Analogy #211: Killing With Good Intentions

THE STORY
When I was a very little boy, I got sick. The doctor prescribed medicine to help me get better.

After taking the medicine, I continued to be sick, so my father told the doctor the medicine wasn’t working. The doctor responded by increasing the dosage. After taking the increased dosage, not only did I not get better, I got worse.

So we went through a few more rounds of upping the dosage until I was very, very ill, coughing up lots of blood and all. There was some concern about whether or not I would survive. Then my dad decided that perhaps it was the medicine which made me ill, so he stopped giving it to me. Not too long thereafter, I became healthy again.

Nowadays, when a doctor or nurse asks me if I have any allergies they should know of, I am quick to tell them not to give me any of that medicine I had as a child.

THE ANALOGY
One of the core foundations to success in medicine is an accurate diagnosis of the problem. If you diagnose the problem incorrectly, you will take the wrong course of action. In my case, the doctor had incorrectly diagnosed my symptoms as being related to the disease rather than a reaction to the medicine. His prescribed solution—increasing the dosage of the medicine—almost killed me.

The symptoms of sickness in a business are usually easy to see—financial losses, large decreases in sales, loss of market share, inability to pay the interest on the debt, and so on. However, just because one can see the symptoms of sickness in the business does not automatically mean that you know how to cure it. You may guess wrong, like my doctor did, and actually do more damage than good.

Any fool could have seen that I was very sick…you didn’t need a medical degree for that. But the one with the medical degree did not know how to cure me, which put my long-term survival at risk.

Victory comes not from identifying the symptoms, but rather from knowing how to remedy the underlying cause of the symptoms. Identify the right cause and then you can prescribe the proper strategy.

THE PRINCIPLE
The principle here is to focus on curing the underlying cause, rather than the symptoms. For example, a symptom of a problem may be poor sales. If you only focus on eliminating the symptom (poor sales), you may conclude this is a marketing problem and pump up the advertising. Unfortunately, this may be exactly the wrong thing to do.

In a prior blog, we looked at what happened when Wendy’s had the “Where’s the Beef” advertising campaign. It was one of the most successful advertising campaigns ever, if measured by recognition. And in the near-term, it brought a lot of traffic back to Wendy’s. But for Wendy’s, that prescription of using those ads almost killed the patient.

You see, the real disease was that in-store operational discipline had deteriorated to the point that the in-store dining experience was awful. All the advertising succeeded in doing was get more people in to have a bad experience sooner, so that the image got worse more quickly. Those ads were as helpful in fixing the problem as that medicine was for me as a child. It was making things worse.

Eventually Wendy’s figured out what the real disease was and improved the in-store dining experience. It was only after fixing the underlying problem that the company was able to improve. Therefore, when designing strategies, build them around underlying issues instead of just surface symptoms.

In general, there are only three main underlying issues to focus on. If the surface symptoms look sickly, they can usually be cured by repairing one of these three issues.

Issue #1: A Reason For Being
Winning strategies start with a winning position—a reason why someone should prefer you over all other alternatives. You need to own a uniquely desirable solution in the marketplace. If you cannot quickly and easily describe why you are the obvious choice in particular area, then don’t be surprised if customers fail to choose you.

I’ve seen many companies try to avoid this positioning issue. Usually, their argument goes something like this: “Sure, I won’t have the leading market share, but if I can just get about a 5 to 10% share, I should be able to do okay. And to get a 5% share, all I need to do is be a credible alternative.”

The problem is that usually there are a dozen or so firms looking to get that 5 to 10% share, and once the market leaders are done getting their 50 to 60% share, there aren’t enough 5 to 10% wedges in the market share pie to satisfy all of those dozens of firms. Just being credible is not enough. You need to have a winning position of leadership with a niche group in order to get even a small share.

K Mart has a lot of bad symptoms and one can use a lot of tactics to try to eliminate those symptoms. However, K Mart’s real problem is that they no longer have a great position—a reason for being. Until that root problem is fixed, the rest is wasted effort. That’s why just putting some Sears brands into K Mart or putting a talking light bulb on TV won’t get the job done. The bad symptoms will remain at K Mart until a strategy is put in place to repair the POSITION.

On the right of this blog, there is a listing of blog topics I have covered. If you click on “Positioning,” you can learn about ways to cure this problem.

Issue #2: Not Delivering on the Promise
A great position is only great if consumers are satisfied that you are superior in delivering on the promises inherent in that position. Home Depot’s early success was based on an encirclement position: Best Assortment, Best Prices, and a High Level of Personal Service.

Over time, Lowe’s tended to neutralize the assortment and price superiority Home Depot once held. In addition, Home Depot lowered its standard for service in order to save money. As a result, Home Depot was no longer winning on the promises behind its position. Therefore, all sorts of bad symptoms started to appear.

It took awhile (and a change in CEO’s), but eventually Home Depot figured out that to fix the symptoms, they had to return to delivering on the promises behind the position. Superior service is once again a priority. The symptoms are starting to get better.

Make sure your position is more than just hollow words. Have your strategy look for ways to increase your ability to “own” your position by pushing the envelope. Increase the distance between your level of delivery and the rest of the market. In addition, before tweaking with your business model, think about the long-term implications it may have on your ability to hold your position. Skimping a little bit on service may have helped a tiny bit in the near term, but created a long-term sickness for Home Depot.

Issue #3: Inefficiency/Complacency
I’ve seen companies who got the first two issues right, but still had some bad symptoms creep in. What was wrong? They got lazy, sloppy, greedy and fat. The headquarters became lavish and bloated. Bureaucratic gridlock made it impossible to get anything done. Inefficiencies and wastefulness sucked up all of the cash.

The world is too competitive to allow for gross inefficiency. A leaner firm can come in and use its superior efficiency to fund a successful attack on your position.

We live in a world of constant change. Lean and nimble companies who have a war chest of money at their disposal are best able to adapt to the change and stay ahead of the game. There is never a good time to rest and stop fighting, because the battle never stops.

SUMMARY
If your company is showing signs of problems, don’t focus on the symptoms. Instead, build your strategy around the root causes of the problem. Typically, those root causes revolve around three issues: poor positioning, poor delivery on the position, or inefficiency/complacency. Get those root issues right, and the bad performance symptoms will tend to go away.

FINAL THOUGHTS
When I make an appointment on the phone to see a doctor, the receptionist will usually ask “what seems to be the problem?” Apparently, they want me to make a self-diagnosis before seeing the doctor. I’m not sure I’m always the most qualified one to do that. That’s why I’m trying to get an appointment with the doctor.

Similarly, if one of your business divisions is having problems, don’t just rely on their own abilities at self-diagnosis. Take the time to get an objective and accurate diagnosis. Remember, if they are so smart, then how come their division is so sick?

Strategizing Vs. Sloganeering

THE STORY
In the past, I have had the pleasure of working with Charlie Rath, the advertising genius behind a number of great TV ads, including the famous “Where’s the Beef?” campaign for Wendy’s.

As a slogan, “Where’s the Beef?” was an instant hit. It became part of the pop culture of its time and was a catch phase used by millions of people in their everyday life. Even to this day, the “Where’s the Beef?” commercials are considered to be among the most memorable and recognizable commercials ever made in the history of television. As far as having impact on its culture, these commercials would have to be ranked as being among the most successful ever.

So what was its impact on Wendy’s? To hear Charlie tell the story, he would say that at about the time the “Where’s the Beef?” commercials aired, Wendy’s was pretty much at an all time low in its ability to execute its strategy. On the factors of cleanliness, quality and service, Wendy’s was noticeably lacking in its ability to live up to customer expectations. About the only thing the stores were succeeding in was in disappointing the customer.

Therefore, when the commercials aired, they accelerated the rate in which people were exposed to this disappointing atmosphere, which accelerated the rate in which people were rejecting Wendy’s as an option. Sure, the ads got Wendy’s noticed, but people did not like what they saw. It just made a bad situation worse.

Eventually Wendy’s figured it out and dramatically improved its strategic execution on quality, cleanliness and service. It once again became a credible option in the fast food industry. Charlie got the company to bring back founder Dave Thomas and make him the chain spokesperson. Although the commercials may not have had as great a slogan as “Where’s the Beef?”, they were plenty good enough, and Wendy’s was able to rebound.

So in the end, one would have to say that:

GREAT SLOGANS + LOUSY STRATEGIC EXECUTION = LOUSY RESULTS

THE ANALOGY
Coming up with a comprehensive set strategic activities which are well coordinated and executed well throughout an entire organization can be hard work. It is a lot easier to just try to come up with a catchy slogan. The hope is that if the slogan is catchy enough, it will bring customers to your business in droves. They will love your slogan so much that they will overlook that fact that the slogan has no basis in reality and that they will patronize you in spite of your flaws.

Well, that’s a nice hope, but it rarely becomes true. Most examples are like what occurred at Wendy’s. A clever slogan was not enough to overcome poor strategic execution.

The thought that a strategic process is finished once you come up with a catchy slogan is ludicrous. If anything, that is just step #1 in a long journey. Now you have to link that slogan to supporting activity which justifies your use of the slogan and makes the slogan more meaningful in describing your firm than for the competition (a point of positive differentiation). Success requires more than clever slogans. It requires linking many different activities together in the direction of your positive differentiation (see blog "Strategy is Like Blood").

THE PRINCIPLE
Advertisements are nothing more than promises. They are making promises about what a customer should expect when they patronize your firm. If your company’s strategy (or its level of execution of that strategy) is weak, then you are not living up to the promises in your ads. At that point, the only image you are creating is that of being a liar. You are saying one thing, yet doing another. It is difficult to build loyalty when your broken advertising promises are destroying your ability to get people to trust you.

At that point, you would be better off saying nothing. Otherwise, you will suffer an accelerated defection, as Wendy’s experienced.

Although it is nice to make great promises to your customers about how wonderful you are, it is so much more important to actually be a wonderful company. That’s what strategic planning is for. It is to first help companies find a unique place where they can be distinctively wonderful. Then, strategic planning helps coordinate the list of activities which need to occur in order to obtain and own that wonderful position.

At that point, a clever slogan which captures the essence of your strategy is the icing on the cake. If all you have is the icing, people will like the taste at first but will eventually be sickened on all of the sugar. You need the whole cake (slogan and strategic execution) to build a long-lasting treat.

What good would it be for Wal-Mart to shout “Always Low Prices” if it had a strategy built around a high cost structure? People would see “Always Low Prices” and think “Always High Prices.” Either that, or you will go out of business pricing everything below your cost. The only way that slogan works is if the entire company is devoted to a strategy centered around developing the lowest possible cost structure in your industry. Even just being average with your peers is not good enough. People will see “Always Low Prices” but think “Always Average Prices.” You’re still seen as a liar.

Unfortunately, reality can get in the way of a great slogan.

A recent example of someone who tried to get this right is Staples. Back at the turn of the century, Staples was having problems. Consumer complaints were outpacing kudos by a factor of 8 to 1. After doing some customer research, Shira Goodman, EVP of Marketing for Staples, discovered that what customers wanted was “a simple, straightforward shopping experience. They wanted knowledgeable and helpful associates and hassle-free shopping.” She also discovered that customer prioritized hassle-free shopping over lower prices.

At that point, Shira knew what the right advertising approach needed to be. However, she also knew that the store was not ready yet to deliver on that promise. Staples, in 1981, was not an easy, hassle-free place to shop.

Therefore, the next step was to build a new corporate strategy centered around making Staples the easiest, most hassle-free place to buy office supplies. First, the company removed about 800 superfluous items, such as Britney Spears backpacks. Then Staples improved store signage, making it easier to find where items are located. Sales associates were trained to be more helpful by walking shoppers to the correct aisle rather than just pointing. Since customers said that the availability of ink was one of their biggest concerns, the company introduced an in-stock guarantee on printer cartridges.

According to Shira, “It took about a year to get the stores up to snuff.” It wasn’t until the end of 2002 that the advertising could finally and truthfully make the promise which customers wanted to hear—that Staples was the easiest and most hassle free place to buy office supplies. Therefore, Staples waited until then to introduce the “That Was Easy,” advertising campaign. This clever campaign, with its sales of over $7.5 million in easy buttons, has had a level of cultural impact approaching the “Where’s the Beef?” campaign, but with a big difference. “That was Easy” was being promised by a store that was strategically working hard to execute well on being easy.

Shira Goodman put it this way, "Staples' new advertising campaign illustrates our long-term strategy to truly make buying office products easy. Our new tagline, 'Staples. that was easy' goes far beyond an advertising campaign -- it represents a fundamental shift in our approach to selling office products. It is evolving the Staples brand and guiding every business decision that takes place at the company."

Did you hear that? She said “every business decision.” It’s not just a clever slogan with a clever easy button. That’s just the icing on the cake. The focus on “easy” is a way of life in all aspects of the business; just like low cost is a way of life for Wal-Mart.

SUMMARY
Clever slogans are nice, but they are no substitute for a well thought out and well executed strategy. Clever slogans make a promise about what to expect from a company. Clever companies use strategic planning to build a way of life that supports the promises of the slogan. When the two work together, wonderful things can happen. When the two do not work together, you may be doing nothing more than accelerating the rate at which customers defect from your business.

FINAL THOUGHTS
Just for fun, study they way you portray customers in your advertising (how they look, how they act) and then study your real customers. How similar are they? Would your customer be offended by they way in which you portray them?