he cut out the middleman and sold directly to customers.
• Rather than manufacturing a large inventory of machines to sell later (and have to cover the costs associated with holding that inventory), he got paid for each machine sold in advance and built the machines one at a time (no inventory). Not only did this allow him to save costs, it allowed him to build machines custom-designed for the customer, thereby increasing the value of the computer.
Hewlett Packard cannot match the cost savings of Dell on computers with their current system of selling through stores. However, if Hewlett Packard were to switch entirely to a direct model, they would alienate all of the retailers and resellers that currently account for all of their business, with no assurance that they would be able to replace all of that business by copying Dell, who already “owns” that position.
A similar approach can be used if your position revolves around higher service, better quality, or greater specialization/customization. To truly hold the position, one must do more than just tell people what your position is. One must also do more than just take a standard approach used by the industry and just execute it a little bit better than others. There is no guarantee that others will not be able to take that same approach and eventually do it a little bit better than you. Instead, you need to deconstruct the entire way you do business and then reconstruct it in a new way that creates a business system, which is meaningfully better and more defendable against competition.
Sometimes, instead of starting with the position and then developing the new system, it makes more sense to start by taking a look at who you are and what you’re uniquely good at. This might lead you towards finding a new system that only you can do. Based on the unique benefits of that system, it may dictate what is the best position to take.
One of the most important roles of strategic planning is to find the right way to position your brand in the minds of your potential customers. Finding the way to position your brand is more than just a coming up with a clever slogan. It involves developing all of the unique processes and competencies that are required to build the only business system that can effectively own and defend that position.
Clever positioning ideas are never as unique as one thinks and can be easily copied. Even a one-in-a-million idea will be discovered by over 5,000 people. On the other hand, clever integrated systems that synergistically support your position in a unique way are much harder to copy and much easier to defend. Building the integrated system that breaks all of the rules in your favor is the most challenging, but most rewarding part of strategic planning.
Over time, it has been shown that the advertising that wins the most rewards usually is not the advertising that is the most effective in selling products. Cleverness is not the same as effectiveness. In the end, the reward I want is a busy cash register.