The Strategy Misunderstanding

Welcome to our inaugural guest blogger post. Periodically we will be featuring members and friends of the KaizenBiz community. For this post, we are featuring John Richard Bell, a KaizenBiz community member, retired CEO of Jacobs Suchard’s North American coffee/confectionary business and former strategy and branding consultant to several of the globe’s most respected blue-chip consumer goods companies.

            Let’s start a conversation…

Strategy has to be one of the most misused words in business.business strategy, misunderstood, tactics

The word is tossed around boardrooms and customer meetings with reckless abandon. You’ve likely heard this:  “Our strategy is to become the biggest and the best.” Deciding to become a global corporation, to diversify, or to increase sales by a certain number of dollars per annum is not strategy. Such aspirations are goals or objectives. Articulating how to become the biggest and the best is the strategy. That strategy can be good or bad. The “steel” in strategy is its capacity to set the stage for an organization to achieve ironclad competitive advantage. Strategy is also a “steal” because good strategies cost no more to develop than bad ones.

Wal-Mart’s example

For many years, Wal-Mart envied the online business of Amazon.com. While Amazon was expanding product lines and customer count, Wal-Mart was content at opening new outlets and increasing same store sales. Now Wal-Mart is making a concerted effort into digital commerce. This is an objective. The means to that end is a growing web presence, an array of mobile apps, and an infrastructure designed and operated by the best managers, coders and engineers the digital world has to offer. These folks can be found in the Bay Area, where Wal-Mart has set up a large and growing outpost. The added steel in Wal-Mart’s strategy against Amazon is this: Through mobile, Wal-Mart is going beyond bringing the store to the web; it is bringing the web to the store. Who better to leverage their massive customer base and transform retailing?

Tactics are often mistaken for strategy

Tactics, often mistaken for strategy, is the last piece of the puzzle that includes goals/objectives and strategies. Tactics are the ever-important short term decisions and activities that win battles and contribute to winning the war. In traditional manufacturing companies, sales departments know tactics better than most other functions because sales people work with tactics every day. Big retail chains are dead without a firm understanding of daily, weekly and monthly tactics. They have to decide when they will promote, what brands they will feature, and how they will achieve one-upmanship on aggressive competitors.

Misguided worries

People worry that strategy slows a company down and limits growth opportunities. The opposite is true. Just look at the success of Apple. Big. Fast. Focused. Innovative. This company managed to harness the resources of 72,000 employees to introduce and successfully market a slew of breakthroughs. Tim Cook and Steve Jobs before him were adamant in saying “no” to thousands of projects in order to focus on the few that were truly meaningful to Apple.

Howard Schultz grew Starbucks at an outrageous pace. In just 3 decades, Starbucks catapulted from the Pacific Northwest to 21,000 stores in 62 countries. Schultz’s vision for Starbucks was a social community with a defined culture that people would aspire to connect with, (over a cup of distinctive, dark-roasted coffee). Seemingly, the personality of the brand impacted every decision about the experience and the ambiance – the furniture, the artwork, the exotic names of the bean origins, even the music.

Strategy is still misunderstood

With so much written about the success of great companies led by outstanding strategic visionaries, one has to wonder why strategy is so misunderstood by so many of today’s leaders.

Join in the conversation…

  1. Why are so many of today’s leaders misunderstanding or discounting strategy?
  2. Should Amazon be concerned about Wal-Mart’s foray into online retailing? Why or why not?
  3. Where does social media marketing fit – as strategy or tactics?
  4. What, if any signs, are there that Apple or Starbucks are veering off their strategic course?
  5. Who are the new-age entrepreneurs who stand out as great strategists? Why?

About the author: John Richard Bell is the retired CEO of Jacobs Suchard’s North American coffee/confectionary business. After Kraft acquired Suchard, he became a strategy and branding consultant for several of the globe’s most respected blue-chip consumer goods companies. You can find John on Twitter @JohnRichardBell or on his website www.ceoafterlife.com.

 

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One thought on “The Strategy Misunderstanding

  1. Since Casudi shared this, I’ll bite.

    1. Why are so many of today’s leaders misunderstanding or discounting strategy?
    Because so many organizations are managed-by-committee, concerned primarily with profit, and turning a blind eye to sustainability. Where profit is the objective, a meaningful difference and long term viability take a backseat. “A bird in the hand beats two in the bush” leads to wholesale procrastination until something absolutely must be done in a last ditch effort to change course or save a sinking, rusted-out, industrial era ship.

    2. Should Amazon be concerned about Wal-Mart’s foray into online retailing? Why or why not?
    Not really. Amazon has a vibrant community of advocates, offers pretty much every product one can imagine, and even allows others access to sell through their channels. Wal-mart is a race-to-the-bottom, cost-cutting juggernaut enslaving the weakest society has to offer under the flag of living better through paying less.

    3. Where does social media marketing fit – as strategy or tactics?
    Products worth owning sell themselves. I see social as more a platform for customer service, though, done right, it can generate word of mouth. A strategy might be offering 24/7/365 access to customer-facing staff empowered to resolve customer issues immediately, on the first contact. Tactically, this would require communicating the strategy to said customer-facing staff, training them how to serve and when to escalate, and implementing tools.

    4. What, if any signs, are there that Apple or Starbucks are veering off their strategic course?
    Funny you would ask this. I waited about 10 minutes for a frosty Starbucks treat for my wife the other day. Redbull in hand, my first thought was irritation. “Who gives a 10 year old a Starbucks gift card, anyway, and why is there only one girl working at this in-store location?”

    As I stood there, third person in line, I began to feel sorry for the girl behind the counter. Dirty “dishes” were piling up. You could tell she had been too busy to clean as she went. And her once remarkable title of “Barista?” I watched as she moved the clear pitchers from one jug of syrup to another, added generic, measured scoops of ice and coffee and put it all in a blender with a timer, I realized Starbucks is maximizing profits by reducing the potential for errors and inconsistencies; they’ve dumbed things down to support their growth model. They could empower their employees and give them increased responsibility with a focus on reflecting their message of quality and experience, but instead they’re cutting corners in the name of profit.

    Apple appears a similar case. Steve Jobs was the visionary, with the chutzpa to make things happen. After all, it was HIS company. Who could argue? While they engaged in anti-competitive practices like limiting their product to a sub-par carrier, other manufacturers stepped up their game, developing superior products for a market unwilling to sacrifice service for sycophancy.

    Today they’re in the crosshairs for having more cash than most developed nations, playing the Man’s Tax Evasion Game better than The Man Himself, and are catching flack for unsavory, exploitive working conditions (hello, Wal-mart), and look to be on the cusp of become patent trolls. The long game looks like they started a game of Monopoly they’re unprepared to finish.

    I’ll skip the last question because I don’t follow the serial entrepreneur, build-to-flip economy much these days. Too busy working on slow growth, small cap stuff that really matters to fewer people. Scale is overrated. (Plus it’s poor form to leave a comment longer than the original blog post – but it’s been a while since I’ve had time to comment.)

    Cheers. Thanks for the opportunity to think and reflect.

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