Wednesday, March 28, 2012

Strategic Planning Analogy #444: Beware of One Choice

Imagine what it would be like if car dealers had only one model of car available to sell. Regardless of who I am or what type of one model they had, I’m sure the salesperson would have a rationale for why that was the perfect car for a person like me.

And if the next customer was completely different from me, that salesperson would have a rationale for why that same car was the perfect match for them as well.

In fact, I’m sure that salesperson would have a rationale for almost anyone as to why that was the perfect car for them. After all, he only has one model to sell, so he has to convince you that this is the model for you to buy. Even if it is really not the car for you.

Beware of the salesperson with only one choice.

Although car dealers have lots of models to try to sell you, there are many businesses which have only one or two items to sell. Included in that second list is often many business gurus and consultants.

Often times, they have had success with a particular business approach in the past. They’ve probably written a book about it. Now they want to use that same approach at your business. They are like the car salesman with only one car to sell. They will try to convince you that their approach is just right for you. They will point out their prior successes to “prove” that you should do it, too. After all, it is the only thing they have to sell, so sell it they will—regardless of who you are.

Of course, the problem is that businesses are a lot like people. They aren’t all alike. Just as there is no one-size-fits-all automobile, there is no one-size-fits-all approach to business strategy.

There’s a reason why car dealerships have a variety of models to sell. Not everyone needs or wants the same thing. And all businesses should not need or want the same strategic solution.

Beware the business consultant with only one choice.

The principle here is that there is no one best strategic solution for everyone. And that’s a good thing. After all, if there was only one strategic solution, then you would only need one company within an industry—the one operating that one strategy best. Everyone else would be an inferior redundancy. And if you are not that one company, then there would be no reason for your company to exist.

Fortunately, the variety within the marketplace allows for a variety of go-to-market strategies. This provides viable options for lots of participants.

Start With the Right Question
So, to begin the strategy quest, be sure to start with the right question. The wrong first question to ask is “What is the best strategy?” That’s a bad question because there is no best strategy. Just as there is no one best car for everyone, there is no one best strategy for all businesses.

The right strategy for a small entrepreneur may be very different from the best strategy for a huge Fortune 100 multinational firm. They have different resources, different strengths, different capabilities. Forcing them to take the same approach to achieve the same ends would be a mistake.

Instead, the right first question to ask is “What is the best strategy for my business?” The point is that who you are is just as important as what you do. There must be a fit between the two. Until you understand who you are in relation to the marketplace, you don’t know what moves make the most sense for your business.

Strategies are about finding places where you can win. If you are short, you will not win at basketball, no matter how successful basketball may be for tall people. You need to find the sport where your talents have the best chance of winning.

So if a business consultant comes in saying “I have the best strategy solution,” tell that consultant they are answering the wrong question.

Judge a Salesperson by their Questions
How can you tell if a business consultant is answering the right question? Check to see if their opening moves are more about telling or more about asking. If they immediately start out by telling you what must be done, this probably means that they have a preconceived notion of what is best and they are going to shove it down your throats whether it is appropriate or not (like the car dealer with only one car).

By contrast, if they start out by asking a lot of questions about your business and your company, then they realize that the best solution depends on how it fits with who you are. Therefore, they need to ask you a lot of questions about who you are in order determine the best solution for you.

This is what a good consumer-centric car salesperson will do. They will ask you a lot of questions, like how you plan to use the vehicle, what are critical concerns, etc. Only after they first understand your situation will they begin to make a recommendation.

Beware of “Proof by Example”
The one-solution consultant will often try to impress you with how superior their solution is via examples. They show how others used this process to great success. Therefore, it should work for you, too.

But here is the problem with examples. Yes, you can find examples of businesses which succeeded with a particular approach. But if you look long enough, you can find examples of companies which failed with that same approach. In addition, you can find examples of successes and failures for all of the approaches. Consequently, an example of a success by one company with a particular approach does not guarantee that you will have a similar success with that approach. And it doesn’t prove that you wouldn’t have even more success with an alternative approach.

That is why in the US, the law requires that advertisements for weight loss products must put a disclaimer on their examples and say that not everyone will lose as much weight as those shown in the examples. Otherwise, the examples can be deceptive.

I remember reading about a company which had an inferior product that most customers didn’t like. They received lots of complaints. However, one day they got a letter from a satisfied customer (their first ever). They used that one satisfied customer in their advertising, and sales rose dramatically (even though the product was still bad). Yes, it was an example of success. But it was not a fair representation of reality.

So beware of blindly accepting examples as proof of future success. Ask yourself how similar your situation is to the one in the example. Check to see if there have been failures. Find out what the differences were between the successes and the failures.

Leaders Aren’t Imitators
Finally, there is the concept of “first mover advantage.” The principle is that those who stake an early claim to a strategic position tend to have an advantage over late-comers. Early participants have a better opportunity to claim ownership of the position in the consumers’ mind, because the consumer has no preconceived leader already in their head. These early arrivers easily claim the customers looking for this position at a time when there is less competition.

By the time the late-comers arrive, customers are already satisfied with the early arrivals. The customers now already have a firm leader in their mind (one of the early arrivals) who owns the space. The late-comer has to work harder to steal away well-entrenched market share. As a result, the early arriver tends to be more successful.

If the business consultant is proposing an approach which succeeded in the past, that success may have been a result of first mover advantage. Others following in their path will be late arrivers and not see the same advantages. Therefore, the approach may not work as well anymore. I spoke more about this concept here.

If you want success, that often requires staking out new claims in new territories with new business models. And this won’t happen if you are always trying to imitate successes of the past. If you imitate the leader, then you will always be a follower. And followers rarely have the advantage. So beware of consultants who want you to blindly follow old rules and will not take risks to be innovative with you.

Strategic planning is a very personal thing. The right strategy depends on the particular company and their particular situation. It is not a one-size-fits-all process. Therefore, it can be a mistake to just pull a strategy “off the shelf” which worked for others and expect it to work for your firm. If you call in a strategy consultant to help you with your strategy, make sure they understand this principle. Become very nervous if the consultant has a preconceived notion about a single approach that they want to force on every client.

There’s a reason why car salesmen and consultants are often held in low esteem by society.

1 comment:

  1. This is my first visit here. I found some really interesting stuff in your blog especially this discussion. Keep up the good work.Strategic Planning