Strategic Planning Analogy #286: Who’s Strategy is it?

THE STORY
Let’s imagine for a moment that a friend of yours asked to borrow your conservative-looking car for a few days. Being the nice person you are, you let the friend borrow the car.

After those few days are up, your friend returns the car. To your shock and horror, you notice that your friend had made changes to the automobile. The exterior had been repainted to a color you do not like. Flame-like decals were put on the sides of the car. The interior was redesigned in an awful checkerboard pattern. The carpeting was replaced with some awful shag that looked like something out of a 1960s Hippie “Love Van.”

Naturally, you would be furious with your friend for trashing up the look of your car. You’d probably say something like, “What is the matter with you? I let you drive my car for a few days and you totally destroy its appearance. Have you lost your mind? This was MY car! You had NO RIGHT to change it like that!”

You friend answers as follows: “I knew I’d only be using the car for a short time, but during that time I wanted to be able to make a statement. I wanted to car express my personality.”

At this point, you’re probably ready to scream, “Well now you can express yourself on a check to pay for all the damage you did to my car!”

THE ANALOGY
It’s hard to believe that someone would be that disrespectful of your car. After all, it is your car. It belongs to you.

Yet something similar seems to occur often in the business world. A newly hired CEO, CMO or strategist will come on the scene. As the new person in the company, they want to quickly make their mark on the firm. They want to make a statement and express themselves. As a result, they start to make all sorts of changes to the brand.

The consumer then screams back, “What are you doing to MY brand? You are destroying it! You had no right to make those changes! Make it the way it was before!”

Remember the debacle of “New Coke?” There was a consumer revolt because the consumers felt that “their” brand had been violated. New Coke had to be eliminated and the classic form needed to return.

The Coca-Cola brand was like the car in the story. Consumers felt they owned the brand. The executives, who tend to stick around in their job for a only short time, had “borrowed” the brand and returned it as an ugly “New Coke.”

THE PRINCIPLE
The principle here is that consumers of a brand tend to stick around longer than the managers of that brand. So, in essence, the brand belongs to the consumer and the managers are only borrowing it for a short time. Therefore, our brand strategies should take more of a “borrower” approach.

A typical CEO holds that position for about 3-4 years. A CMO typically holds its position for only about a year. A Chief Strategist probably falls somewhere in-between. This is a very short period compared to the expected life of the brand or company being managed.

The only one sticking around for the long haul tends to be the consumer. In many ways, they are the ones who own the brand. After all, branding success depends on creating the proper image/position in the mind of the customer. The customer owns their mind. They don’t like people playing mind games to mess it up (even more than they hate having people mess up their car).

Look at what Pepsi did in 2009 by redesigning all of its brand logos. Between the cost of the redesigns and the cost of the transferring all of the visuals to the new look, Pepsi probably spent well into the hundreds of millions of dollars world-wide.

What were the results? First, the redesign of the Tropicana orange juice carton was received so poorly by the consumers that Pepsi had to return to the former design. The consumer response was “How dare you change MY juice carton. You made it ugly; change it back!”

Changing Gatorade to “G” caused a lot of initial confusion for the customer. Is this the same old Gatorade I’m used to or did you mess it up like Coca-Cola did with New Coke? As for the other Pepsi logos, I doubt one will ever be able to find a positive return on the huge investment. The new management over-stepped and wasted a lot of money.

Remember, we are only borrowing the brand/product/company for a short time. We need to act more like borrowers. As a borrower, we should manage by a few rules.

Rule #1: Do Not Ignore the Legacy You Are Inheriting
Typically, the brand/product/company was around for a long time before you got there. You are not starting with a clean whiteboard. That whiteboard is already filled with years of impressions and experiences between the brand and the customer. Some of those impressions/experiences are etched in pretty deep. You cannot just erase this history as if it never occurred.

Before embarking on any strategic or cosmetic change, first make sure you understand all of that historical heritage. That legacy tends to box you in on your strategic options. Depending on the history, certain strategies will be compatible. Others will not.

Coca-Cola’s legacy was around authenticity. Coke was “the real thing.” Coke was “it.” The historically-based impression was that the Coke formula was the enduring essence of refreshment throughout the generations and that everything else is a poor imitation.

This legacy boxed in the strategic options. Throwing away the old formula and replacing it with a new one was not compatible with this legacy. If old Coke was “real” then new Coke had to be “fake.” If old Coke was “it,” then new Coke was “not it.”

Based on the history one has inherited, you only have permission to go in certain strategic directions. If you stray too far from history, consumers will tell you that you had no permission to do so and will try to force you to return the brand back. We talked more about permission in a recent blog.

In this Web 2.0 world, the customer has more power to fight back than ever before. So do not ignore the history you are inheriting. Pay heed to impressions already in place. Go only where history allows you to go.

Rule #2: Remember Where the Battle is Taking Place (the Consumer’s Mind)
To win with the consumer, you have to win at the point where decisions are being made—in the mind of the consumer. You do not own the mind of the consumer. You can visit it, but trust me, the consumer is very protective of what goes on there.

As I said earlier, if you think someone is going to be mad because you messed up their car, just watch what happens if you try to mess up their mind.

Therefore, treat the consumer’s mind with respect. Respect the historical impressions which already are already embedded in the brain. If you stray too far, your message/strategy will not be believed.

Remember, you are only a visitor, borrowing a bit of their mental attention.

Rule #3: You Are A Caretaker of the Brand For the Next Generation
Just as the brand/product/company was around well before you got there, hopefully it will be thriving well after you leave. You are a caretaker of the brand for only a brief time. If you are a poor caretaker, you will destroy the brand’s long-term viability.

If you only think short-term, you can find many ways to get a quick bump in profits. Some of these tactics, however, can destroy the long-term prospects.

Think of the luxury fashion industry. The heritage is wrapped up (in part) in exclusivity. In the near term, one can get a boost in luxury goods sales/profits by taking the brand to the masses. However, once the masses embrace the brand, the exclusivity heritage can be destroyed. In the long-term, this will lead to defection from the brand by luxury customers. Once the luxury customers no longer embrace/endorse the brand, the masses will no longer see the value, so they will eventually reject it as well. The net result is that the short-term boost lead to long-term brand destruction.

Remember, the key determinant of stock price is anticipated future cash flow. If your actions appear to be destroying long-term prospects, the stock price will be depressed, even if you get a near-term bump. Keep a long-term perspective in your strategy. When you hand off the brand to the next manager, give them a strong brand.

SUMMARY
We are managers for only a brief period in the life of what we are managing. We are inheriting the legacy of those who came before us and we are leaving a legacy to those who come after us. The best strategies understand this larger perspective. They take advantage of the opportunities provided by the old legacy and create enduring strength which transcends our tenure. After all, the brand really belongs to the customer. We are only caretakers.

FINAL THOUGHTS
When I was a Boy Scout, we were taught about treating nature with respect. We were told that we were nature’s caretaker on behalf of future generations. When it came to camping, the rule was to “leave the campgrounds in a better condition than you found it.” I’d say this concept applies equally well to strategic management.

Strategic Planning Analogy #280: Mother May I

THE STORY
When I was a child, one of the games we played was called “Mother May I.” In this game, one person (called “Mother”) stood facing away from a line of children. The one playing the role of Mother then chose a child (at random, or in order), and announced a direction. These followed a pattern, like, "Bobby, you may take “x” giant/regular/baby steps forward/backward." The child then responded with "Mother may I?"

At this point, Mother then said "Yes" or "No", depending on her whim, and the child complied. If the child forgot to ask "Mother may I?" he/she went back to the starting line. The first one to touch Mother won the game.

THE ANALOGY
The two most important things to remember when playing Mother May I are:

1) You cannot move unless you have permission.
2) If you forget to ask for permission, you have to start all over again.

These two points are also important to remember when developing a strategy:

1) Your strategy probably will not succeed in a space unless you have permission to be there.
2) If you do not ask for permission, the marketplace will punish you and you have to start again.

THE PRINCIPLE
The principle here has to do with the concept of permission. A strategy only works if there is cooperation between your company and its key constituents—the consumers, strategic partners and employees. If your key constituents do not think you have a right to be operating in that space (or in that manner), you will not get the needed cooperation. Therefore, a necessary element to success is gaining permission from your key constituents.

1) Permission from Consumers
Over the last 10 years, Seth Godin has written a considerable amount on what he calls permission marketing. His idea is that un-asked-for one-way advertising (from producer to consumer) is very wasteful. Instead, marketers should first get permission to speak before spouting their marketing message. The idea is to create a relationship, or dialogue, with the consumer first, in order to create credibility. Then, when you give your marketing message, it will be better received, because the customer gave you permission and asked for the message.

This is all very fine and good, but I want to take this to a deeper level. Getting permission to speak is only half the battle. You also need permission to change the mental model inside the customer’s mind.

Consumers have a mental model about how things work and how various brands perform. For example, let’s assume someone wants to buy a new vehicle. Their mental model of choices may go something like this:

“If I want a reliable car, I should get a Toyota; if I want a luxury car, I should get a Lexus; if I want great value, I should get a Hyundai; if I want a truck, I should get a Ford.”

Brands are quickly labeled and slotted into a particular mindset. This mindset is the lens through which they see the world. If you, the producer, make a marketing proposition which is contrary to that mindset, the customer may not give the permission for that proposition to enter their mind.

Ford has been trying to convince people recently that it is not only the place to go for trucks, but also for automobiles. Ford now makes fine automobiles, on par in quality to Toyota and Honda. Unfortunately, the old mental model is so strong that Ford is having difficulty getting credibility as a viable automobile choice. People are not giving Ford permission to enter that mental space in their mind. That space is already filled by Toyota and Honda.

Therefore, before Ford can convince you to purchase one of their cars, they must first convince you that they have a right (i.e., permission) to be considered in your mind as a viable automobile seller.

Similarly, Wal-Mart recently tried to be taken seriously as a source for fashion apparel. It set up a quality fashion design studio in New York. It took out ads in Vogue magazine. It had a fashion show during New York’s fashion week. All that effort failed, however. Wal-Mart was still not taken seriously as a place for fashion. The project was a bust and most of the initiative got shut down.

The problem was not quality. The problem was permission. The consumer would not give Wal-Mart permission to be in that space. It took decades of careful image crafting to get Target to the place where it was seen as a credible source for fashion. Wal-Mart tried to get there in one year. Consumers would not permit it. The mental mindset for Wal-Mart is “Lowest Price.” This is incompatible with fashion ads in Vogue. The mind would not let the message in.

2. Permission from Partners
This same principle applies to your relationship with your strategic partners. Cisco and HP have been strategic partners for a long time. The relationship has been successful for both of them. However, in the past year these two firms have been invading each other’s territory. Cisco has made devices which cut out HP and HP has made devices which have cut out Cisco.

Neither one asked the other for permission to do this. They just did it.

The companies claim that these are rational growth moves and that their partners should understand that and rationally still work together in other areas as they partnered in the past. Unfortunately, we are not 100% rational. Companies, just like people, have an emotional element as well. These emotions get upset when a partner invades their space without permission. They retaliate with products that invade the other person’s space.

I suspect that in a few years all of that great strategic partnering between HP and Cisco will be a memory.

3. Permission from Employees
I know a company where they used to value their employees highly. The employees were considered to be the most important asset and were treated as partners. Then there was a change in command. The new administration started treating employees as a horrible cost to be minimized. They did not ask the employees for permission to make this change. The employees resented this change.

As a result, many of the good employees left the company. The ones who stayed were less devoted to the company. Rather than volunteering to work hard 70 hours per week, they started working only 40-50 hours per week. If they were going to be treated as”just an employee”, the employees would start treating their work as “just a job”. Enthusiasm and morale declined. Productivity was ruined.

Be careful about taking employees for granted. If you act without their permission, they can make your life miserable.

SUMMARY
Just like the game “Mother May I”, if you want to move ahead, you need to ask for and receive permission. Otherwise, you will meet resistance. With customers, one needs to get permission to change mental mindsets. With partners and employees, one needs permission to change the status quo.

FINAL THOUGHTS
Getting permission takes time. It looks like a way to slow down a strategy. However, without permission the strategy goes nowhere. That’s even slower. So factor getting permission into your strategic timetable.