Monday, April 14, 2008

Analogy #172: Don’t Read the Label

Associate Professor Robert Austin of the Harvard Business School issued an interesting article today. It is the story of Thorkil Sonne and the company he founded, called Specialisterne.

Sonne is a Danish businessman. When his son was three years old, Sonne found out that his son had autism spectrum disorder, also known as ASD. He was told that ASD was a lifelong handicap, with no cure or treatment.

Although labeled as a handicap, Thorkil Sonne did some research and discovered that even though persons with ASD had limitations in some areas, they tended to have strengths in other areas. This was particularly true for those with a form of ASD known as Asperger syndrome.

Many of these ASD people prefer routine to novelty, exhibit a steady focus and are good with repetitive behavior patterns. As an entrepreneur, Sonne then tried to figure out how to put those skills to effective use.

Sonne knew that many software companies are good at developing software, but poor at testing software. Software testing requires an entirely different skill-set from software devlopment. As it turns out, many people with Asperger syndrome are ideally suited for software testing.

Therefore, Sonne created Specialisterne, a company to help others with their software testing. About 75% of the software testing consultants at Specialisterne have Asperger syndrome. The company is doing well and starting to grow internationally.

Most people label those with ASD as having a “handicap.” They see it as something bad—a limitation which has to be overcome. Sonne ignored the label and looked for the unique benefits which come from the condition—the ability to concentrate on repetitive tasks. He then turned this into a unique competitive advantage in the marketplace.

In the business world, we are often confronted with many situations which are quickly labeled as bad. However, as Sonne discovered, sometimes those labels are misplaces. Trait’s characterized as “bad” can actually be a competitive advantage.

Therefore, when designing a strategy, be careful how you initially label something. It may lead you astray and cause you to miss out on the hidden advantage within that negative label.

The principle here is to avoid rapid labeling of a situation as “good” or “bad.” In the initial phase of strategy formulation, it is better to just identify the condition, without adding a label. That way, you are not biased in your examination of the usefulness of that condition.

Items initially labeled “good” are not always that advantageous, and items initially labeled as “bad” can have strategic advantages. The longer we avoid these labels the more we can determine the true worth of a situation.

For example, there was a time when Heinz was receiving criticism about its Ketchup. People were upset because it was so thick that customers had difficulties getting the ketchup out of the bottle.

Heinz could have quickly labeled thickness as a bad thing and worked on making their ketchup runnier. Instead, they embarked on an advertising campaign to tell people that thickness in ketchup is synonymous with quality. The ads told people that thickness was an asset, and since Heinz was the thickest, it must therefore be the best.

Since it was already well known that Heinz was the thickest ketchup, it was a small leap for consumers to now bestow on Heinz ketchup an image of extreme quality. /This stroke of strategic genius further distanced Heinz from the competition and greatly strengthened the brand. The attribute which was originally labeled as bad (thickness) had suddenly become one of the brand’s greatest assets.

In an earlier blog, we looked at many other firms who turned things normally labeled as bad into something good (see “It’s in the Bag”).

In spite of all these examples, we can still fall into the trap of missing opportunities due to labeling items as bad too early in the process. Early labeling can blind us from looking for these type of opportunities. The strategic process itself can help contribute to this problem. For example, many people use the SWOT methodology early in their strategic planning. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The goal in the process is to quickly label characteristics with one of these four terms.

Once something is labeled as a “Weakness” or a “Threat,” strategic thinking moves to eliminate or diminish that trait. However, as we saw with Asperger syndrome and thick ketchup, items often called weak can provide a competitive strength.

Therefore, instead of using the SWOT tool, I would recommend something which delays the labeling until later in the process. So instead of putting things up on the whiteboard under one of these labels, just put them up on the board as a situation or characteristic. The initial goal is to get a complete picture of the situation you are dealing with.

Once you see the complete picture, one can think of a variety of strategic options (or scenarios) under these conditions. In some scenarios, a characteristic can be good. In other scenarios, that same characteristic can be bad. The best strategic option wins, and that option then labels the condition.

If one labels a characteristic too quickly as either “good” or “bad,” it may lead to sub-optimal strategy development. It is better to get the complete picture first while one still has an open mind. Then you have the flexibility to consider more options. This will typically increase the likelihood of choosing an optimal strategic option. So don’t rush quickly to a SWOT analysis.

Sometimes we can fall into the trap of thinking that because a trait can be bad for one company, it is bad for all companies. However, something that is bad for one firm can actually be good for others. For example, Wal-Mart tends to get into trouble whenever it aspires to be too upscale and fashionable. However, other firms have been extremely successful being upscale and fashionable. The idea here is not to label things in a generic sense, but to eventually label them as they specifically apply to your particular strategy.

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