Thursday, April 11, 2013

Strategic Planning Analogy #497: Managing Moments

When I started my first semester at the university, I was surprised how friendly all the students were. I had never seen such friendly people. I thought to myself that this was going to be a great experience. 

However, when I started my second semester as a freshmen, I noticed that the other students in my classes were a lot less friendly.  At first, I thought it was an odd coincidence that I just so happened to get friendly students in all my first semester classes, and unfriendly students in all my second semester classes.

Eventually, I figured out the real cause of the change. In my first semester, I was surrounded by other first semester freshmen.  We were all new to the university. Most of us did not have friends on campus because we didn’t know anyone there yet. Because of the strong desire to have friends, these first semester freshmen were acting aggressively friendly in order to fill that desire.

By the end of the first semester, these freshmen had made a sufficient number of friends.  The need was satisfied. Therefore, they relaxed in the second semester and were not as desperate to aggressively make new friends. Hence, they were not as “friendly” to me.

That is why, when I’m speaking to someone who is going off to the university for the first time, I tell them to be careful in choosing the classes and places where they hang out in that first semester. After all, the people you meet in that first semester are the ones most likely to become your lifelong friends long after university life is over.

When students first go to college, there is a brief window of time when they are aggressively seeking out friends. In a matter of weeks, however, that window gets closed.  Enough friends have been made during the short window of opportunity that afterwards the aggressive behavior goes away.  They are now less likely to work abnormally hard to make more friends.

Windows of opportunity also exist in the marketplace. There are brief moments of time when an individual is more open to creating new purchasing behaviors or preferences. Then the window quickly closes and they become “less friendly” towards changing those behaviors/preferences. Habit and routine takes over; and market share hardens like concrete.

There are many triggers which can cause these windows of opportunity to open. Moving to a new location, like a university campus, is one such trigger. Not only may you need to be more open to finding friends after moving, but you now may have to find a new grocery store to prefer, a new doctor, a new hair stylist, the best place to service your car, and so on. You are much more receptive at that time to consider new alternatives. But soon, you make all of those choices and the window of opportunity closes.

Other triggers which can open us up to abnormally high openness to change in behavior include getting married, having one’s first child, getting a big promotion, buying your first home, a change in a company’s CEO, a drastic change in the economy (up or down), revolutionary new technology which makes the status quo behavior obsolete, and so on.

Most strategic plans include a desire to change marketplace behavior to the benefit of the company/brand. Since triggers can have such a strong impact on susceptibility to changes in behavior, it usually makes sense to consider triggers as part of your strategic plan.

The principle here is that windows of opportunity are only open for brief moments. Therefore, finding ways to quickly identify and exploit these windows should be a priority in most strategies. If you wait until the third semester to make friends in college, you will probably end up with fewer friends than if you started in the first semester, when making new friends is easier. Similarly, if you are slow in reacting to triggers in the marketplace, you will miss out on the benefits inherent when windows of opportunity are open.

Here are three suggestions on how to better exploit triggers and windows of opportunity as part of your strategy.

1. Understand the Relationship Between Triggers and Your Business
Not all triggers are equally important to your business or your strategy.  Therefore, if you want to exploit trigger points and their windows of opportunity, you must first understand which ones are most important to your business, and why. It is only through understanding the relationships that you can properly determine which triggers to exploit, and how to exploit them.

For example, I know of a church that wanted to grow. It did research and found that the people most likely to consider seeking out a new church were those who were new to the community. That was their key trigger point.  Additional research showed them that the primary reason why people moved into their community was due to a job transfer. 

Therefore, the church built a strategy around seeking out and appealing to those with job transfers.  They took out ads in the airport (the place where many of these people first experienced the community). They formed close relationships with the companies bringing in the most new employees to the community. As a result of strategic actions such as these, many newcomers ended up choosing their church and it grew very rapidly.

So do your homework to learn which triggers to exploit as well as discover the best way to exploit the window of opportunity while it is open.

2. Prepare in Advance
Because these windows of opportunity may not be open very long, one needs to act quickly—as soon as the window opens.  Otherwise, by the time you figure out what to do, it may be too late. 

In a prior blog, I talked about how Caterpillar did a scenario analysis of what would happen in significant economic downturn. They calmly built what they believed to be the best course of action under such a scenario.  Then, when the great recession began, Caterpillar realized that the significant economic downturn trigger had occurred, so the quickly implemented the plan built for that scenario. 

The plan worked brilliantly because it was not hastily put together during a period of panic. When the trigger came, they pulled out the plan and implemented it immediately with full confidence.

Other companies, like Proctor & Gamble, were criticized for being too slow and indecisive when the great recession came.  And they suffered for it.

In another example, a friend of mine told me a story about beer in Chicago. Budweiser had been a strong competitor in Chicago, but sometime back around the 1970s or so, the Budweiser distributors suffered from a strike.  Old Style beer, a smaller player from out of town, knew a strike at Budweiser in Chicago was a potential trigger point, so they prepared for it. 

When the strike occurred, Old Style immediately flooded the market to fill the void. They positioned themselves as being the one loyal to the citizens of Chicago. They made close ties with the local sports teams.  They advertised aggressively to position themselves as Chicago’s beer. As a result, when the strike came, the former Budweiser drinkers (who now had to find a substitute) chose Old Style and many stayed with Old Style after the strike was over.  Old Style became the strong leader in the Chicago market. It took many decades before Budweiser regained the share lost due to the strike. All because Old Style was prepared in advance for the trigger.

3. Utilize Modern Technology
Thanks to the technological advances in “Big Data” crunching, and the data available due to social media, it has never been easier to find out when individuals have reached a trigger point.  One can now set up massive, yet finely targeted marketing campaigns to reach individuals precisely at the point when the trigger goes off.

I recently attended a big data conference and was amazed by how advanced the tools are becoming (and how the prices to use them are dropping). It would be foolish not to consider them as key tools in your strategic arsenal.

However, given privacy concerns and other such issues, one needs to be careful.  Back in February of 2012, Target stores got into some trouble for being too indiscriminate in the process.  Due to big data analysis, Target determined that if a customer suddenly started buying certain products (out of a list of 29 products), there was an extremely high likelihood that the person was pregnant. So once someone started buying these products, Target immediately went into action with their pregnancy and new baby promotions.

Unfortunately, one of these promotional packages ended up going to a young teenaged girl.  The girl’s father became irate and went to Target to complain.  But then, a few days later, the father apologized to Target because he learned in the interim that his daughter was indeed pregnant. Thanks to big data, Target knew before the girl’s father.

Since then, Target is more subtle in how they exploit the data.

The best time to convince people to switch allegiance to your brand is when people are most prone to consider making a change. Therefore, effective strategies can be built around finding and then exploiting the triggers which cause people to be more susceptible to changes in behavior. The best way to do this is by:

1.      Understanding the relationship of your brand to various triggers.
2.      Preparing in advance a strategy to exploit that trigger, so you can act upon it immediately.
3.      Carefully using all the modern big data and social media tools which make finding and exploiting trigger points easier.

Another thing I remember from my college days was that at the beginning of each school year, one of the beer companies would sponsor a huge free concert on campus. They understood that those first semester freshmen were not only making new friend choices, but new beer brand choices. Are you the one exploiting these types of windows of opportunity, or are you letting the competition get the upper hand?

No comments:

Post a Comment