Tuesday, April 17, 2007

Mission: Unpredictable

Back when I was younger, I loved to watch the old TV show “Mission: Impossible”. Even though the plot was pretty much the same from week to week, I guess I liked that plot, because I kept tuning in.

Essentially, the plot every week went something like this: There would be a really evil person. This evil person would have very predictable patterns of behavior. Because the behavior was predictable, the Impossible Mission Force could devise a plan to use that predictability against the evil person. The evil person would naturally fall into the trap set up by the Impossible Mission Force, because the person’s predictable behavior would automatically lead them into it.

Every week, I would yell at the evil guy in the TV to stop and do something different for a change. I would try to tell him to quit being predictable and to break out of his routine. Yelling at the TV didn’t do much good. The evil person would remain predictable and the Impossible Mission Force would accomplish their mission.

The problem with being too predictable is that—-just like in Mission: Impossible-—people can use that against you. For example, I one time had a job developing the advertising strategy for a retailer. I soon discovered that most retailers are very predictable in their advertising. They tend to advertise the same items in the same way during the same exact weeks of each year.

Therefore, I mocked up an annual calendar which predicted what I thought each major competitor would do in their advertising on each week. Then I called together the top merchandising management and said, “Assuming that this is what the competition is going to do next year, what is the best counter-strategy for us?” It led to some lively discussions and some big changes to our own advertising calendar.

For example, most of the competitors had their biggest Christmas toy sale on a particular week. We decided to go out one week before that in order to capture the demand first, as well as to avoid the risk of them having lower advertised prices on the same items we advertised on the same week. Similarly, there were other times when everyone else was moving in one direction, and we moved in a different direction, to avoid dilution of demand among too many stores at the same time and to avoid the risk of pricing the same item too high in the same week.

At the end of the process we had a program that optimized our position relative to the competition—all because they were too predictable. I could not have been as successful had the competition been less predictable.

Strategies are developed to help you find the proper direction for your business. The goal is to consistently move your business in the direction of your strategy. However, there is a difference between being consistent and being predictable. Being consistent means that you are not wasting effort, because all of your actions are efficiently moving your firm in the same general direction.

Being predictable, however, means that the enemy will know exactly which path you are on, so that they can ambush you. The evil people on Mission: Impossible would always get caught, because they did not deviate from their predictability. The same can happen to your business if you become too predictable. This is not to imply that your actions should be random. Consistency is still important.

You don’t want to mix it up so much that people are confused about what you stand for, either. It is hard enough trying to develop a strong position in the minds of the customer even when your message is clear and consistent.

However, without a little variety in your actions, you can become dull and uninteresting to your customers. Worse yet, you can lose your edge and become vulnerable to effective attack from your competition.

In the Art of War, by Sun Tzu, he refers to this principle using the terms Cheng and Ch’i. Cheng activities tend to be orthodox, expected and predictable. Ch’i activities tend to be unorthodox, unexpected and unpredictable. Sun Tzu believed that to be effective in war, one must continually alternate between the Cheng (orthodox) and the Ch’i (unorthodox).

If all you do is the predictable (the Cheng), then the enemy can prepare and counteract it. If all you do in the unpredictable (the Ch’i), then your unpredictability in fact becomes predictable and the enemy can prepare for it and counteract it. Therefore you need random alternating approaches between the two—enough Cheng so that you get people thinking about you in a particular way and enough Ch’i so that you can take advantage of hitting them in area where they are not prepared.

According to Sun Tzu, you engage with Cheng, but win with Ch’i.

How does this apply to business? Think of Cheng as activities which reinforce your core strategic principle. For example, if your strategy is based on superior quality, then actions to promote quality are your predictable Cheng. Similarly, if your strategy centers around price or service, then price or service activities become your Cheng. You cannot abandon Cheng without abandoning the core position upon which your strategy rests.

Think of Ch’i as an action which provides an unexpected benefit to your offering which is in addition to your core benefits. For example, if you are known for price, yet can occasionally throw into your mix some great quality and service and still keep the low price, then you have upset the mental picture of your firm to be much more than mere price, taking people by surprise.

It is a mental game, where you try to build up enough expectations in one area so that your unexpected actions can have the maximum impact. With your enemy the goal is to unexpectedly gain market share at their expense while they are looking the other way.

With your customer the goal is to pleasantly exceed their expectations. If you always try to exceed expectations in the same direction, then the customer will just increase their level of expectations on that attribute, making it ever more difficult to just meet their ever increasing expectation levels. However, if your excesses come from an unexpected direction, then they cannot be overanticipated by the customer, so they remain true pleasant excesses over expectations.

When Home Depot started out, everyone expected them to have a large selection and low prices, because they were a big box retailer. And in fact, they did have a large selection and low prices. However, when customers entered the store, they were surprised to find out that Home Depot had hired experts in the field of home improvement who could give as much useful advice as that great (but expensive) local hardware store (in fact, many of the original Home Depot employees used to own or operate some of those local hardware stores). This was the unexpected surprise which created success. To paraphrase Sun Tzu, engage with big box tactics (price, selection) but win with surprising hardware store service.

It wasn’t until Home Depot started taking away the surprise that they started to slip. In the name of cost cutting (an expected big box attribute) they replaced these expert full-timers with part-timers who had less expertise. Now, Home Depot was just a boring big box store—good on expected attributes, but nothing more. Suddenly Lowes had more of the pleasant surprises. And guess where the buzz went…to Lowes.

In home improvement centers, being good at the core big box attributes (price, selection) was expected by the customer. Having them did not cause you to win (although not having them could cause you to fail). Winning came from the surprises—unexpected benefits not typically associated with a big-box retailer. To Frank Blake’s credit, as new CEO of Home Depot, he is trying to bring back the pleasant surprises.

I used to know a grocer who operated huge, high volume stores known for their low prices. Unfortunately, they also were sometimes known for having long checkout lines. If the lines got too long, the owner would sometimes break open some packages of cookies and make sure that the people in line had the opportunity to receive a free treat. He did it often enough to make a pleasant situation out of an unpleasant one, but not all the time, which would have made it merely expected, rather than pleasantly unexpected. He would engage on a regular basis with low prices, but win with the occasional surprise of treats.

If a customer knows that a store is doing exactly the same thing all the time, there is little reason for making an extra trip to the store. However, if the store is always doing some little thing a little bit different, people may be inclined to come to the store more frequently just to see what they are up to.

If a business finds a winning tactic and then repeats it all of the time, competition can just copy it and negate the benefit. However, if the business continually changes the surprise, competition cannot negate them, because by the time they find out what the other business is up to and begin to copy it, the other firm is on to something else.

Although a strategy needs to consistently reinforce the core attribute behind the strategic position, this is not enough. It is just the table stakes to be able to play the game. To truly win, this consistent reinforcement of the expected must be enhanced with a variety of pleasant surprises from unexpected directions.

Becoming too predictable allows competition to negate your benefits (as I did with the advertising strategy) and allows your customers to become bored with you. Don’t be like those evil people on Mission: Impossible or maybe I’ll have to yell at you like I used to yell at the TV set.

To save you time, I will unexpectedly not have a final thought today.

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