Monday, April 19, 2010

Strategic Planning Analogy #319: Take the “F” Out

At the exercise club where I work out, there are a series of TV monitors by the equipment, so that you can watch TV while exercising. Each monitor is set to a different channel. Some of the channels include a few of those political news cable channels.

It is interesting watching simultaneously how the different political cable channels report on the same news items. One would think they must be reporting from different planets, because their conclusions have absolutely nothing in common. Often, even their so-called “facts” of the situation have almost nothing in common. The “liberal” channels and the “conservative” channels each seem to live in their own little world.

I guess I shouldn’t be surprised. Emory University in Atlanta released the results of a political study back in January of 2006. Test subjects were given statements by a prominent conservative politician (a Republican) and a prominent liberal politician (a Democrat). The statements contradicted each other.

When shown these statements, both Democrat and Republican test subjects ignored the contradictions for their own party but saw the contradictions made by the other side. Worse yet, while going through the test, the test subjects did not show any increased activation of the parts of the brain normally engaged during reasoning. In other words, political opinions and mental reasoning appear to have nothing in common.

That explains a lot.

One part of the strategic planning process is fact-gathering. Different people place different levels of importance on the fact-gathering phase. As we talked about in an earlier blog, some people become obsessed with “fact-based decision-making” as being a top priority.

However, as we saw in the story, one person’s facts may be another person’s fiction. And even if we could agree on the facts, the story shows that mental reasoning regarding those facts may not occur. As a result, opinions and behaviors may have very little to do with the facts.

Therefore, when you are trying to develop a strategy to get consumers to behave in a particular manner (to your benefit), facts may be irrelevant. It may be more important to align yourself with a particular opinion segment (something like a political party) than to align yourself with the facts.

The principle here is that actions are more important than facts. Profit occurs when the right actions occur. Since actions are not necessarily determined by facts, then facts should not necessarily be the focal point of your strategy.

We need to get the “F” out. In other words, instead of focusing on “facts,” we should be focusing on “acts” (facts without the F).

This is not to imply that we should lie to our customers or intentionally deceive them. Not only is this wrong behavior, it is ultimately stupid behavior over the long haul. The global banking industry is feeling a lot of negative pressure and new restrictive regulations because of the perception that they deceived the public.

Losing the trust of your customer base can be a death sentence. And in today’s internet-connected, socially-conscious climate, bad corporate deeds always seem to find a way out into the public eye to your detriment. (Even if the facts aren’t 100% accurate, the damage is done).

Therefore, the idea is not to throw away the facts (and deceive), but rather to give higher preference to the mindsets in particular activity groups.

For example, let’s assume you want to sell lawn care products/services. You could dig up all the facts around the most productive way to care for a lawn, but this may not result in the ideal lawn care strategy. When you look at actions, what you will probably find is that there are two distinct types of actions regarding lawn care. One group hates lawn care—sees it as a burdensome chore—and wants as little activity as possible. Another group sees lawn care as a passion—like a pleasurable hobby—and enjoys their time in the activity.

The first group wants to do less than what the facts would say are ideally productive. The second group wants to do more than what is necessary. Neither is looking for the factually most efficient. Instead, a good strategy would be to pick a segment (no matter how “irrational” their actions seem) and appeal to the way they want to act. Either position your strategy as “the brand that minimizes the chore” or “the brand that enhances the satisfaction of the hobby.”

Another example could be cat food. If one were to look at the facts, one might come to the conclusion that the most appropriate food for a cat would be one that is high in meat, fat and bone meal. However, many of the people who put a high priority on their pets (and are willing to pay a premium to feed them) behave as if their cats were miniature people. They want them to eat what they believe is a good people diet, full of lean protein, grains and vegetables.

If you want these folks to act in a way that gets them to purchase your brand of premium cat food, you probably need to cave in to some of these pre-conceived notions and behaviors and put in some vegetables. This is like the political candidate who can only get elected by his party if he agrees to some of the party’s long-held notions.

So how can we apply this to the fact-gathering stage of strategic planning?

1) Put more emphasis on what people do than on what people say.
One of my favorite cartoons has someone going door-to-door taking a survey about what people are watching. One man goes to his door and tells the survey-taker that he only watches educational documentaries. In the background, you can see a TV set showing a low-brow comedy program. The moral of the story: Don’t believe what people say, but what people do.

This is why a behavior-based system to determine what people watch, like Nielsen (who has a box connected to your TV set) will get a more accurate reading than asking people what they watch (like in the cartoon).

The old joke used to be that nobody knew who Playboy was selling all those magazines to, since nobody claimed to be buying them. And if you did find someone who admitted to buying the magazine, they would claim they bought it for the articles, not the photos. If that were the case, why does Playboy bother to put photos in the magazine? Don’t trust the “facts” of what people say; trust the facts of what they do.

Rather than getting bogged down in endless pre-product scenario testing with consumers, get a prototype out there in the real world to test. One of the beauties of the digital age is that it is so easy to get a beta test out into the field. This allows you to get feedback based on actual activity.

If you want to develop a product to help people in doing their work, watch how they work at their place of work. If you want to improve the meal-making process in the kitchen, watch how people act in the kitchen.

2) Understand that different segments operate under a different set of “facts”—Pick One
Just as Democrats and Republicans seem to operate under a different set of facts, so do other segments. We saw this also in the lawn hobbyists versus the lawn-work haters. These segments have a different way of looking at the world.

It is nearly impossible to build a political position that would be equally loved by both Democrats and Republicans. They love totally different things. Similarly, it is nearly impossible to win by trying to pick a business strategy which tries to make everyone in the market happy. Broad middle-of-the-road strategies are rarely as successful as those which target specific segments or niches.

If you target a like-minded, similar-behaving segment, you can focus on specializing in exactly what they are looking for. You can appeal to their set of “facts.” You can speak their language. You can be a clear “winner” in the eyes of that segment. By contrast, if you try to appeal to conflicting points of view, you end up being the best option for nobody. So pick a segment for your strategy.

3) Interpret facts via a chosen filter
Once you choose a segment, try to see the world through their eyes. Filter the facts through the same filter they use. Don’t try to force them into buying what you think they should want. Give them what would make the most sense within their view of the world. Even something as simple as different views on lawn care can create heated battles among neighbors—as heated as political discussions. So don’t assume your business is too mundane to be beyond having different filters. Take heed or they may rebel against you.

The world is not a homogeneous mass of people sharing a similar point of view. Not only do we have different opinions, we often cannot even agree on the facts. Instead of being homogeneous, the world tends to cluster into a number of segments based on how one acts. Therefore, when designing a strategy, pay more attention to how people act than fretting over the precision of various facts.

Even if your targeted segment seems irrational, it only appears irrational because you are looking at the behavior through the wrong lens. Through their lens, it seems perfectly logical. Find the lens that helps you see the “logic” that they see.

1 comment:

  1. Gerald, I concur with your conclusion. People have different perspectives, emotions and feeling to the same issue. Emotions lead to actions; different emotions give different actions. Clustering of similar actions is the solution.