What Is Strategy?

Having just finished presentations for Vocollect's strategic planning efforts this year, I am reminded of one of my all-time favorite business articles, Michael Porter's "What Is Strategy?" (You can find a free copy here apparently.) In a nutshell, Porter argues that strategy is a set of inter-related and mutually reinforcing decisions about what to do and not to do. Companies that try to execute two strategies at once often pay a "straddling penalty" because the two strategies compete for resources and detract from each other. Take a look at the diagrams, in particular, which I have found wonderfully instructive for explaining how good strategy works.

Back when I was in the paint industry, Benjamin Moore had an excellent strategy:

1. Target the residential repainter.
2. Sell through dealers only (no home centers, no company-owned stores).
3. Market to consumers as "high-design, high-fashion, color-forward."

Each of these decisions had implications and mutually reinforcing benefits. Targeting the residential repainter meant making the paint easy to apply, high coverage, and fast to dry. In fact, Benjamin Moore's highest-end paint dries so fast that regular consumers can't even use it because they paint too slowly. The company seems to have skimped a bit on the qualities that consumers value such as ability to wash the walls without leaving marks, but residential repainters don't care about these qualities. Selling through dealers enables full support for the design aspects that consumers value. The high-design positioning justifies the higher price at the dealer as well as making consumers tend to ignore the less appealing functional qualities of the paint in favor of the design knowledge.

I often look at technologies in our industry and wonder why nobody has tried to own a strategy in RF scanning devices. They are really just sold as commodities, but the supply chain market has room for a number of potential strategies:

• The "Dell" strategy: go direct, reduce cost and inventory, become a "fast follower" on technology, customize orders prior to shipment, compete on price.
• The "Apple" strategy: sell through proprietary network of high-value consultants, work really hard on the user interface, make the devices intuitive for users, solve problems in the supply chain with easy-to-download "apps" for the devices, provide a robust ecosystem of matching applications (printers, device management software, etc.), limit inter-operability to require the entire ecosystem and provide benefits for using all one vendor's ecosystem.
• The "Sub-Zero" strategy: go super up-market, provide extraordinary value for a premium price, sell through a network of carefully chosen partners with only the best knowledge base, focus only on niche applications that cannot take a commodity scanner.

I would be hard-pressed to explain any RF scanner's strategy in this space although many have a positioning. Consequently, none of the vendors seem to be making lots of money with RF scanning. Fortunately, I believe that our parent company Intermec has some of the best technology and thinking in the field and has the ability to create a break-out strategy that could win some serious market share and profits. Maybe I'll send them the article.