Tuesday, September 11, 2012

Inspiration Versus Perspiration

You've heard that genius is 1% inspiration and 99% perspiration? Well, I was interested to read a few months ago an insightful article on Wells Fargo and their success in retail and commercial banking. The relatively new CEO John Stumpf states that a good strategy flawlessly executed will always win versus a brilliant strategy poorly executed.

I would personally modify that statement a bit. I believe that a good strategy enables flawless execution but does not ensure it. In other words, a good strategy is necessary but not sufficient to win.  I would say that company success is 20% strategy and 80% execution. But you can't get the 80% right without the 20%.

I advocate the concept of "employee bandwidth" in management. The executive team has only a certain amount of time in the day, so anything that distracts their focus from work critical to the future of the company will ultimately help to sink the company. Having a single strategy, with elements that are mutually reinforcing and move towards a common goal, enables everyone to use their limited bandwidth to drive towards greater customer insight and profitability.

Where does market research come in to this equation? Done properly, the market researcher stands at the vanguard of understanding customer value. When communicated properly to executive management and the company at large, the market researcher has the unique responsibility to explain how to break value compromises that customers have endured in the past.

Take Southwest Airlines as an example again. The market researcher should have explained that pleasure travellers are willing to give up many perks of flying to get a better price. They are willing to give up free food, assigned seats, flight attendants in uniform, first class seating, entertainment options, non-stop flights, but not on-time arrival. Southwest Airlines could therefore orient their "value" offering to eliminate most perks as long as turning around the plane quickly (a key to their strategy) did not result in late departures.

Most of Southwest Airlines' approach helps to ensure that they can turn planes around quickly and still achieve one of the best on-time records in the industry. Nevertheless, their strategy has been devilishly difficult to implement. In fact, Herb Kelleher repeatedly has taunted his competitors to try his approach because he knows how difficult it is.

Difficult-to-execute strategies are not bad; in fact, they are excellent. "Difficult to replicate" equals "long-term competitive advantage." The history of companies attempting to copy Southwest Airlines is filled with failures, and I can only think of one partial success (Alaskan Airlines).

The great moment for the market research professional is the moment at which the strategy has been set, and the company is desperate for more information on what the customer is or is not willing to give up to get the benefit your company now offers. If you're offering a complete ecosystem of products that work seamlessly together, is the customer willing to give up in-person service? If you're offering the same product as competitors for half the price, is the customer willing to order direct instead of going through a distributor? If you're offering unparalleled service, is the target customer willing to pay a premium price and still give up ever going into a physical store? Market research can and should be spending money to find out these secrets.

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