We work with many clients who claim to have a marketing strategies but are actually failing to base it on the most important questions- Where do we want to be and how are we going to get there? Obvious but essential to winning marketing strategy.
Understanding the nature of strategy is necessary to define what is needed to create a good one. Strategies need to fulfill the needs of the market, the business’s problems and provide a solid future direction that can be worked towards across all departments.
Noun: A plan of action or policy designed to achieve a major or overall aim.
Perhaps an obvious example, but a clear and bold testament of how intelligent focus can change a company’s fortunes. A true example of top class strategy that was also well executed.
The story of Apple’s turnaround strategy:
Apple in 1996 was close to bankruptcy They had the front cover of Business Week saying that Apple was on its death bed, shares were below $30, the lowest in over 10 years.
Apple is rapidly becoming a minor player in the computer business and may be swallowed up by Sun Microsystems Inc. or another rival.
Most observers and people in silicon valley suggested there could only be two strategies for Apple to get out of the mess it was in:
1. A buy out from Sony, Sun or HP
2. Get bought or taken over by Microsoft
This is what a solid marketing strategy did for them…
Steve Jobs first secured $150m from Microsoft so that the Window’s producing company could keep Apple in the market. Jobs knew that Microsoft would accept as it would help them avoid added problems with monopoly and anti-trust regulations they were facing at the time. They needed Apple as competition to avoid being split up.
Apple had a range of 15 computer models and Jobs scrapped them for 1 model. Jobs then cut the number of engineers (8% of its work force) and set up factories in Taiwan to save money and create a lean, but highly focused business.
It was a focused survival plan. People were surprised at this level of focus when most people tend to opt for further risk mitigation and diversification. When Jobs was asked whether he as going to sell out he made it clear that Apple were never going to sell out. He believed in the product and decided that focusing on the core benefits of the Macintosh simplicity and values would win if they could streamline operations.
This strategy ensured they had liquid capital and created a simple and easy to understand product, with associated benefits in an increasingly fragmented models that were more and more alike.
IBM has another good story of winning marketing strategy…
IBM’s Louis Gerstner increased IBMs revenue by 500% through creating as good strategy that took around 8 years to be fully realised.
He saw the pressure the business was under from market forces. The commoditisation of computers and the reduced need for their hardware business meant that continuing to offer computers would produce a reducing revenue stream over time. Competition was too stiff and reduced profit margins on selling computers to a more mass market audience was Microsoft’s territory.
Despite great resistance internally and other executives believing the company should break up.
Gerstner focused on becoming a service provider and consultants to businesses rather than a hardware provider. Over 8 years the company would maintain hardware development and research, but for big businesses. Providing bespoke solutions for the world’s PLCs.
IBM are now world thought leaders of technology and the future of computing. It took time and resilience for the board to win over the company, especially front line staff, but with great focus that dealt with the most pressing market forces succeeded.
Look at other examples of winning strategy
If you take any sector and look at the competitive set ask the following questions to find the winning strategies
- Whose the most successful player in the market or sector?
- How did that player get there?
The same story emerges each time. Something changes in the market. A new condition or force changes the playing field. The eventual winner spots this change, quickly and effectively creates a solution that takes advantage of this change.
Reachli is a company that has done this more recently. It saw the change in the social media industry. Two trends were at work. The first was the rise of Pinterest as a new big player in social networking and the increasing demand for social media campaign management tools to help create and track social media campaigns. Reachli created a service that helps its users achieve both.
When asked about a strategy often businesses state the amount of revenue growth, profit and market share growth they are. A slightly better situation is when a set of principles are created that appear to collectively feed into the defined goals. For example:
We will create an environment of honesty and mutual support
We will maximise shareholder return
These are not strategies however, but principles or policies that may help to achieve the end goal, but does not provide the roadmap for how a business is to succeed and meet its long-term vision.
We will minimise overheads to x
We will ensure that profitability is kept to a margin of 30% on all lines
All of these might be good tactics that will also help a company reach its end destination – where it wants to be. But they do not provide a winning formula in their own right.
It gets worse. Some businesses use financial results and predictions as a strategic document.
Furthermore “Customer orientated disintermediation” is not a strategy, but meaningless, fluffy jargon. It is a smoke and mirrors statement that was made by a large mainstream bank. It is devoid of action points and means very little to few people.
Strategy is often focused on where people want to get to in the future and not the current challenge. It fails to deals with forces or issues that are happening now!
None of the above are strategies.
A strategy is the how you achieve goals.
What does this mean for social marketing strategy?
Whether a business, marketing or life strategy is irrelevant. A good strategy has its foundations in the same ground. To create a strong social marketing strategy one must create:
“A coherent mix of policy and action designed to overcome a specific challenge”
Strategy exploits the predictable nature of the world. As we saw from Apple going against the flow of expectation created a differentiation in its own right. Combining a clear understanding of the problem and ignoring external chatter to create a clear plan that so obviously tackles the problem at hand wins every time.
Winning strategy is the co-ordination of forces that enables you to create a powerful burst of focused effort. Such focus aligns all the resources at your disposal and will get you to the end goal faster than anyone else.
In marketing terms this might be “the adoption of a CRM tool to engage with customers on a whole new level in order to cross sell to existing customers and thus increase sales by 40% within 2 years”
With such a clear action defined in a sentence next to the target result everyone can get to work and thus implement the CRM system with a clear understanding of what is necessary. This will help the company get there before anyone else and achieve the first mover advantage that is so valuable in business.
Successful strategy has 4 criteria:
1. Diagnosis related to the nature of the business or context
2. Goal setting
4. Clear action
Creating a powerful strategy using 7 stages:
1. Diagnose the challenge
2. Make actions coherant: Focus
3. Cultivate insight look across the board and to all sources for understanding of the problem and potential solution
4. Create a proximate objective: Something that is feasible
5. Ride the wave: Go with the flow of change
6. Chain links matter: To have excellence everything must work together
7. Expect entropy and inertia