In the last blog, we looked at a comparison between the Emergent view of strategy and the Positioning view. I explained why I prefer the positioning view. In today’s blog (part 2), I will explain why I think the emergent point of view also makes some good points and how to incorporate them into a positioning framework to get the best of both worlds.
The Issue
The emergent position brings up two good issues. The first has to do with sustainable
competitive advantage. The positioning
school tries to find positions which provide sustainable competitive
advantages. The emergents respond that
sustainable competitive advantages are becoming increasingly more difficult to
create, so finding those types of positions can be a more futile undertaking.
First is the “sustainability” part of the phrase. In a seemingly ever faster changing
environment, very little appears sustainable.
So if change is constant, why seek sustainability?
Then there is the “competitive advantage” portion of the
phrase. With rapid change comes frequent
upgrades and frequent obsolescence. It
makes any advantage very temporary. It
is like a ping pong game, where the ball keeps bouncing from one side to the
next—first side A has the advantage and then side B has the advantage, then
side A regains the advantage, and so on.
So instead of trying to achieve lasting advantage, emergents just try to
stay in the game by responding with their ping pong paddle in a way to keep the
game alive.
The Solution
Is this phenomenon a concern? Yes.
Is the problem as dire as the emergents believe? I don’t think so. First of all, this is not the first time
rapid change has occurred in business. We’ve
gone through the industrial revolution, the widespread adoption of electricity,
the movement to a knowledge-based economy, and so on. Yes, there is some turmoil during the
transition, but companies with a good strategy find a way to make it through
the transition.
The solution is to change the focus of where one looks for
advantage. Even when many things are
changing, many others stay the same. In
particular, when products and technologies are changing rapidly, basic human
needs and desires still stay the same. There
is always a segment wanting low prices.
There is always a segment wanting status. There is always a segment wanting
convenience. There is always a need to
feel loved or appreciated.
Now the means by which these constants are achieved may
change. The core solutions do not. So the solution is to find positions which
are not tied to particular products, but to enduring solutions. For example, Wal-Mart positioned itself around
the enduring solution of offering low prices.
Now the way it has done this has changed. It started as a discount store. When it looked like wholesale clubs could
provide lower prices, they opened up Sam’s Club. When it looked like supercenters could
provide lower prices, they aggressively replaced discount stores with
supercenters. When it appeared that
building a more sustainable and eco-friendly supply chain could lower costs and
prices, Walmart aggressively went in that direction.
The point is that Walmart’s low price position gave them an
anchor. As the world was changing around
them, they did not panic. They just kept
migrating to wherever that position could be best met. And through that singular focus, they were
able to reinforce that position with the customers and become continually
stronger.
Bausch & Lomb was in the lens business, but they focused
their position on the end solution—better sight. As a result, they migrated in to contacts,
eye surgery equipment and eye enhancing vitamins. Yes, the product changed radically, but
because of their focus, they knew what had to be done to stay relevant. They found a place where they could
differentiate and win.
Apple keeps changing their offering, but each offering is
true to their position of selling cool, easy to use interfaces between people
and their data.
Without these positioning anchors, the myriad of strategic choices would overwhelm a company. You cannot do it all. You have to focus. You have to make trade-offs. And these enduring positions help light a path within the confusion of change. In fact, they can help you better anticipate where to go, due to that focus. Without it, you are always trying to catch-up to whatever looks hot today. And by the time you match it, the world has moved on to the next hot item. You never get ahead that way.
Another positioning approach to take is to create a position
around speed and flexibility. The
emergent view is to always be racing to keep pace with change. If speed and flexibility are so important in
a rapidly changing environment, wouldn’t building excellence around speed and
flexibility be a great position? Build your positioning trade-offs around speed
and flexibility, so that you become faster and more flexible than those who do
not make those trade-offs. This position
actually makes rapid change an advantage for your position.
The Issue
The second key point emergents make is that businesses are
losing control of the interaction with their customers. The power is shifting to the consumer. Social media and web 2.0 have given the
consumer more of a voice. They are
having a greater say in how products are designed and marketed.
If consumers are gaining a greater control over the
conversation, then emergents would say that consumers are gaining greater
control over a company’s position. If
that is the case, then a company can no longer rely on managing its business by
managing its position. Instead, a
company needs to chase where the consumer conversation is going and whatever
emerges from that is the strategy.
The Solution
Well, this is true to a point. And
that point ends when you shift from incremental strategy to transformational
strategy. Consumers can be great critics
of the status quo. They can tell you
what is wrong with a product and how to incrementally make it better. However,
they tend to be quite bad at voicing opinions about transformational issues
which go beyond what the consumer has experienced.
This is because a) most consumers are too busy living their
current lives to spend time dreaming up all the particulars around the business
model for the next big thing; and b) if they have no experience to relate to,
then they have trouble getting their arms around it and give an accurate assessment.
That is why Henry Ford supposedly said, “If I’d asked my
customers what they wanted they would have asked for a faster horse.”
That is why Steve Jobs supposedly said, “You can't just ask
customers what they want and then try to give that to them. By the time you get
it built, they'll want something new.”
And when commenting on what kind of consumer research Apple did for the
iPad, Jobs said, “None. It is not the consumers’ job to know what they want.”
So if you want to remain in an approach to strategy which is
only incremental, then perhaps the idea of following the customer makes
sense. But if you want to transform the
world like Henry Ford or Steve Jobs, it would seem that following the customer
is a poor choice. Instead, you still
need to lead the customer and be pro-active in what you do. And if the world is moving as fast and
creating as much obsolescence as the emergents proclaim, then I think the
transformation approach is even more important.
And that means that significant control is still in the hands of the
successful companies.
Although there is good and bad in both points of view, that does not give an excuse to abandon all approaches to strategy. It is still worth doing.
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