Evaluating Your Company Strategy

Evaluating Your Company Strategy

In this excerpt from Mavericks at Work, William C. Taylor & Polly LaBarre outline five key questions entrepreneurs should ask themselves about their company’s strategy.

Few companies set out to be just another me-too player with another ho-hum business model, following a bland formula that’s hard to distinguish from everyone else’s. But in industry after industry, that’s precisely how most companies end up competing, which is why competition feels so unforgiving.

As you think about the values you stand for as an organization and as a leader, ask these five questions about your company’s strategy.
1. Do you have a distinctive and disruptive sense of purpose that sets you apart from your rivals?

This is what separates the mavericks from their me-too competitors. The founders of DPR Construction were determined, from the moment they started the company, to reckon honestly and openly with the designed-in flaws of their industry and to build an organization that would prosper by fixing those flaws. The founders of Cranium didn’t launch their company because they had one good idea for a single board game. Instead, they had a wide-ranging critique of what was going wrong with family entertainment -- and an unapologetic sense of mission about providing a clear alternative, through board games but also through book publishing, TV shows, and other lines of business that Cranium has begun to enter after its runaway success with games.

Even when their company was a tiny start-up, the Cranium founders believed and acted as if they were playing for high stakes -- not just thinking about games, but rethinking how parents could relate to their kids and how families could relate to one another. “We’ve always acted as if we’re a much bigger company than we really are,” says Grand Poo Bah Richard Trait. “We’re still a fairly young player in our industry, but we conduct ourselves as if we are a global movement. This isn’t a job. It’s the pursuit of a dream, to give everyone a chance to shine. It’s a big, ethereal goal, but we won’t stop until we’re convinced that we’re making progress against that goal.”

High ideals, to be sure. But don’t confuse high ideals with modest ambitions. Companies with the most values-based critiques of their industries often turn out to be the savviest and most aggressive competitors. The stock market value of fun-loving Southwest Airlines exceeds the stock market value of every other U.S. airline put together. Quality-obsessed HBO was the first network in TV history to generate more than $1 billion in annual profits. ING Direct holds assets of more than $40 million per employee; the average for U.S. banks is about $5 million per employee. In other words, Arkadi Kuhlmann’s outfit is eight times more productive than the competition at generating assets. Who says high-minded values can’t drive cutting-edge performance?
2. Do you have a vocabulary of competition that is unique to your industry and compelling to your employees and customers?

And we mean a real, honest-to-goodness, only-spoken-here business language. Commerce Bank, a fabulously successful financial services company, has such a unique strategy, and such a homegrown vocabulary, that it actually publishes a dictionary of “Commerce Lingo.” New employees learn the meaning of “One to Say Yes, Two to Say No”: “The rule that states all employees can say ‘yes’ to a customer, but must first check with their supervisor before saying ‘no.’” They learn the essence of “retailtainment”: “The art of engaging customers and creating moments of magic so that every customer leaves Commerce with a smile.” And on it goes for pages, explaining terms that eventually become second nature and ultimately make Commerce a one-of-a-kind competitor.

Companies that think differently about their business invariably talk about it differently as well. What language does your company speak?
3. Are you prepared to reject opportunities that offer short-term benefits but distract your organization from its long-term mission?

At every company we’ve explored, the road to prosperity has been determined in part by the road not taken -- choices not to pursue markets that looked seductive but were at odds with the company’s advocacy agenda, decisions to turn down customers who could pay the bills but didn’t fit the strategic bill.

Scott Bedbury, a marketing wizard who played a key role in brand-building for Nike and Starbucks, likes to say that some of the best moves he ever made were the growth opportunities he passed up. He calls it the “Spandex Rule of Branding,” and it applies to strategy as well as marketing: “Just because you can doesn’t mean you should.”

The Spandex Rule helps to explain why ING Direct passes on business opportunities that would make traditional bankers salivate. It explains why Craig Newmark and Jim Buckmaster of Craigslist are determined to keep looking for reasons not to charge visitors, even though the site’s devoted users, both buyers and sellers, are certainly prepared to pay for some services. It explains why Southwest Airlines has never adopted some of the most common practices of its rivals.

“The ‘invisible’ decisions that you make to stay on purpose can be 10 times more important than your visible decisions,” argues Roy Spence. “Nothing’s more difficult than saying no to an attractive opportunity. And nothing’s more important.”
4. Can you be provocative without provoking a backlash?

One key test of any would-be disruptor is whether he or she can also be a convincing diplomat. That insight may be the most enduring contribution of the rise and fall of Netscape, the company that single-handedly defined the revolutionary fervor of the dot-com boom. Eventually, waving a red flag at Bill Gates and his colleagues in Redmond, Washington forced Netscape to wave the white flag as an independent company.

Even a fire-breathing maverick like Arkadi Kuhlmann appreciates the virtues of diplomacy. Not with his competitors, mind you, but with his colleagues. After all, ING Group operates in many of the businesses that Kuhlmann loves to critique, from home mortgages to credit cards. So he is careful to reassure his Dutch brethren that he’s a team player as well as an industry reformer. Back in the 1990s, when he launched ING Direct Canada, Kuhlmann named the conference rooms at bank headquarters after Dutch villages -- a symbolic gesture that received a warm welcome in Amsterdam. Indeed, Kuhlmann’s diplomatic skills are so well-developed that when Forbes surveyed the parent company’s American presence, it concluded that the operation that felt most Dutch was ING Direct USA.
5. If your company went out of business tomorrow, who would really miss you and why?

We first heard this question from advertising maverick Roy Spence, who tells us that he got it from strategy guru Jim Collins. Whatever the original source, the question is as profound as it is simple -- and worth taking seriously as you evaluate your approach to strategy and competition.

Why might a company be missed? Because it’s providing a product or a service so unique that it can’t be provided nearly as well by any other company. Because it’s created a workplace so dynamic that most employees would be hard-pressed to find a similar environment somewhere else. Because it has forged a uniquely emotional connection with customers that other companies can’t replicate. Precious few companies meet any of these criteria -- which may be why so many companies feel like they’re on the verge of going out of business.

Can you identify one piece of how your company operates that, if it were to disappear, would be sorely missed in the marketplace? If not, can you identify one good reason why your company is not at risk of disappearing?

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