Friday, March 30, 2012

Strategic Planning: Business as the New Government

Back in February, Peggy Noonan wrote an editorial in the Wall Street Journal about how enthusiasm for politics is declining in the US. In what many political pundits feel is an historic election year the US, the public is not all that engaged with the process.

According to Peggy Noonan:

a) Voting in primaries tends to be down compared to prior elections;
b) News viewership drops when election stories air;
c) Political stories on the web are not getting many clicks (far less than other news);
d) Cable news ratings aren’t going up as normal in an election year;
e) Viewership of the President’s speeches is down.

People in the US just don’t seem as interested in politics as before.

I have a theory about this. It goes back to the business principle of “Solution-Selling.” The idea is that consumers don’t really desire products. What they really desire are solutions to problems. Products are only the means to that end. And as soon as people are convinced that there is a better way to solve a problem, they will abandon the old products and go with the new alternatives offering the better solution.

A perfect example is weight loss. Most people really don’t desire exercise or diet or surgery. What they really desire is losing weight. Whatever method promises to be the fastest, easiest, most convenient and least costly way to lose weight will win. That’s why there are so many weight loss fads. People keep switching to the next fad in hopes that it will provide a better weight loss solution. I speak more about this solution-selling concept here, here, here and here.

I believe that a similar situation is occurring in politics. Yes, there are those political junkies out there who love politics as much as football junkies love football. However, for most people, politics in and of itself is not a desire. No, people are looking for solutions for life and for society.

For a time, politics and government appeared to be the best solution for solving many of these problems. However, I now believe that there is a growing movement towards the idea of a better “product” for solving those problems. That better product is a combination of social media and business.

As an example, I’d like us to consider sustainable fishing. There are many who believe that if you keep taking more fish out of the ocean than the replenishment rate, that eventually you will run out of fish. Therefore, there is a movement to support fishing practices which are more sustainable over the long term.

Trying to solve this problem via government is extremely difficult. The oceans don’t easy fall under government rule. There are many different vested interests in different countries, so universal compliance would be difficult. Even if you could get all the governing factors to agree to laws and standards, they would be nearly impossible to enforce, making the laws relatively worthless.

Now compare that to what has recently been happening. Social media pressure has been placed on the large companies which purchase the most fish. As a result of this pressure, many of these companies have enacted policies to only purchase fish from those who practice sustainable fishing. It looks like this pressure has impacted a critical mass of large fish purchasers (like Wal-Mart and Supervalu). The market equilibrium has shifted.

The fishing world is now faced with a dilemma. If they want to sell the fish they catch, they are more likely to do so if they practice sustainable fishing practices. It is in their best interests since that is what the largest customers demand. It is self enforcing.

Now compare the two alternatives to solving the sustainable fishing problem—government versus social/company. To me, it is a no-brainer. The social/company approach is faster, more efficient, and easier to enforce. So following the principles of solution-selling, market share should flow from “government as solution” to “social/business as solution.”

Hence, the decline in political interest. The people have found a better solution for many of their problems.

If this is true, the implications for business are enormous.

Expectations Have Changed
First of all consumer expectations have changed. An ever growing number of consumers now expect that businesses will take up some of the responsibilities formerly handed off to governments. They expect businesses to not only be good citizens, but to be proactive in using their clout to right many of the wrongs of the world, like sustainable fishing, reducing environmental waste, helping the poor, etc.

You see this in how the millenial generation acts. They are increasingly more interested in the social activity of the companies they choose to work at or purchase products from. The largest economic generation is using their clout to bend the businesses to their point of view. It is all expected as part of the new normal.

There is Nowhere to Hide
And if a company chooses not to comply with these new expectations, it will become known. In today’s society there is no place to hide. People will discover your actions (or lack thereof) and broadcast them across the social media spectrum.

Within literally moments, a groundswell of discontent can be pointed against your company. Remember, this social media helped topple heavily entrenched governments in the Middle East. Don’t assume you are so heavily entrenched that the social forces cannot “topple” your business.

This is serious stuff.

Your Strategic Plans Must Reflect the New Reality
If the new expectation is that businesses are supposed to take up responsibilities formerly given to governments AND failure to comply can lead to nearly instant and massive retaliation, then your strategic planning should reflect this. It needs to be at the discussion table.

First of all, one needs to determine which formerly governmental responsibilities they will pick up. This can be tricky, because of two factors. First, not everyone wants the same outcomes. As we have seen in the news, stands regarding contraception, homosexuality, and Planned Parenthood can create controversy no matter what you do. Therefore, be careful about the issues you choose to fight for.

Second, there can be unintended consequences to your actions. For example, Target Corporation decided to take a stand to promote the growth of business. Therefore, they made contributions to candidates pushing a pro-business agenda. Unfortunately, one of those individuals—in addition to their pro-business stance—also had a strong position on one of those controversial issues mentioned above. Word got out that Target was supporting one of these controversial issues because of their support for this candidate. The social media’s anger was pointed at Target. All for the wrong reason.

Then, you need to determine how to use your corporate clout to affect change. This is also equally tricky for many of the same reasons.

These decisions are easier if you understand your customer and understand how to use issues to reinforce one’s strategic positioning. For example, Wal-Mart’s position is about lowering prices for people who cannot afford to pay more. Wal-Mart has chosen to fight environmental waste. The connection is that environmental waste increases costs. If Wal-Mart eliminates environmental waste, they can afford to make prices even lower. In theory, it becomes a win for everyone—the environment, the customers, and Wal-Mart.

There appears to be a rising tide of opinion that the social/company approach can provide a superior solution to major problems better than the political/governmental process. As a result, companies are now expected to take on some of these governmental roles. If your strategic planning ignores or downplays this new role, you may suffer grave consequences.

Consumers are angry over their perception of the “do nothing” congress. Don’t follow in their path and get the perception of being a “do nothing” company.

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