Friday, January 2, 2009

Analogy #231: Where's the Finish Line?


What if every participant in the Tour de France bicycle race got to choose their own unique race course?  Some might pick flatter courses.  Some might pick shorter courses.  Some might decide to race in Canada rather than France.


If this happened, how would you determine who won the race?  With every racer having a different finish line at the end of a different course, that could be quite difficult.


Perhaps as a guide, we can look at the race for the presidency of the United States.  Not all of the candidates chose the same route.  Some entered the race early; others came in later.  Some candidates skipped the early primary states and focused instead on some of the later, larger prizes.  Some candidates charted their race through the internet more than others.  Some took a grass roots path while others went after the political party establishment.  Tactics, messages, and issues varied from one candidate to the other.  Sometimes, they varied for the same candidate from one month to the other. 


So how do we know who won?  It was the candidate that had the most cheering fans at their designated finish line.  That's the one who ended up in the White House.


So, to apply this to our Tour de France contemplation, perhaps the winner would be the cyclist who had the most cheering fans at the end of their designated finish line, wherever that might be.  Even if we weren't positive they won the race, at least we would know they won the hearts of the fans.



Strategic planning is very much a race—a race to a desired future position.  Whoever captures that position first gets to "own" that position and reap disproportionally higher rewards from the customers desiring that position.


This business race, however, is more like the hypothetical Tour de France in our story than the real one.  Each business determines its own race course and has its own finish lines.  Not every firm chooses the same desired position.  Not every firm tries to get to their position in the same manner.  Business strategies can vary all over the place.


So the question remains—how do you know if your strategy is a winner?  Check out the crowds at your finish line.  How many people have paid to see you cross that line?



Given the fact that the race of business has everyone on different courses with different finish lines, one should consider the following four principles:


1. Good Training and Good Execution are not Enough

If everyone were running the same course under the same rules, then the winning strategy would be simple—just perform better than the others on that course.  Your focus would be on training well and executing well. 


However, if everyone is running different courses in different ways, the task becomes exceedingly more difficult.  Not only do you have to perform well, but you need to choose well.  Since the race course is not given to you, you have to choose one.  Making the wrong choice for your course could be more damaging than how well you run the course.  Getting quickly to a bad destination doesn't qualify you for the winning Tour de France yellow jersey.  


So many times I have seen companies get singularly focused on the concept of "training and execution."  The idea is that if I can just perform a little bit better at what I am doing, I will win.   Just lower costs a little, raise quality a little, improve service a little, or lower prices a little, and I will do well.  In other words, if I run just a little harder, I can win.


This concept is flawed, because it assumes that you are running the right course.  In fact, you may be on a terrible course.  For example, I don't care how well you may operate a five and dime variety store.  It is an obsolete retail format.  The customers have left and are cheering on other retail formats, like discount stores, dollar stores, or supercenters.  To win, you first need to change your course to a retail format that is still viable in the marketplace.


Choosing the right course is just as important, if not more so, than getting the execution right.  Therefore, one's focus needs to expand beyond just performance and also concentrate on making the right choices for course and destination. 


2. Chasing the Competition is not always a Great Idea

If everyone is running the same course, then the goal is to chase the leader and overtake them, so that you can get to the finish line first.  The focus is how you are doing relative to the other racers.  However, if you have different finish lines in different locations, your position relative to competition becomes less relevant.


In most industries, there is room for more than one successful position (i.e., finish line).  For example, in grocery retailing, there can be success at being the lowest priced (like Aldi), the most convenient (7 Eleven), the best one-stop shopping experience (a supercenter), the best and most healthy food (Whole Foods), and so on. 


Each of these successful positions is pointed at a different finish line.  Whole Foods will not win its position by chasing Aldi, nor vice versa, because their desired end-states are in different places.    Each needs to stay true to their own path. 


Again, I have seen many companies lose because they were too focused on following the competition.  For example, I remember when Wal-Mart was first expanding to the east coast of the United States.  This was an area owned by Roses discount stores.  Roses saw that Wal-Mart had a winning strategy, so they tried to follow it.  Roses tried to copy everything Wal-Mart did, including repainting its store walls to the same color as Wal-Mart.  In the end, Roses had made itself into an inferior Wal-Mart.  When Wal-Mart came to town, Roses lost and quickly disappeared from the retail marketplace.  People didn't desire an inferior Wal-Mart (Roses) when they could get the real thing (Wal-Mart).

Roses made the mistake of running towards Wal-Mart's finish line (a race they could not win), rather than finding a course where they could win.


By contrast, when Wal-Mart expanded north into Shopko Discount Store territory, Shopko took a different approach.  It started backing away from aspects where Wal-Mart was strong and put more resources into areas where Wal-Mart was weaker.  The goal was not to beat Wal-Mart but to successfully co-exist by choosing a different course.  Now, twenty years later, Shopko still exists. 


The moral of the story is to focus on running your race, rather than the race of someone else.  Keep the eye on your finish line, not theirs.


3. Remember that Rules are Fluid

In the comic strip Calvin and Hobbes, Calvin invented a game called Calvinball.  The rules were simple:  a) no two games are to be played by the same rules, and b) you make up the rules as you go along.


In many ways, real life business strategy is a lot like Calvinball.  The environment is constantly changing.  Rules that worked in the past may no longer apply.  The cheering crowds may have moved to a new location. 


In this type of race, you don't just set the course once and forget about it.  Instead, you need to periodically make course adjustments.  You may need to put your finish line in a slightly different place.  In extreme cases, you may need to abandon the race altogether and start a different one.


Strategic planning is not a one-time event.  The end result is not a huge book detailing steps to be followed exactly to the letter.  Instead, it is a continual way of thinking about the marketplace so that your running gets you closer to your cheering crowd.  When the crowd moves, you need to move as well.


4. It's Most Important to Have the Crowds at the End of the Race  

Most great new innovative strategies start small.  This is because innovation implies change, and people tend to resist change at first.  Habitual established patterns can be hard to break.  However, great innovations do eventually win out over habit.


Therefore, do not be afraid when striking out on a new, innovative course.  If the innovation provides a clearly superior solution to customer problems, it has a great chance of winning in the long run.    


The important thing is not how many adoring fans you have at the beginning of the race, but at the end.  Barack Obama had very few fans when he started the race for President.  But at the end, when it counted, he had enough fans to win the election.


Therefore, choose the destination that is in the same location as where people are going, rather than merely looking at where they are today. 



Strategic planning is about winning a race for the future.  However, your race is not the same as everyone else's.  You need to find the course that is best for you.  Therefore:


1.  Spend Time Choosing the Right Course

2.  Don't Chase Competitors who have Chosen a Different Course.

3.  Be willing to modify your course in the middle of the race.

4.  Run to where the crowds are going to be.



A friend of mine invented his own Tour de France:  a bicycle race down France road in Minneapolis.  It may not be as big as the race in Europe, but at least it was a race he could win.

1 comment:

  1. Hello Mr Nanninga,
    I came to this blog from one of your comments on "Clay Christensen's Milkshake Marketing" on
    This is one of the most extensive, entertaining and informative blog.

    Thank you for sharing your insights and experience on this blog.

    It will take some time for me to read all articles but my understanding on strategy would be lot better after that.