Evidence of Strategy Everywhere: “Hot Doug’s”

You might think I’m announcing that today there is strategy in the United States. Such a discovery would indeed be welcome but it’s not what I mean. I mean that you can see strategy in almost every newspaper article. All you need is to want to see it!
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We tend to think strategy, in the sense of unique positioning, is for large companies with large strategic-planning staffs and large strategy-consulting firms presenting large bills. It might be that the opposite is true.

In large companies strategy is mostly tactical tweaks to the master plan that made them big to begin with. That strategy was the founder’s dream. It succeeded, and made the company large. The rest, as they say, is history, with a bit of tinkering at the margins.

The number of large firms that changed strategy or created strategy once they were big can be counted on one hand with perhaps four fingers left over. IBM (under Gerstner). (Apropos IBM, see also my co-editor Mark Chussil’s “The Holy Grail of Competing.”)

Did I say IBM?

Since small businesses are typically run by their founders, and since they haven’t yet accumulated the fat to sustain them for decades like large firms, if they are to survive they must have some unique positioning. If the business is local, we often don’t see “strategy,” but even a slight difference in activities can make, well, a big difference.

A story in USA Today about Doug Sohn, Chicago’s “sausage king,” reveals a textbook example of a Michael Porter competitive-advantage strategy.

There are 2,000 hot-dog stands in Chicago, yet Mr. Sohn created a panic when he announced that he would close his one and only location, Hot Doug’s. (If you didn’t make it there already, it’s too late.)

For 14 years Sohn sold creative hot dogs. How creative can a hot dog be? Try chardonnay and rattlesnake sausage. Try foie gras and sauternes duck sausage. You want creative fries with that? He offered duck fat fries and cheese fries made with his own secret sauce.

Big deal, eh?

Yeah, a big deal. For decades, people would wait in line for hours — that is not a typo, I mean h-o-u-r-s —to get his hot dogs. His strategy included never expanding, offering only 45 tables in his one inconvenient (i.e., not downtown) location. Those ingredients, mixed together, produced the uniqueness. Had he expanded he might have made more money, or not, but it wouldn’t have been such a mecca for hot-dog lovers.

The essence of this strategy was creating a luxury, gourmet food where it could be positioned as affordable. Simple, elegant, strategy, cooked to perfection. And he closed at the peak of his success.

Kudos, Doug. Let me know about your next shop before you close it down, okay?


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About the author  ⁄ Ben Gilad

BENJAMIN GILAD, PhD, is founder and president of the Academy of Com­petitive Intelligence, Inc., and with Mark Chussil, a cofounder and partner of Sync Strategy. He is a former associate professor of strategy at Rutgers University’s School of Management, and a pioneer in the field of competi­tive intelligence and war gaming. He has published seven books and more than 90 articles in academic and practitioners’ publications on the topics of behavioral economics, competitive intelligence, and business war gaming.

He has been running war games for Fortune 500 companies since the 1980s and teaching a course on war gaming as part of Fuld-Gilad-Herring Acad­emy of CI which grants CIP certification in the field of CI. The Strategic and Competitive Intelligence Professionals society awarded him its highest Meritorious Award in 1996.

He earned his PhD in economics at New York University, MBA at the University of Central Mis­souri, and BA at Tel Aviv University.

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