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.

Accomplishment

Allow me to toot my own horn for a minute. I completed the Pittsburgh Marathon last Sunday in 5 hours, 15 minutes and 22 seconds. (The last stretch of time-consuming training runs also partly explains my absence of posts for a bit.) I ran just about the speed I had planned.

Two things struck me about the run:

1. Outdoor advertising is really noticeable to the 25,000 running the race and probably to the thousands of people watching (thanks for the cheering--it really helped). Something makes me think this particular type of advertising is on the expensive side on a cost per thousand (CPM) basis, but the impact should not be underestimated.

2. Running a marathon for the first time is not unlike putting together a good marketing plan.

I took a lot of the same steps in preparing to run a marathon that I would in marketing. I started with a clear goal. I read about other people who had accomplished the goal and used existing tools to set my expectations and revise my goal for realism. I set out a schedule to accomplish the goal using existing templates from respected sources and adjusting them to my purposes instead of starting from scratch. I researched the best online tools to help me on my way, started with the free ones to save money, and adjusted my tool usage based on my needs along the way (such as paying for professional medical help for my knees about 80% of the way through the training). I purchased strategic assets necessary to move forward (such as toe caps to keep my toenails from falling off) and leveraged existing information online and from experts to solve problems (such as getting the best knee-strengthening training exercises).

It is amazing what one can accomplish with planning and a lot of effort. When all was said and done, the marathon was hard but a good match for my expectations at the start of the race. If I compare my approach to some of the flailing around I have witnessed in marketing departments I have consulted to in the past, I think matching expectations and achieving the goal is all you could ask of a big project.

Visionary Thinking

Roger Byford founded Vocollect 25 years ago. Today, we look at the Talkman(R) device and think, "It's just another wearable computer." We have smart phones that do 100 times more than this little thing, cost less (albeit for much less rugged use) and work in such a user-friendly way. But imagine what it took to start this company 25 years ago.

Just to remind you, this was the age in which Steve Jobs was just leaving Apple to start NeXt Computer. In which Robert Tappan Morris was just unleashing the first major network-crashing virus. In which people were jazzed about IBM's new Silverlake line of midrange computers. In other words, not an era in which many people were thinking about wearables and the future of the supply chain.

In fact, I told Roger today that if he had come up to me in 1988 and described his business, I would have probably thought him a complete crackpot. "You're going to design a computer that you wear that listens to the worker in the middle of a noisy distribution center, understands what he says, and then tells him what to do and where to go on the basis of that speech recognition?"

The success of this company just shows me what "future vision" really means. I stopped by the third floor display case today that contains one of those first Mercury wearable device models. It's impressive, both because of its size and because of the audacity of its vision. And here we are two decades later talking about the shrinking market in our grocery business... because Vocollect already has 80% of the Supermarket Top 75 using our product.

What's your vision of the future? Automated guided vehicles that pick full truckloads and then drive them (driverless) to the store? Self-guiding packages that move themselves into position in the supply chain? Because if you're thinking about something like recently purchased Kiva Systems, I believe you that may be looking too near into the future. The big winners are going to be products from the visionaries like Roger who see the possibilities more than two decades ahead and then have the audacity, persistence, skills and sheer guts to fulfill those possibilities.

R.I.P. Steve Jobs (But Not Your Management Style)

I surprised myself by my strong reaction to Steve Jobs's passing. Maybe having had an Apple II as my first computer prompted the youthful nostalgia. Poking around in the Google News archives, I found this old article about Mr. Jobs returning to Apple:

http://news.cnet.com/2100-1001-256947.html

The author reflects the ambivalence about the management style of someone who was, by many accounts, a royal a******. Nevertheless, the Stanford graduation address shows a different side of Mr. Jobs:

http://www.ted.com/talks/steve_jobs_how_to_live_before_you_die.html

The TED video is worth watching in its entirety to remind each of us what passion really means. For me, it means being good to other people (unlike Steve), remaining passionate about bringing science to marketing (maybe like Steve), and trying to live a life I want rather than the life I think someone like me ought to have (definitely like Steve).