Thursday, November 29, 2007

Analogy #134: Strategy is Like High School

In retrospect, academy award winning actress Meryl Streep does not look back on her high school years at Bernards High School in Bernardsville, New Jersey, as her fondest memories. She remembers it as a very superficial place, where external appearances were far more important than who you were as a person. It was a place full of cliques, where the ultimate quest was to become popular.

As Meryl saw it, popularity for girls had little to do with accomplishments, but with how pretty you were. This was especially true if you were trying to impress the high school boys. Who you knew meant more than what you knew. Minority positions or points of view made popularity even more difficult.

However, when Meryl Streep got to college at Vassar, her eyes were opened up to a new and glorious world. In college, it seemed like everyone was accepted, regardless of looks or points of view. People were encouraged to express themselves without fear of rejection. Hard work was rewarded. Minds and talents were nurtured. Anything seemed possible.

Meryl loved college life so much that after graduating from Vassar, she continued her education with three years of graduate work at Yale. By this time, she was feeling strong and self-confident, a welcomed departure from those insecure and superficial days of high school.

However, when she left college and entered the work world, Meryl was shocked and disappointed to find that the real world was much more like high school than college. The battle returns to trying to fit in. Looks and popularity mattered big time. Holding contrarian views would get you in trouble. Experience or excellence was not normally rewarded. Whereas college life gave Meryl confidence that she could successfully tackle almost anything, she found the real world to be “vast and impossible,” where “resigning oneself, or hiding and hunkering down becomes the best way of getting along.”

In many ways, Meryl Streep is correct in her conclusion that the real world is a lot like high school. This applies to the business world as well. Success in business comes by using many of the same tricks learned to become successful high school. If your business is popular and fits in with the right crowd, your firm can be successful. However, if your company is seen as “uncool” and rejected by the popular people, then you will typically have problems.

Therefore, many of the strategies you used to cope with high school will also work in the business world (with only a little bit of tweaking).

The principle here is about finding ways for your firm to “fit in.” Applying the rules of high school, there are three steps to fitting in:

1) Pick a Clique
2) Look and Act the Part
3) Manage the Gossip

These three rules are briefly discussed below.

1) Pick A Clique
High Schools are full of cliques. There are the Jocks, the Nerds, the Goths, the Druggies or other assortments of peer groups. When in high school, one of the first things one learns is the need to find a way to fit into one of these groups.

The marketplace of business is very similar. Customers are not a homogeneous group. Some customers are just interested in the lowest price. Others are looking for status. Still others may be service-oriented, wanting to be waited on. You can think of these different customer segments as being like the cliques in high school.

In high school, one learns that it is nearly impossible to be popular across a wide variety of cliques. In fact, if you are accepted into certain cliques, it almost by definition means that you will be rejected by other cliques. It is just the nature of cliques to reject those who act contrary to the norms of their little group. But that was okay, because as long as you fit in and were accepted by one of the groups, you could put up with the rejection of the other groups.

This is also true in business. The goal of a business is not to try to make everyone happy. Not only is this impossible, but counterproductive. Rather than trying to become acceptable to all, a better strategy is to become loved by one of the consumer cliques. Even if the love of one group means you are hated by others, that’s okay if the group that loves you is large enough to make you profitable. This topic was covered in great detail in the blog “The Opposite of Love.”

So step one in the strategy is to pick a clique where you can fit in and become loved & accepted. For example, Apple decided it wanted to be accepted by the “cool kids.” They don’t mind that they are rejected by people who are most interested in low prices or business functionality. Similarly, Nike decided it wanted to be accepted by the “jocks.” They don’t mind if they are rejected by couch potatoes.

2) Look and Act the Part
Once you pick your clique, you need to live by the rules of the clique. You have to embody the essence of what the clique stands for. You have to win the popularity battle for being the first company to come to mind when one thinks of the clique.
In high school, this meant living and acting and dressing and looking and thinking like everyone else in your clique. In business, this requires a go-to-market strategy which:

a) First understands what is most important to the essence of what the clique stands for; and then
b) Makes strategic choices which place you closest to delivering that essence.

Wal-Mart wants to appeal to the clique of people who are most interested in saving money. Therefore, every decision at Wal-Mart is made in that context—does my choice of action serve to increase my ability to deliver low prices.

Similarly, Apple wants to be popular with the cool crowd. Therefore, you will never see Apple produce a product that is primarily concerned with achieving the lowest price. To achieve the lowest price, Apple would have to make compromises with product design, limit the functionality, and make it dull and cumbersome to use. This is contrary to what their clique wants and could cause their clique to reject Apple, because it “no longer fits in” to what they deem important (coolness). Apple’s television commercials (Mac vs. PC) are specifically designed to enhance the coolness of Mac.

3) Manage the Gossip
An old friend of mine once said that no matter what you do, people are going to talk about you behind your back (and a lot of what they say will not be flattering). Since you cannot stop them from saying bad things about you behind your back, the best you can do is try to control the nature of the way they speak poorly of you.

In the case of my friend, he did not want others saying things that would question his competency or his loyalty, so he tried to find something less dangerous for them to criticize. He chose eating habits. He would make a show of eating too much at a single meal in their presence. Then he tried to position that as the acceptable way to criticize him.

In high school, we referred to this as gossip. Gossip was everywhere in high school. You couldn’t stop it. However, if you worked at it, you could manage it to be less damaging.

Advertising can be an important part of a business strategy, but attention to public relations and word of mouth may be a better way to manage your company’s gossip. Do you check out the web sites to see what the gossip is about your company? Do you try to manage the “buzz” around your strategy? How good are you at viral marketing?

A great strategy is worthless if nobody understands it, or if the “word on the street” is against you. Winning in high school was all about image. The more you can manage the gossip, the more you can improve your image.

If you understand your weaknesses, you can inject into the negative gossip some neutralizing factors. Listerine knew that people hated its taste. They neutralized this by telling people that the strong taste meant it was a strong and effective product. Their slogan was “the taste you hate twice a day.” This turned the negative into more of a positive.

Or take the deep discount limited assortment grocer Save-A-Lot. The stores have a poor selection and no ambiance. But they do have very low prices. In its advertising, Save-A-Lot would admit to not having all of the niceties of the fancier supermarkets (for example, proudly proclaiming that they do not have live lobster tanks). But then they would say that all of those niceties serve to raise costs. By eliminating them, they are able to pass on the savings in lower prices. In essence, they used their negative as “proof” as to why they can offer lower prices.

The business marketplace is a lot like high school. Therefore, the tricks of getting through high school can also work in developing your business strategy. The steps are to pick a clique, look/act the part, and manage the gossip.

Although Meryl Streep may not have enjoyed the superficiality of high school, she was smart enough to know how to play the game. She focused on her appearance, became a cheerleader, and ended up being popular enough to be named homecoming queen. She was then able to apply those skills to be successful in the superficial world of Hollywood. So even if you don’t love it, you can still do it.

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