Tuesday, July 8, 2008

Analogy #192: Pick a Pew

Back when I was a young boy, my family took a summer vacation to New England. One of the places we visited was a church which claimed to be one of the oldest churches in the US still in operation.

One of the things that I found interesting was the fact that the many of the church pews had names engraved on them. The tour guide said that the in the old days, the wealthy people would donate large sums of money to the church. In return, the church would put your name on a pew. That spot became your spot in the church, and was where you were expected to sit during the church service.

The more money you gave, the more prominent your location. It sort of reminds me of the luxury suites at the sports stadiums, where wealthy corporations can buy the best seats at the stadium.

I figure there were some disadvantages to everyone knowing where you sat at church. First, everyone would know if you didn’t show up. Second, it would be hard to just sneak into the church late.

In many ways, having engraved assigned seating at church also created some advantages. First, you didn’t have any trouble finding a spot, since one was reserved for you. And everyone knew where everyone was, so it was easy to locate each other. There was also a sense of orderliness and predictability.

Good times in business also tend to follow this same pattern. Everyone knows who you are and where you belong. You have a special position in the marketplace which belongs to you. None of your competition can take your seat. The more you invest, the more prominent your position. There is stability and order.

Sometimes, I am asked to explain good strategy in as few words as possible. On those occasions, my response is this: “Pick a pew and then sit down.”

By “pick a pew,” I mean that strategy is first about making good choices about where to locate yourself in the marketplace. Just as there are lots of pews in a church, there are lots of positioning options in the marketplace. And just as some pews are better located than others, so some business positions are better than others.

It’s virtually impossible to stand for everything in the marketplace. Typically the best approach is to find a more narrow set of attributes where one can excel, rather than being mediocre at everything. You have to make some tradeoffs and choose to narrow your sights on specific location where you can win. We talked about this in detail in the blog “Strategy is Like Barbeque Sauce.”

Les Wexner of The Limited uses the term “best at.” What are you best at? If the marketplace cannot quickly and uniformly mention what you are best at, then you have done a poor job of picking your pew. Your position should be so easily identifiable that it is as if your company’s name is permanently engraved on that pew for all to see.

If you haven’t picked out and staked a claim to a pew, then you are stuck with whatever is left. Rarely is that a prime location. The same is true in business. So step one is to make that choice: finding the best unclaimed pew for which you have sufficient resources to secure. In other words, “pick a pew.”

The second step is to “sit down.” By this I mean that businesses need to settle into that position. As an old consultant once told me, “Great positions are hard to find. Once you get one, ride it for all it’s worth.” If a company keeps moving around, it will confuse the marketplace and the employees. Nobody will really give you strong credit for your position, because it changes too often.

If you move around and try to sit everywhere, you will end up sitting nowhere in the minds of the marketplace. However, if you stick it out for the long haul in the same location, everyone will instantly associate you with that location. That strength of image can then be used to extract additional value out of the marketplace.

Apple picked the pew of elegant innovation. Whatever Apple introduces is a great, highly functional innovation encased in sleek design. People who desire this give Apple so much credit that they are willing to pay a premium for the privilege of owning an Apple product. New products are accepted quickly because of the reputation consistently built over time.

If Apple walked away from its pew and started to litter its portfolio with “me, too” products in ugly packaging, it would ruin that image. Customers would stop trusting what Apple stands for. New “innovations” would be met with more skepticism. Profits would drop.

When you sit down in your pew, you are firmly and clearly staking claim to that spot. Nobody can take that spot away from you unless you stand up and walk away from it. The more clearly you can communicate where you have chosen to sit the better (see “Clarity”).

Sitting down does not mean that you have to do the same thing forever without change. Apple has transformed its business in many different directions over time. The secret is that every transformation is consistent with the chosen pew—elegant innovation, be it in computing, music, cell phones or retailing.

Wal-Mart picked the pew of low price and has sat there for more than 45 years. The way it delivers that low price has changed from discount stores to supercenters. In addition, Wal-Mart has created many new supply chain innovations to improve its ability to deliver low prices. Even its recent efforts in environmentalism are rooted in eliminating the environmental waste which drives up costs.

Because of the strength gained from sitting in one place for so long, when the economy recently weakened, customers who became more interested in low prices instantly knew where to go. They went to Wal-Mart in droves.

So the principle here is not to continually change your position at every whim. Sit down in one spot and work on improving your ability to deliver that position. Intensification beats meandering every time.

Good strategy can be defined as simply as “Pick a pew and then sit down.” In other words, choose a position and then stick with it, always trying to intensify on one’s ability to deliver on that position.

I’ve seen people fret so much about picking the right pew that they never truly make a choice. The fear of making the wrong choice paralyses action. In reality, there are usually many viable positions in the marketplace. Just pick one and stop second-guessing yourself.

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