Celebrity and Strategy

The cult of celebrity is not only present in entertainment, sports, and politics, it’s in business as well. CEOs that get the most attention aren’t necessarily competing better than the rest. In the news doesn’t mean in the know.
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Here’s a true story. A friend of mine, Bruce Hamilton, won the Professional Bowlers Association (PBA) championship some years ago. He laments that his skill is in bowling and not in golf. His prize was nice but the Professional Golf Association (PGA) championship paid seven times as much in that year. Would we say the PGA champ was seven times as skillful as my friend?

In 2013, the PGA champ was paid 28.9 times as much as the PBA champ, up from seven times. Would we say that skill at golfing is growing faster than skill at bowling?

How many top golfers can you name? How many top bowlers? (I can name one.)

We have, in business, a cult of celebrity rather than a cult of strategy. Try this: who’s the CEO of Facebook and who’s the CEO of DuPont?

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Do Marketers Market?

When it comes to competing, marketers are missing the mark. A recent study reveals that most marketing professionals focus on customers over their competitors. 
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I have never thought of myself as a Luddite. I own a smartphone and a scanner, and I use them as needed (i.e., less often than every waking minute). Progress, science, and rigorous analysis are my guiding lights.

I wouldn’t bother you with such personal reflections if I hadn’t stumbled on an article in a prestigious academic marketing journal. The article made me feel, for the first time, a total Luddite, unable to understand progress and the contribution of science to humanity.

The article, “From academic research to marketing practice: Exploring the marketing science value chain” by John H. Roberts, Ujwal Kayande, and Stefan Stremersch, was published in the June 2014 issue of the International Journal of Research in Marketing. It is one of the most sophisticated, elaborate, careful studies I’ve seen in years. Its admirable objective was to test this question empirically: Does marketing-science research affect marketing practice?

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The Best Ad Ever

When it comes to corporate advertising, being unique creates a competitive advantage. See how these companies decided to be unique, resulting in “the best ad ever.”

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According to Michael Porter, competing effectively means providing some customers with unique value, where “unique” means not offered by competitors and “value” means of worth to some customers. To do that, a company must design its set of activities in a unique way as well, or it will be imitated quickly and its uniqueness will evaporate.

Part of the activity chain, and therefore part of competing, is a company’s message delivered via its advertising. Many advertising agencies just spit out commoditized ads. (Where’s their unique value?) Once a year, in honor of the Super Bowl delirium, they try to be funny. The goal isn’t unique and the formula isn’t unique. Film a cute dog or a cute toddler or a cute dog with a cute toddler, and you have it. The cuteness and humor needn’t have anything to do with the other activities of, say, Budweiser or Pepsi. Or with sales, as Darth Vader can testify against VW. So, the activity chain is not internally very consistent.

They can all learn from Las Vegas and Cirque du Soleil.

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The Holy Grail of Competing

Every company wants to grasp the holy grail of competing: to disrupt so thoroughly you make your competition irrelevant. But a disruptive competitive strategy doesn’t last forever. There is a disruptive attitude, though, that might.

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Disruption and the blue ocean are the holy grails of competing. With them, you don’t even have to compete.

Blue ocean is pacific. It’s gentle; it doesn’t bother anyone; it’s just something wonderful and new. Disruption is the bad boy of holy grails. It sees the party going on at your house and lures everyone away to the party at its house.

Disruption is the ultimate buzzword for raising capital. Starting Walmart merely makes you rich. Starting Google makes you rich and cool.

But we are strategists and we demand more than generalities and party metaphors. Is disruption really the holy grail of competing? I’ll conclude that it is, but not of the we-don’t-even-have-to-compete variety. (I’m going to meander a bit on the way.)

In a sense, all extant companies were disruptive at least once because they lured customers to attend the party at their houses. But that’s about as useful as remarking that all extant humans breathe air. “Disruptive” must mean more than breathing. What more it means is a bit unclear.

Walmart is number one on 2014 Fortune 500 list. Its revenues top the combined budgets of California, New York, and Ohio. They top the annual budget of the Netherlands.

Is Walmart disruptive?

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“The Sound of Competing” Episode 3: Culture Doesn’t Replace Strategy


Every corporation has a corporate culture. Is yours a competitive advantage?

Many pundits, especially those from the “soft” social sciences (psychology, sociology, anthropology), make a case that corporate culture is a critically important source of competitive advantage. They call for open and empowering cultures that they say uniquely encourage innovation and success. Yet, just as attitude can take you only so far in soccer if your stars are injured, culture can take you only so far within the competitive economics of the industry. Companies creaking with old-fashioned management styles have succeeded over decades. Startups wielding the most open, progressive, and innovative cultures have failed overnight.

The one aspect of culture which is critical is how information flows inside the organization. The reason: whether your management is an authoritarian, cigar-chomping Lord High Everything or an enlightened, organic Collective of Nice Dedicated Associates, without information you wear a blindfold during the big game.

In the podcast you’ll hear about the category of information that’s the most crucial to decision makers, why it is scarce, and what it takes to make it flow.

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“The Sound of Competing” is a new podcast from Competing.com. It’s conversations from Ben and Mark, plus the occasional reckless guest. It’s remarkable. It mixes serious concepts with humor. It’s edgy without sacrificing critical thinking. It’s the antidote to the silly and shallow. Also, there are titanic battles between good and evil. A ping pong match between two strategy giants resulting in commentary smart enough to listen to.

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Disruptive Innovation versus Old-Fashioned Strategy

A solid business strategy doesn’t have to be groundbreaking, it just has to provide value. Some companies even gained a competitive advantage from their own non-innovative business strategies.
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Harvard Business School Professor Clayton Christensen published The Innovator’s Dilemma and laypeople and pundits fell in love. They fell in love with Prof. Christensen’s buzzword: disruptive. You, too, may cast a romantic smile toward your dictionary right about now.

Companies with modest revenues are said to be worth IPO billions due to their disruptive business models. The most-sought-after disruptions are those hailed as truly new ways of doing things. Yet the frantic race to the next disruptive technology or innovation brushes off old-fashioned business models that eschew “innovation” for the sake of innovation (see also my article The Strategic Mind At Work). Those drab old business models merely make money.

Business models, whatever the term means to you, don’t have to be about the biggest disruption or the latest technology. Old-fashioned strategy can triumph without disrupting anyone. Remember the joke about investing millions in space pens that can write without gravity, when a pencil would suffice? No joke here. Let the pseudo-savvy investor crowd rush to pour billions into the latest techno-gamble. You quietly find real value.

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