Strategy Planning Analogy #564: The Attack of Gravity

THE STORY
I have a skateboard park near my home where lots of young boys like to hang out. The primary attraction at the skateboard park is a giant U-shaped surface. The idea is to start at the top of one end of the “U” and skate down & back up the other side of the “U”.

It sounds easy enough, but these boys have a tendency to fall off their skateboards. As it turns out, the location the skateboards prefer is not on top of the “U” but at the bottom. That’s where all the skateboards congregate after the boys fall off of them.

They are victims of the law of gravity. The boys try to fight it, but the skateboards willingly give in to the gravitational pull to the bottom of the “U”. But then again, if skateboarding were easy, there wouldn’t be any challenge to the sport.

THE ANALOGY
Lately, it seems like retailers have become more like skateboards. They all want to fall down to the bottom of the “U”. In this case, it is the gravity of pricing which is pulling them down. All the retailers seem to want to be on or near the bottom of the range of prices.

In the past, retail pricing was more like when a boy is guiding the skateboard, trying to defy gravity and get as high in the air as possible. Similarly, retail management in the past would guide the stores on paths towards pricing as high as they could get away with. But now it is more like when the boy falls off the skateboard. The retail pricing falls to the bottom like an unmanned skateboard.

And there the stores lay, all clustered at the bottom of the pricing range. And although that may be good for the consumer, that’s not a good thing for the retailers.

THE PRINCIPLE
If you want people to prefer your offering, then you have to give them a reason to prefer you. There needs to be something in your offering that makes it special enough to cause people to see a justifiable reason to prefer it over the alternatives. That won’t happen if every option looks the same. Similarity makes all the options undistinguishable from each other. There is no reason to prefer one over the other when you cannot distinguish one from the other. Therefore, a key aspect of strategy is to find one’s point of preferred differentiation.

The problem is that business gravity tends to pull everyone down into an indistinguishable sameness. As soon as one firm finds a positive differentiation, everyone copies it. They chase each other on prices until everyone is at the bottom. They all get stuck in a heap at the bottom of the “U” looking about the same.

To fight the business gravity, firms need to apply the principles of differentiation. We will look at three of these principles.

#1: A Difference Needs to be Meaningful

Marginal differences do not motivate behavior. Consumers are creatures of habit. If you want to change their habits, you have to make your differentiation large enough to grab their attention and overcome the resistance to change.

When I was in the grocery business, the general rule was that if you wanted to get people to shift based on price, then your average prices would need to be at least 7% lower than the competition. Otherwise, the price differential is not enough to succeed. You don’t look different enough to create preference on price.

The problem is that in commodity retailing, pretty much all retailers are now within about 7% of each other on price. Wal-Mart’s original popularity was based on the fact that their prices were significantly lower than the prevailing “normal” prices. That caused people to shift to them in droves.

Now, Wal-Mart prices are considered to be the “normal” price. Their prices are no longer seen as abnormally lower than the marketplace. They are the marketplace price…no big deal. They set the market norm which others come pretty close to matching. No wonder Wal-Mart has stagnated. Their level of difference in their prices is no longer meaningful. When your level of differentiation is no longer meaningful, it is no longer a point of strategic differentiation.

#2: Successful Differences tend to be on the Fringe, Not the Core

Such a phenomenon is typical for the core attributes in almost any industry. Because the core attributes are so critical to success, competition won’t let you get a meaningful differentiating advantage there. They will copy the market leader on core attributes to nullify any advantage.

In retailing, the core attributes tend to be product and price. Unless you are a niche retailer, the products and prices between retailers today are not all that different. As a result, it is difficult to create meaningful differentiation at the core. Therefore, if you want to create differentiation, you have to look to the fringe.

And that’s what commodity retailers are doing. Wal-Mart has been investing in improving its service levels and store décor. Even Aldi, a leader in no-frills, low cost retailing, has started a program to upgrade its store décor. After all, if your prices are not that much lower than anyone else, why should customers put up with your low service and bad décor? The trade-off isn’t worth it when the price differential shrinks. So now you can no longer just be the best low price store; you have to be the low price store with the best fringe offering.

So the irony is this: although the core is the reason for consuming an offering, it is the fringe where differentiation tends to be most effective, since it is easier to create differentiation at the fringe than at the core.

#3: Successful Differences tend to be Difficult to Copy

But just as the core can be copied, eventually so can the fringe. So the trick is to try to find the types of differentiations which are the most difficult to copy. This is done by making bold trade-offs.

The trick is to get extremely good in one fringe area (i.e., create a huge differential) by foregoing much investment in other fringe areas. It’s like putting your eggs in one basket.

For example, the core in the airline business is getting a passenger safely to their destination on time. Most airlines are pretty similar with respect to these core features. So to create differentiation, you have to go to the fringe. Southwest Airlines focused on the fringe aspects most popular with pleasure travel and pretty much ignored the fringe directed at business travel. As a result, they are not the most popular business travel airlines, but they have meaningful differentiation that attracts the pleasure traveler.

Had Southwest tried to be equally strong in all fringe areas, they would not have stood out on any fringe area. The beauty of only focusing in one area of fringe is that it allows you to make bold changes to your business model. You can cut out the aspects of the business model where you do not focus so that you can alter your business to be even better at providing the fringe being focused on. This is the idea of making trade-offs.

For example, Southwest Airlines eliminated the hub & spoke approach to scheduling. Although that may not have made business travelers happy, it freed up resources to make it easier for Southwest to win with the pleasure traveler. The beauty is that it is difficult for airlines who did not give up hub and spoke to match Southwest on the fringe which matters to Southwest, because the others did not make the trade-offs necessary to create ability to outdo Southwest in the areas where Southwest chose to differentiate.

So the secret to differentiation is this: pick an area of differentiation which is inherent to the unique way you operate your business model, so much so that those using a more conventional business model cannot match you. Create trade-offs in both the way you operate and the fringe you offer, which make imitation difficult. By working the two in tandem (internal operation and external fringe offering), you can distance yourself from the norm and create meaningful differentiation.

SUMMARY
There is a natural tendency in business for companies to chase the same approaches to the core. Like gravity, they are pulled to the same place. By all looking and acting the same, there is little opportunity to create differentiation. And without meaningful differentiation, there is no reason for a customer to prefer your offering over the alternatives. To get around this, firms need to:

• Consider how to create differentiation in an aspect of the fringe;

• Create trade-offs in the business model which allow one to get so good at offering the chosen fringe that others with a more conventional business model cannot effectively copy you. 

FINAL THOUGHTS
This is not just a problem for retailers and airlines. All businesses can fall victim to their industry’s gravity and become indistinguishable from the competition. Differentiation at the fringe is important for all businesses to consider.

Strategy Planning Analogy #561: I’m Going to be Rich and Famous

THE STORY

One time, I was talking to an expert on the subject of marketing to teenagers. She said research shows that most teenagers believe that in a relatively short time, they will become rich and famous.

The rationale for why most teenagers thought they would become rich and famous went something like this:

a)     They looked at all the rich and famous people in teenage pop culture.

b)     They decided that most of those famous ones are only marginally talented or skilled.

c)     They saw that most of these rich and famous people were also messed up jerks in real life.

d)     They looked at themselves and concluded that they were at least as talented (if not much more talented) than the rich and famous ones AND they had it a lot more together in their personal lives than the rich and famous ones, too.

e)     Therefore, the teens concluded that if those “losers” could become rich and famous, then a more talented and more “together” person such as themselves would have an even better chance of becoming rich and famous. Hence, the teens felt that they were going to become rich and famous.

That’s teenage optimism for you.

THE ANALOGY

If you look at the total number of teenagers alive today (about 25 million in the US alone) and compare that to how many of them actually become rich and famous in teen pop culture (probably much less than 100), the odds of any US teen becoming rich in famous this way is less than 1 in 250,000. In other words, the likelihood of one of these teens becoming rich in famous is less than 0.0004%.

Yet, despite these terrible odds, most teenagers believe they will be one of those rich and famous ones. That seems like foolish optimism, right? Only teenagers would be silly enough to think this way, right?

Well, consider the fact that most business people think they are going to be successful. Most companies adopt strategies that they think will succeed. If you read the press releases or public filings of companies, they almost always seem to talk positively about future success. Even companies with a horrible track record and huge piles of losses talk about how their new strategy will turn things around.

It looks like that silly teenage optimism is contagious. Many businesspeople have caught that same crazy notion that THEY too will beat the odds and be one of the successful ones. After all, why would entrepreneurs put in all the effort to start businesses if they didn’t think they would succeed? Why would companies work hard to implement strategic plans if they thought they would fail?

The logic in the business world tends to be as flawed as in the teenage world. Many think that:

a)     My ___________ (company, strategy, idea, product, people, myself, etc.) is as good or better than a lot of those successful companies out there.

b)     Therefore, if they can be a success, then I should become a success, too.

Yet, we know that most new businesses fail and that a large number of older businesses go into decline, retraction, bankruptcy or some other path that cannot be defined as a major success. Companies fall off the Fortune 500 list all the time. So, is this optimism justified?

THE PRINCIPLE

The principle here is that most truly successful businesses get that way by exploiting the benefits of being a leader. And as we all know, each category can have only one leader. The rest are followers who typically struggle to just stay alive. Therefore, most companies will not be truly successful.

Since the odds are stacked against success, one shouldn’t be like teens who blindly believe that success will naturally come to them. One needs to have their eyes wide open and realize how tough their prospects actually are. Just having a written strategy is not enough. Just doing things well is not enough to ensure success, either.

You have to plan carefully and not only work exceptionally well, but exceptionally differently. This is explained below.

1. Unseating an Established Leader is Exceptionally Difficult

As Al Ries and Jack Trout have pointed out in their many books (most particularly “Positioning,” “Marketing Warfare,” and “The 22 Immutable Laws of Marketing”), established leaders are hard to topple. They have lots of inherent advantages, including:

a)     They own the category in the minds of the consumers.

b)     They have economies of scale.

c)     They have preference in the supply chain.

d)     Habitual patterns are on their side.

e)     Image is on their side (Why would anyone buy from a loser? Doesn’t that make you a loser? Winners buy from winners.)

As a result, Ries and Trout said that just being a little better than the leader is not enough to take that position away from them. In fact, they concluded that one needs to be about three times better than the leader in order to take away their position as leader. Given the unlikelihood that you can imitate the leader and do it three times better, this is a suicide mission. Blind teenage optimism cannot overtake these odds.

Most of the Ries and Trout work was written before the economy was taken over by social media, apps, and digital networking. The laws of networking make unseating a leader in this economy even harder. A network, like Facebook and LinkedIn, gains its power exponentially as their network grows. The value of the business is directly related to the number of connections.

Therefore, to unseat one of these new economy leaders, you have get huge numbers of people to simultaneously abandon the current leader and sign up with you. After all, it’s no fun to join a new network if everyone you want to network with is still with the leader. Even if everything about the way your network works is better than the leader’s, it is worthless if nobody is connected to you. Customer switching costs are so high to leave the leader (where the connections are), that your odds of unseating the leader are as bad as a teenager becoming rich and famous.

Therefore, if you blindly try to unseat the leader at its own game, you will most likely fail, no matter how hard you try, how much better you are or how optimistic you are.

2. Being Different is Better Than Trying To Outdo the Leader

The solution, according to Ries and Trout, is to find a new place to win. Rather than try to outdo the leader at their game, play a different game where the advantages are more in your favor. For example, rather than trying to beat the top burger chain by doing what they do better, do something different, like:

a)     Change the product (Chicken instead of Beef, like Chick Fil A)

b)     Change the image (go further upscale, like Umami Burger or Larkburger, or go further downscale, like Rally’s and Checkers)

c)     Change the customer (go after the health conscious, like Lyfe Kitchen  or go after those who want the best tasting basic burger, like Five Guys or Smashburger)

d)     Change the business proposition (Burger King in Asia does home delivery)

3. Make the Differences a Key Part of Your Plan

Just claiming a new position doesn’t mean you will win. New positions typically require a new business model. Southwest Airlines did not win at the low price differentiation by merely imitating the major airlines and charging a lower price. No, it created a different business model which made lower pricing more profitable, including:

a)     Flying point to point rather than hub and spoke.

b)     Not transferring luggage.

c)     Flying out of secondary airports.

Therefore, your strategy needs to do more than just identify a point of differentiation. It must design a different business model which exploits that point of differentiation and makes the differentiation profitable.

Being different requires acting different. Both differences need to be in the strategy to make it work.

4. Follow Through

A great strategy poorly executed is really a lousy strategy. Don’t be like the teens who think fame will come naturally. Do the hard work to make it happen.

5. Don’t Rest on Past Success

Even if your strategy succeeds today, that does not ensure success tomorrow. Times change, tastes change, technology changes, customers change, regulations change. These changes can make your current strategy and business model obsolete. Being the best carbon paper provider in the age of digital documents is of no benefit, because carbon paper is obsolete. (For those of you too young to remember, carbon paper was used to make multiple copies on a typewriter.)

Just as teen idols come and go, so do successful strategies. Don’t rest on past success.

SUMMARY

Just being good is not enough. Almost everyone operating a business is good or they would already be gone. To be truly successful, change your focus from being good to being different (in positioning and the business model which supports the position). Rather than trying to outdo the leader at their own game, find a new place to lead with a new game plan. Otherwise, you will most likely fail, no matter how optimistic you are.

FINAL THOUGHTS

Just as most teens who thought they could be the next “American Idol” failed at this attempt, most businesses fail at achieving major success. Don’t assume success will come naturally. Do the hard work to find your point of differentiation.

Strategic Planning Analogy #541: Necessary for Whom?

THE STORY
I was in a business meeting recently where we somehow got on the topic of Southwest Airlines. I was explaining how Southwest had been so much more profitable than most other airlines for decades because of its unique business model, which in part included the avoidance of the hub and spoke model used by most of its competition.

Someone in the meeting objected to the praise of Southwest. He countered that the traveling world needs a hub and spoke business model. Since the hub and spoke model is necessary, it is not proper to praise a company which avoids this necessity.

In my mind, my reaction was “Necessary for whom?” Is it necessary for some business travelers? Yes. Is it necessary for Southwest? Absolutely not.

THE ANALOGY
Two of the key aspects of strategy are determining WHERE to compete and HOW to compete. Answer these concerns properly and success is more likely. Answer them wrong and success is nearly impossible.

One method businesses use to determine where and how to compete is by looking for necessity of demand. After all, if something is viewed as a necessity and demanded by a large sector of society, it must be a good place to be, right?

Just look at the illegal drug business. The junkies feel that getting their next fix of the drug is the most necessary thing they must do. And the suppliers of those illegal drugs make a lot of money off that perceived necessity.

The problem is that there is not a strong correlation between necessity of demand and profitability. It worked in the illegal drug business. It didn’t work so well for those satisfying the necessity of hub and spoke in the airline business.

Southwest chose its “where to compete” principally in the lower price, non-business portion of the airlines industry. Southwest chose its “how to compete” by doing a number of things differently, including the elimination of the hub and spoke model. These were very profitable choices for Southwest.

In fact, it was a more profitable choice than going after the demands of the business traveler, even though the demand for business travel is higher (and presumably more necessary) than for non-business travel.

Just because something out there in the marketplace is a necessity does not mean that you have an obligation to provide it. Like Southwest, it may be better to avoid it.

THE PRINCIPLE
The Southwest example illustrates a common situation in business. This is the principle that the highest profits are often found by avoiding the highest demand. This may seem counterintuitive at first, but there is logic behind this point of view.

Why High Demand Items Are Often Not Very Profitable to Supply

There are many factors which tend to lower the profitability of serving many high-demand segments. The first is that high demand segments tend to attract a lot of competition. Businesses like to flock to where the big sales potential lies. But when too many companies are fighting for those sales, the profitability of those sales plummet. Price wars suck the desirability out of those sales. You may be able to get a much higher return going after smaller, less competitive markets.

A second problem is that high demand necessities tend to attract a lot of government regulation. Food and health care are high demand necessities. Many governments get involved in significant regulation how those necessities are supplied. This often takes a lot of the profitability out of the system.

Just look at the results when communism gets involved in the necessity of supplying food. They impose all sorts of regulations and price controls. They often insert themselves into owing a lot of the food businesses. The net result is that businesses pull away and consumers are stuck with shortages and long lines.

A third problem is that high demand needs pull in the masses. And the masses do not always have a lot of discretionary income. They cannot afford to pay as much for their demands as other, smaller segments. You cannot charge more than they are able or willing to pay, no matter how much it costs you to serve them. Just look at the automobile industry. Those selling cars to the masses tend not to do as well as those selling cars in luxury or high performance segments. Customers in the luxury and high performance segments are willing and able to pay a lot more for their cars, making them more profitable, even if the segments are smaller than the mass segment. That's the reason why Tesla decided to start by targeting the high performance end of the electric car business.

When you try to appeal to the masses, you often end up with “average” offerings. Unfortunately, there will always be competitors who specialize in targeting the smaller niches. The specialists will offer items that are cheaper, or of higher quality, or of higher prestige, or of higher functionality. These more profitable niches will eat away at your mass market, leaving you with some of the less profitable middle ground. This is what Southwest did when it specialized in the profitable low price, non-business segment (and firms like Virgin Airlines and Net Jets at the high end), leaving the other airlines fighting over the unprofitable middle.

Fourth, high demand areas are often in fairly mature businesses. Mature and aging businesses, by their very nature, tend not to be as profitable as businesses in their younger, faster growing stage. Look at Procter & Gamble. They completely divested out of the food business (an extremely high demand business). Why? Because it did not have high prospects for future growth and profitability. It was too mature.

Instead, P&G has been pouring money into beauty care. You can say that food is a necessity and beauty care is a more discretionary luxury (less necessary). Yet, beauty care is where P&G have better prospects for growth and profitability. P&G is doing a great job of choosing where and how to compete, even if it means walking away from a lot of high demand products. 

Choose Wisely

As a business, you have choices. Strategy is about helping you make better choices. Those choices need to consider more than just the size or necessity of demand. They also need to look at the profitability within that demand. Smaller segments can often be better strategic choices.

In most businesses, there is no law that says that you have to target unprofitable segments. Even if you think that a particular function is necessary to make the world work, that doesn’t mean you have to serve it. It’s okay to walk away from some businesses and leave it to someone else.

Others may have business models better suited to those situations. Keep in mind that when P&G has been divesting all of its non-desired businesses, it has been finding buyers for those businesses. Many of those buyers are companies who do things differently from P&G and are better suited for wringing value out of mature, slow growth businesses.

Is There a Moral Obligation?

There may indeed be some moral issues here. Is it right to only serve the profitable rich and ignore the masses? Can we ignore the poor because they are unprofitable? Businesses work within a society and they have some obligations to that society. But they also have obligations to shareholders, debt holders and employees.

If businesses choose to or are forced to take on bad business models, this is bad for everyone. If they cannot make an adequate return, employees lose their jobs, and equity/debt holders don’t get a return. More importantly, the companies don’t make any profits which can be used for charity or for taxes to governments to help solve these issues.

Strong, healthy businesses are in a better position to provide jobs and provide funding for social issues. Then the question turns from business models to social accountability.

SUMMARY
Strategy is ultimately about making choices, such as where and how to compete. These few strategic choices can have a bigger impact on business success than almost any other thing you do. Choosing what not to do is usually more important than choosing what you do. And some of the things you should not be doing are perhaps serving large “high necessity” demands. It’s okay to walk away from them and go in a direction better suited to who you are.

FINAL THOUGHTS
When you look at large, mass oriented businesses, there are usually only a small handful of winners (often only one or two). The rest struggle to stay alive. If you are not the winner in that mass space, it is usually better to walk away and switch to leading in a smaller segment. And that’s okay.

Strategic Planning Analogy #512: Working on the House

THE STORY
I was recently eating at a Taco Bell restaurant where the inside temperature was only 63 degrees Fahrenheit (about 16 degrees Celsius). It was so cold, I had to eat lunch with my coat on (and it is only October). This got me to thinking…

Imagine that you have a home-based business and that your home is extremely cold. The extreme cold in your house causes your typical day to have problems like these:

1. Much of your day is spent trying to create warmth, doing things like:
1. Chopping wood for the fireplace.
2. Doing exercises to warm up.
3. Checking the thermostat.
4. Heating pots of water on the stove. 

2. Working on your laptop, smartphone and tablet is difficult because you are bundled up in bulky clothes and wearing mittens on your hands. 

3. Lots of money is wasted on utility costs in a futile attempt to warm the place. 

4. Because of the pre-occupation with the cold, you find it hard to concentrate on anything else (like your home-based business).

If you had to deal with problems like that day after day after day, I suspect that your home-based business would be a disaster.

Now let’s suppose that instead of focusing on trying to do work IN the house, you tried to do work ON the house. You go around inspecting the house. What you find is that there are several big holes in your wall exposing you to the cold outside environment. In addition, you find that the insulation in the walls is missing.

After spending a little time working ON the house (fixing walls and insulation), you quickly notice that it becomes a lot easier to do your business IN the house, because now it is comfortably warm all day.

1. You gain back all that time wasted on trying to heat the house.
2. It is easier to work on your devices when not wearing mittens.
3. Your utility bills go way down.
4. It is easier to concentrate on the business now that the distraction of being cold is gone.

And now the home-based business is a lot more successful.

THE ANALOGY
In the world of business, you have two choices on how to spend your time. You can spend your time either:

1. Working IN the business (doing the daily stuff which keeps the process in operation); or
2. Working ON the business (doing the big-picture stuff which improves the structure of the business and its ability to win in the marketplace).

Both are important; both need attention. But for leaders, more time needs to be spent working ON the business rather than IN the business.

I believe that leadership in most businesses under-allocates time working ON the business. It’s easy to understand why. Fixing the crisis of the day (IN the business) sucks up time leaving little left for the examining the big structure (ON the business). But, as we can see in the story, that approach is very unproductive.

The crisis of the day in the story was the cold temperature. Extensive time and money were wasted trying to find ways to get the work done in this environment. Dealing with trying to work through the crisis was crippling the business (working IN the business wasn’t working).

However, by taking time to step away from the day to day and look at the big picture, one could easily see that the overall structure of the house was inadequate. After fixing the structure (the holes and the insulation), the crisis went away. Productivity skyrocketed. By spending time ON the business, the work being done IN the business got a whole lot more productive—more productive than what could be achieved by merely working in the business.

THE PRINCIPLE
The principle here is that structure matters. How you structure the business can have a big impact on how effective the work is inside the business. Even if your employees are hardworking and want to succeed, if the structure is wrong, that effort will be as effective as trying to use devices with your mittens on.

Structural Questions

Structural issues would include questions like these:

1.     Do you have a winning position in the marketplace (a reason for customers to prefer you)? If you have no reason to win, then you will lose, even if you work hard. Working hard at mediocrity or in offering the same as everyone else will not get people to prefer you. The winning position is the foundation of your structure. Without a solid foundation, the structure will fall and crush your operations. Everyone gets all excited about the smartphone business, but keep in mind that only Apple and Samsung are making a profit in this segment. The others are working very hard IN the business of smartphones, but they are losing because they have not developed sustainable positions which create a natural reason to prefer them. Unless they first address this issue (working ON the position), their efforts IN the smartphone business will be wasted. You can read more about this concept here.

2.     Do you have a business model which is designed to give you an edge in achieving your position? Why should you expect to win if you do not have a structure designed to increase your odds of achieving superiority at your point of differentiation/winning? Just working harder in the business is usually not enough. Think about hard discount retailers like Aldi. They create a preference based on a low price position. These low prices are not achieved by merely working harder IN the grocery business. No, they are achieved by working ON a structure which makes low prices easier to obtain:

a.      Very Limited Assortments

b.     Virtually all Private Label Store Brands

c.      No Service

d.     Selling from pallets of open boxes rather than placing individual items on the shelf.

This structure gives an edge in achieving the low price position which businesses under a more conventional structure cannot touch.

3.     Have you supplied the business with adequate levels of capacity and competency? Working hard IN the business will not lead to success if your structure is missing the capacity and competency needed to win. Without an adequate supply chain (access to enough raw materials, manufacturing capacity, distribution capacity, etc.), your work IN the business will not be able to deliver on the promises. Similarly, without the needed knowledge, skills, and tools, harder work will be wasted work. The lack of capacity and competency is like the lack of insulation in that house. It prevents the work inside the house from being productive. In the modern economy of tech firms like Google, Yahoo, Facebook, Apple, and other social media firms, there is an understanding that if you cannot get an adequate capacity of engineering competency, you cannot deliver the winning position. Therefore, the winners design structures which create an edge in attracting and keeping this component.   

Role of Leaders

Answering these three questions is the role of leadership. They are the ones who need to step away from the day to day to think about the structure. Thinking back to the story, they need to ask: Where are the holes in the house? Where do I need more insulation? Do I need to build an addition to the house? Do I need to totally remodel the house?

If the leaders do not proactively make the time to step away from being IN the business to work ON the business, it will not get done. The crisis of the day will naturally choke it out. Like the story, you will spend so much time and effort dealing with the cold that there is little left for focusing on winning in the marketplace.

The lower levels are too closely tied to the day-to-day or their little area of specialty. They cannot see the whole structure. Only the leaders can wrap their arms around the bigger picture. And when you do, the improvements can be amazing.

And the fancy word we give to all this attention to structure is STRATEGY.

SUMMARY
Hard work is nice, but it can be a lot of wasted effort if the business structure is wrong. When all of your time is focused on finding ways to do more work IN the business rather than first working ON the business to make sure it is set up to win, you are merely creating action, not results. A good business structure has a winning position, a business model which supports the position, and enough capacity and competency to deliver on the promise of the position. If you do not work ON the business to build this kind of structure, your work IN the business is going to go nowhere.

FINAL THOUGHTS
The key here is delegation. Leaders need to delegate more of the day-to-day so that they can spend increased time on the bigger picture.

Three Signs of a Bad Strategic Plan

Introduction
We’ve spent a lot of time in prior blogs focusing on what good planning is all about. Today we will look at the key characteristics of bad strategic planning. In general, bad strategic plans have one or more of the three following characteristics.

#1) Bad Plans Are Full of Platitudes
One dictionary defines platitude as “a flat, dull, or trite remark, especially one uttered as if it were fresh or profound. Synonyms: Cliché, Truism.” In strategic plans, platitudes can be quite common. At first, the words sound profound, but after you think about it, you realize that it is merely a trite truism—a cliché.

Examples of platitudes would be phrases similar to the following: Our goal is to be a…

a)     …market leader.

b)     …highly profitable company.

c)     …consumer-centric organization.

d)     …good corporate citizen.

e)     …successful leader in our industry.

f)      …company with above average returns on investment.

A good way to tell if you have a platitude is to say the opposite of the statement. If the opposite does not make any sense as a strategy, then the original statement does not make sense as a strategy, either.  For example, does it ever really make sense if you turn to the opposite of the above phrases and say your goal is to be a…

a)     …market loser or also ran.

b)     …highly unprofitable company.

c)     …organization that ignores its customers and treats them poorly.

d)     …bad corporate citizen.

e)     …unsuccessful follower in our industry.

f)      …company with above poor returns on investment.

If the opposite is not a viable option, then your original statement is little more than a fancy way of saying “We want to be good.” And that is no strategy—it is just a wish.

Great strategies are about making tough choices. It is about choosing where to focus and where not to focus. It is about making trade-offs so that you give up in some areas in order to win in others. It is about finding your differential advantage versus competition. You don’t find these in platitudes. Platitudes tell you what is common to all; strategies tell you how you are creating a meaningful difference in the marketplace.

In contrast to the above statements, a great strategy could say something like: Our goal is to win on the basis of superior quality. This works as a strategic statement, because you don’t have to have superior quality to win. You could also win on price, service, speed, originality, etc. So the opposite of “not winning on quality” makes sense. You’ve made a real choice.

This choice provides direction (towards quality). It lets you know the trade-offs (I will invest in extra quality even if it means I cannot have the lowest prices). It lets you know how you will create demand for your offering versus the competition (better quality than them).

Those platitudes cannot do this. Just finding a fancy way to say “I want to be a success” provides no direction on what you will do to achieve that success. Putting the platitude on the wall may warm your heart a little, but it does not help you determine:

a)     Why does my company deserve to win?

b)     What actions are needed to create the win?

c)     Why should customers prefer me over the competition?

d)     What should I focus on?

And if your strategic plan cannot help you answer these questions, then it really doesn’t help you at all.

#2) Bad Plans Focus on the Scoreboard
To solve the problem above, some companies attach a specific number to define their success. The statement may go something like this: In five years, we will have achieved success by attaining:

a)     Sales of “X”

b)     Profits of “Y” percent of sales

c)     An annual growth rate of “Z” percent.

The problem is that putting a specific value on a wish does not change the wish into a strategy. It merely makes the wish more specific. Yes, now there is a quantifiable and measurable goal associated with the statement. But there still is no direction as to how that number is to be achieved. The numeric specifics let us measure how badly we did at the end, but they do not tell us what to do at the beginning.

In the past, I’ve referred to this as focusing on the scoreboard instead of the clipboard. It refers back to a statement Flip Saunders made when he was the coach of the Minnesota Timberwolves basketball team. When a reporter once asked him what it would take to win, his answer was “Unless they’ve changed the rules, we have to score more points than the opposition.” Although that answer is true, it is not a strategy.

The point is that a scoreboard lets you know who is winning the game, but it provides no strategy as to how to win. If Flip Saunders’ only advice to his team was “Go get me more points than the opposition!”, he has not given them a strategy for winning. Yelling at the scoreboard to put up more points doesn’t get you more points, either.

The way you win in basketball is by drawing up good plays on the clipboard and then executing them well. The clipboard is where the strategy is developed, not the scoreboard. If all you do is attach numbers to a platitude, then all you have done is merely told me what you want the scoreboard to look like when the game is over. But that doesn’t mean anything.

True strategies will look more like that clipboard. They will specifically say what everyone’s role is and how they are supposed to work together to increase the odds of scoring more points than the opposition.

And remember, a budget is not a strategy, either. It is just a more elaborate scoreboard.

#3) Bad Plans Focus On Improving the Parts
To avoid the problem of focusing too much on the scoreboard, some companies will work with the individual departments to talk about ways to specifically make improvement. It usually focuses around tactics to either reduce inputs or increase outputs for that area.

Although this is nice, it also falls short of great strategy. The problem is that it focuses on improving each part separately, rather than looking at how all the pieces fit together. It would be like having a separate clipboard for each player on the team telling them their best move in isolation. When all the players go onto the basketball floor together, they will probably fail, because they were not given a plan on how to work together for the good of the whole.

Perfecting the parts individually in isolation assumes that:

a)     You are already doing the right things (you just need to do them better);

b)     You are not missing anything (you have all the parts you need); and

c)     Making each individual part the best is optimal for the whole.

In most cases, these are bad assumptions. Today’s status quo can become obsolete in a short time. This can make what you are doing no longer appropriate, no matter how well you do it. Perfecting the obsolete is a waste of time. Perhaps you need to rethink the entire approach.

Perhaps the best approach is to move into brand new Blue Ocean areas, which require capabilities nowhere found in your organization. Or maybe the great opportunities lie in the white spaces between your departments, and you need to focus on better interaction between departments.

And, depending on what trade-offs you have chosen, it may be wrong to improve every area. For example, if you have chosen to win on quality, perhaps you need to double your efforts on quality initiatives by taking away improvement efforts in areas which will not increase quality.

Great strategies do not just look at improving the individual status-quo parts. Instead, they build integrated business models showing the best way to get all the parts working on behalf of the trade-offs needed to win in the environment of the future.

SUMMARY
Bad business plans tend to have a combination of these attributes:

a)     A Focus on Platitudes;

b)     A Focus on the Scoreboard; and

c)     A Focus on Improving the Parts.

By contrast, great business plans tend to:

a)     Focus on Differentiating Direction;

b)     Focus on the Clipboard; and

c)     Focus on the Integrated Business Model.

FINAL THOUGHTS
A little bit of fluffy platitudes in a plan can make it prettier and easier to sell (like adding dessert to a meal). But if that is all you provide, then you have not given them the most important part of the meal.

Strategic Planning Analogy #509: High Occupancy Vehicles

THE STORY

To help alleviate pollution, congestion and speed up traffic, some urban areas have put HOV lanes on their highways. HOV stands for High Occupancy Vehicles and is typically defined as a car having at least two people in it.  The HOV lanes usually only allow high occupancy cars and other efficient vehicles, like buses.

Because about 75 to 85% of workers commute by driving alone in their car, most commuters cannot legally take advantage of the HOV lanes. As a result, the HOV lanes are less congested and move along faster. Seeing the HOV cars moving faster makes some of those driving alone try to find ways to cheat in order to get into the HOV lanes.

One way used to cheat is to put a mannequin or a life-size blow-up doll in the passenger seat. For example, in 2010, a 61 year old woman put a mannequin in the passenger seat so she could ride in the HOV lane in New York. Unfortunately for the woman it was a cloudy day, and the hat and sunglasses on the mannequin looked out of place to a highway officer. The woman ended up having to pay a $135 fine and had two points taken off her license.

THE ANALOGY

We live in a business environment which has been described as faster than any time in history and getting even faster. Businesses feel the pressure to move ever faster or die. To a large extent, speed has become the default universal strategy.

One way businesses try to increase speed is by unburdening themselves of as much as possible. Management is eliminated, rules are eliminated, and strategic planning is eliminated—all in the cause for speed.

The elimination of strategic planning is justified with reasons like “We don’t have time to waste on that” or “Things move too fast to plan anything long-term” or “All we have to do is release the next version of our product before the competition—you don’t need strategic planning for that.”

The problem is that the business world is more like those HOV lanes than these people realize. All this unburdening is making businesses look more like those single person cars—going it alone. And since nearly everyone is taking this same approach, they are all crammed into the slower lanes.

Ironically, the faster HOV lane is the one where cars are “burdened” with extra passengers. And, as we will see in this blog, if companies load up their “car” with extra passengers like strategic planning, they will have access to the faster lane and get to their destination more quickly.

THE PRINCIPLE

The principle here is that the proper use of strategic planning does not slow a company down, but actually puts a company on a faster path. So instead of dropping strategic planning in the name of speed, we should be adding it to our “car”. Described below are three reasons why adding strategic planning gets you into the HOV lane of business.

1) Strategic Planning Improves Speed Via Focus

A focused company can move faster than an unfocused company, and strategy improves focus. Lack of focus leads to anarchy and confusion. You can yell at an unfocused company to “Move Faster!” all you want, and all you get is faster anarchy and faster confusion. Everyone is moving in random directions rather than making forward progress. Faster randomness is not improved progress.

Strategic Planning, when used properly, is a way to provide a business with focus. Not only can it tell a business what are the right things to work on; more importantly, it can tell a company what are the wrong things to work on. Strategic planning simplifies the agenda by taking a lot of options off the table (the things that are off-strategy). All the time-wasting rabbit trails are eliminated before they begin.

With a strong, focused strategy, you don’t have to waste time in endless meetings continually asking yourselves “should we be doing this or something else?” Instead, you can speed things up by focusing on how to improve on the things everyone already knows are important to the strategy.

Look at Apple. Under Jobs, Apple did not go in all directions trying to do everything as quickly as possible. Jobs had a specific strategy in mind as to what Apple would focus on. It had to do with designs that emphasized quality, elegance, coolness, and user-friendliness, made possible by focusing on building closed end-to-end systems. It became obvious what was appropriate for Apple to be doing and what was not.

The “not” list for Apple under Jobs was large. They did not work on low price products, or products not tied to the larger closed system. They did not even work on manufacturing. This allowed Apple to become very focused and quickly build a whole new digital future.

2) Strategic Planning Improves Speed By Overcoming the Leapfrog Trap

When speed alone becomes the substitute for strategy, a company is no longer building unique competitive advantages or competencies (except maybe the competency of speed). All they are doing is racing everyone else to be the first to release the next new improvement to the status quo. This is very common in areas like consumer electronics & digital media, and becoming more common elsewhere.

This process leads to what I call the leapfrog trap. Any small success gained by getting to the next improvement first is lost when a competitor leapfrogs you and gets to the improvement which follows before you. Gains are short and fleeting, since others are racing to leapfrog your most recent advancement as soon as they can.

Here is the crux of the problem. Because everyone is focusing on the same thing (speed), nobody is creating a competitive advantage. All the companies look about the same, with the same types of engineers in the same types of culture working on the same types of issues. You cannot create a lasting advantage in this scenario because you bring no real competitive advantage to the marketplace. Others can copy you almost immediately because they have a similar business approach with similar tools at their disposal.

By contrast, a true strategy builds differential advantages which allow a business to do certain things better than others. Rather than playing the same game of leapfrog with everyone else, you go your own way and build a different game where you have an edge and are not so easily copied. This leads to the third point below.

3) Strategic Planning Improves Speed Through Business Model Superiority

Great strategies understand the importance of making trade-offs. They don’t try to do everything well. They understand that:

a)     There are not enough resources to do everything well; and

b)     Even if there were enough resources, it is still not possible to win on all fronts because of conflicting agendas. For example, it is nearly impossible to win at lowest price AND highest quality AND most innovation at the same time, because what it takes to win in one of these areas makes it harder to win in the others.

Therefore, great strategies choose what to specialize in and make all the proper tradeoffs to win there, even if it means giving up abilities in places outside their specialty. Take, for example, Southwest Airlines in the US. For decades, they have had both consistently lower prices than their competitors as well as consistently higher profits. Why? Southwest Airlines built a business model to specialize in lowering costs. This caused many trade-offs, where Southwest didn’t do things everyone else did if it got in the way of the low cost strategy.

When other airlines tried to copy Southwest’s pricing, they did not achieve Southwest’s higher profits, but made their profits even worse. Why? Because their business models were not laser-focused on making enough tradeoffs to pay for the lower prices.

When all you look at is speed, you take your eyes off building the right trade-offs in your business model to allow real differential advantage. If the business model does not provide an edge, then you cannot quickly build a place where you can win. You are stuck in the leapfrog trap.

SUMMARY

Ironically, the singular drive for speed does not usually end up putting a business on the fastest track to lasting success. Instead, the faster track also needs to include a drive for great strategy. The addition of strategy improves speed by:

a)     Adding Focus (on what to do and what NOT to do);

b)     Adding Differentiation (to avoid leapfrog trap); and

c)     Adding a Trade-off Based Business Model Design (which makes it harder for others to copy you).

These additions allow you to take a superior path that speed-only businesses cannot get on.

FINAL THOUGHTS

There’s a reason why mannequins are referred to as “dummies.” And if you think you can sneak onto the fast lane without real strategy in the passenger seat, then that mannequin may not be the only dummy in your car.

Strategic Planning Analogy #505: Secrecy is Silly

THE STORY

One time I was doing some work for a client which I found very frustrating. I kept trying to give them the insight I thought they needed for their decision, but it seemed like my efforts were always a little bit off from what they were looking for.

It wasn’t until much later (after the project was over) that I found out what the problem was. My client had deceived me about what their true intentions were. They wanted to keep their true intent a secret, so they gave me instructions under false pretenses.

No wonder my insights were a bit off the mark. They were designed to meet the false pretense rather than the real objective.

THE ANALOGY

My client was not the only one who likes to keep secrets. Secrets can be found all over the business world. This secretive approach often finds its way into the world of strategy.

There seems to be this idea out there that if a strategy “gets out” and is made public, it ceases to be an effective strategy. Somehow, mere knowledge of the strategy takes away its competitive advantage.

The problem is that the true value of a strategy is in its execution. And if those executing the strategy are kept in the dark, they cannot execute it well. As we saw in the story, I could not effectively do my job when I was kept in the dark.

THE PRINCIPLE

The principle here is that strategies are most effective when they are well communicated, both inside and outside the organization. A secretive approach to strategy diminishes its effectiveness.

The Problems With Secrecy

There are quite a few reasons why keeping a strategy a secret is detrimental to its effectiveness.

1. If your employees do not fully comprehend the strategy, they will not be able to fully execute the strategy. Thousands of decisions are made all over the organization every day. Depending on how those decisions are made, they can move a company either closer to or further away from your desired strategic direction. If the strategic direction is not known all the way down the organization, it will only be random luck if their decisions move the company in the right direction. Remember that your REAL strategy is not what you put on a piece of paper, but what you actually do. So to get what you do to match what you put on the paper, you’d better make sure the doers know what is on that piece of paper.
2. When your employees know what the strategy is, then they can use their insights and initiatives to make the execution even better. By contrast, if just the top executives know the strategy, then the only way to get the strategy executed is by having the top executives order people to do specific actions designed to support the strategy while keeping the strategy behind the actions a secret. This only makes sense if you believe that:

1. All the great ideas are found only at the top of an organization; and
2. A top-down only control of the business like the old communist economies is the best way to go.

The bankruptcy of the old communist system should be proof enough that a top-down only secretive approach has many flaws. The alternative is to let the people at the bottom in on the secret and allow them to make contributions to the effort. Strategies are made much stronger when input comes from the collective intelligence of the entire organization working on a common known goal.

3. Strategies usually include a reason why certain consumers should prefer patronizing your brand over the alternatives. Why should these consumers flock to your brand if you keep your reason for preference a secret? You should be shouting your strategic benefit from the rooftops, so that there is no mistake as to why you should be preferred. And to make the claim believable, it helps to show why your strategic approach makes the claim a true differential advantage.

Take the insurance business, for example. If your strategy is based on low price and you get there by going direct and eliminating the independent insurance agent to save money, let the customer know. Conversely, if your strategy is based on best service, play up your strategic approach of having the best local independents working for you (something the price-oriented insurers eliminated).

Positioning is about owning a spot in the mind of the customer. You won’t own that position if you keep it a secret.

4. The stronger you cement your position and strategy with your customers and your employees, the harder it will be for the competition to take it away from you. In fact, if you make it clear to your competition what your strategy is and how strongly you will defend it, you can cause your competition to no longer want to fight in that space and instead take a differentiating strategy. For example, Walmart has made it clear they will fight to the death to defend their low price position, so most competitors stop trying to win price wars against Walmart and instead go a different route, which strengthens Walmart as the everyday low price leader.

The Faulty Logic Behind Secrecy

Some believe that if you let the competition know what your strategy is, then they can quickly copy it and take it away. That is why they want to keep it a secret. But this thinking is flawed, because there is a big difference between knowing what a strategy is and knowing how to best deliver it.

Great strategies are built upon great business models. And great business models are often very complex and very difficult to imitate.

For example, Southwest Airlines has done very well with its low price strategy. But if a competing airline merely copied Southwest Airline’s low prices, they would not be as successful as Southwest. Southwest’s strategy works because they have a unique and complex approach to their business model, including choice of airplanes, choice of airports, point-to-point routes, corporate culture, and so on. You need the full business model to make the strategy work. This is nearly impossible for an established competitor to convert to.

In another example, Wells Fargo has created success with a superbly executed plan to win via cross-selling.  Now it’s one thing to say “we will win via cross-selling.”  It’s another thing to have a sophisticated business plan designed specifically to optimize cross-selling.  As Wells Fargo CEO John Stumpf put it recently, “We could leave our strategic plan on an airplane and it wouldn’t matter.  It’s all about execution.” In other words, there is no reason to hide the “what” of Wells Fargo’s strategy from competition, because it would take them years and years to figure out the “how” behind the strategy, and by then you’d have made even further advances, so they never could catch up.

Here’s a little secret for you. If a competitor can immediately copy your strategy upon hearing it, then you really don’t have much of a strategy. A good strategy is based upon making a number of deliberate choices about how you operate. Trade-offs are made in certain areas so that you can better excel in other areas. These choices and trade-offs attempt to optimize against your unique strengths and weaknesses. The net result is a complex business model which is not easily copied due to its complexity and its unique suitability to your own situation.

We live in an era of transparency and openness. If secrecy is your only defense, then you are in trouble.

Remember, great strategies try to find a place where YOU can win, not where anyone can win. If anyone can supposedly win there, then nobody will win there, because nobody will have an advantage.

SUMMARY

When it comes to strategy, secrecy is a disadvantage. Strategic secrecy keeps your employees from doing their best, it hurts your ability to own your position with the consumer, and it weakens your ability to scare off a competitor from going head-to-head against you. Great strategies are built upon great business models, which are extremely difficult to imitate. As a result, even if competition knows your strategy, it doesn’t mean they know how to take it away from you. So don’t keep your strategy a secret.

FINAL THOUGHTS

If your strategy is nothing more than a hollow platitude, like “We will be the Best” or “We will be the Most Profitable” then I might consider keeping it a secret, because I would be too embarrassed to let others know how silly my so-called strategy is.

Strategic Planning Analogy #485: Unconventionality

THE STORY 
Sometimes when my wife and I are on a road trip together, I’ll have fun by telling her that I want to race her to the destination.  Of course, that’s a silly suggestion, because we’re both in the same car.  As a result, we will both get to the destination at the same time.

I think that the very silliness of the suggestion is hilarious.  My wife thinks the very silliness of the suggestion is quite stupid.  So I laugh and she frowns.  But every once in awhile, I still bring up the suggestion when on a road trip.   

THE ANALOGY

If everyone is in the same car, they will arrive at the destination at the same time.  It kind of takes the fun out of being in the race, because there is no way to get a lead over everyone else.  It makes the whole idea of racing kind of silly.

Yet, I see businesses doing this all the time.  The company will set up all kinds of goals to win and to exceed the performance of everyone else in their industry.  The goals are quite impressive.

But when you ask them how they are going to win and achieve those goals, the game plan is to operate by the traditional rules of their industry.  My response is, “How do you plan on beating everyone else if you are doing the same exact conventional activities as everyone else in the industry.”

To me, that makes as much sense as trying to win a road race by piling all the drivers into the same car.  For if everyone in the industry is playing by the same conventional rules of operation, you are in the same car—the car of conventionality.   You are running the race the same way, with the same tools, same business models, the same processes, the same strategies. 

How can you expect to pull away and win a decisive victory under those circumstances?  I don’t care how impressive your goals are.  You haven’t shown me a way to pull ahead and win.

THE PRINCIPLE

The principle here deals with another one of my 23 laws of strategy, the Law of Unconventionality.  This law states that: “You do not achieve unconventional profitability with conventional business models.”  In other words, you do not meaningfully beat your competition if you are doing the same thing they are.  If you want unconventionally high levels of profits, you have to do unconventional things.  You have to get out of the same car of conventionality that everyone else is in and get a car of your own—a car that runs a better race.

Why Conventionality Won’t Win the Race

The problem with conventional methods is that they provide little room for differentiation.  If everyone is going after essentially the same customer in mostly the same way with basically the same offering, all the competitors will look about the same to the consumer base.  There is no natural reason for a customer to prefer one competitor over the other.

Without any meaningful natural differentiation, the only way to get an edge is by “bribing” customers with lower prices or added freebies.  Of course, the other competitors will follow, causing a downward price and profit spiral.

That is why the profitability of industries tend to drop over time and mature industries have returns which are about the same as the industry cost of capital. 

The Need to Differentiate

If there is an outlier in an industry who is beating these odds and making high levels of profits, I’ll bet you it is because they are not following the conventional rules of the industry.  They are doing something very different—playing by different rules.

Southwest Airlines has superior profits over conventional airlines because it doesn’t play by conventional airline rules.  It runs a point to point system with different rules on seating, ticketing (won’t use other ticketing sites online), baggage, fuel purchasing, employee relations and host of different things.  By playing by different rules, it has a lower cost structure and an offering which is superior to a significant sector of the population.

Geico made a splash in the insurance industry by running against the conventional approach of selling insurance personally through a huge network of insurance agents.  Instead, they put the money into advertising and call centers and cut out the agent fee, putting that money into other benefits.

Ashley Furniture gets higher than average returns for furniture retailers by direct sourcing much of its furniture from low cost countries and bypassing the branded furniture manufacturers which the conventional furniture retailers use.

Amancio Ortega became the third richest person in the world by re-writing the rules of the fashion industry.  Instead of running the business around a handful of fashion seasons each year, he built a system based on continuous replenishment.  This system supports his Zara stores in a new way, called “fast fashion,” which is very profitable, because it is a much more productive use of capital and inventory than the conventional fashion operators.

Apple became one of the highest valued companies by avoiding the conventional approach of specializing in either hardware, software or distribution and build an integrated, closed system.  It also changed the rules by focusing on elegance rather than just functionality.

Differentiation Breaks the Bribery Trap

When you do things differently, you give yourself a natural edge.  Either you create cost savings the competition cannot copy so that you can profitably underprice them, or you create superior preference so that customers are willing to pay more for your offering.  Either way, you get to zoom past the conventional operators in the race to profits.

Apple has had long lines of people waiting to full price for their integrated offerings, because many consumers thought their different approach made it worth the effort to get one. 

Because Zara sells through its offerings so quickly and replaces them with something different, people learn that it is useless to wait for items to go on sale.  You have to buy it at full price right away.  And because of their different cost structure, Zara’s full price is still a good deal relative to conventional operators.

The Limitations of Bechmarking

This is why benchmarking is only of limited value.  It helps you to understand how others do things, but it doesn’t tell you how to do things differently from everyone else.

If you are falling behind in the race, benchmarking can help you find a way to get into the car of conventionality.  At least then you are no worse than average and can ride with the rest of the conventional operators.

Or, if you see someone breaking away from the pack, benchmarking can help you figure out how to get inside their car.  For example, others like H&M and Forever 21 have copied much of Zara’s business model, which is starting to make that the “new conventional” model.

But benchmarking won’t tell you how to become the next Southwest, Geico, Apple or Zara.

Sources of Differentiation

There are lots of ways to become unconventional.  It can be done by going after a different customer base, offering a different bundle of benefits, offering a radically different way to solve an old problem, changing how a solution is delivered, changing how an offering is paid for, and so on.  There is not enough room in this blog for all the creative ways to break the mold.  Look for your creative way and you’ll be pleased with the results.

SUMMARY

If you run your business the same way as everyone else in the industry, you will never break away from the pack.  You will be stuck in a world lacking differentiation—and the added profits which come from differentiation.  Only unconventional approaches lead to unconventional returns.

FINAL THOUGHTS

A popular old circus act was to have dozens and dozens of clowns pile out of a tiny car.  If you stick to doing things the conventional way, you are like one of those clowns stuffed into the car of conventionality.  And those clowns get laughed at.  Do you want to be laughed at?  If not, get a car of your own.