Tag Archives: market leadership

The new role of marketing

The reason why companies have worked photocopy business plans for so long is because they never thought to work any other way. It just seemed too risky. The rise and rise of producer nations, in the words of Michael Porter, “rivetted attention on implementation”. Watching Japan, then China and India continue to progress, many companies fell further into the action trap. They believed that the only way to outrun their immediate competitors and their looming Asian rivals was to, somehow, out-do them.

But as Michael Porter has commented: “It’s incredibly arrogant for a company to believe that it can deliver the same sort of product that its rivals do and actually do better for very long … It’s extremely dangerous to bet on the incompetence of your competitors” – and that, he says, is what companies are doing when they rely on operational effectiveness for competitive advantage.

My sense is that operational effectiveness and efficiency currently account for about 50 – 70% of perceived competitive advantage, but that percentage is falling. It’s falling, because of course consumer expectations continue to rise – ironically as more and more best of breed thinking is installed – and consumer emotions continue to change – as more channels give consumers unprecedented access to brands and to each other.

As quality becomes ubiquitous, it’s harder and harder to gamble on incompetence.

And it becomes easier and easier for consumers to change brands for no reason whatsoever other than what they feel. Because the actual risk in doing so is getting smaller and smaller thanks to best-of-breed.

All this makes for an irrational economy. And the irrational economy plays by very different rules.

As Avi Dan points out in this article in Forbes, “Customers are now able find out much about the company they wish to engage with: where and how a company makes its products; how it treats its employees, retired workers, and suppliers; how much it pays its top executives; how seriously it takes its environmental responsibilities and the like.”

The criteria is no longer what they get. It’s just as much what they know – and therefore feel.

The role of CMOs in such a world, Dan goes on to say, is “to meld the internal and external faces of the enterprise”.

That’s a quite extraordinary mandate. It ratifies the points made by Tom French, Laura LaBerge and Paul Magill of McKinsey that not only are all organisations marketers now, but that, in an era where “marketing is the company”, marketers themselves must rethink and reassert their influence.

  • CMOs, they say, will increasingly be held accountable for performances beyond their direct report. Any action that involves a customer will become traceable back to marketing. That’s a whole new set of metrics.
  • Marketers will have greater influence over other areas traditionally outside their sphere of influence because of the converging roles these functions now play in helping the organisation connect with customers. While much has been made of the need for the CIO and CMO to work more closely together, the authors also point to relationships with distibutors, digital teams, physical networks and third-party partnerships. Any interaction that makes contact with a customer will include marketing. That’s a much more complex picture to understand.
  • Marketers will have more responsibility for generating rich customer insights, but, the authors say, expect to see a shift in marketing team skills from, say, researching to problem-solving and strategic-marketing designed to inform critical business result elements such as pricing, sales targeting, and product selection and development. Marketing will become an influential voice in strategic goal setting and not just an operational function to achieve what has been set. That’s a very different set of core skills.
  • Whilst I agree with the authors, to a degree, that marketing will become a more data rich and analytically intense activity, my reservations from my last post still stand. There will be more data to play with – but marketers themselves will stand or fall, in my view, on their ability to read the human factors in the numbers rather than just analysing the numbers themselves. Marketers will need to be able to activate consumers at an emotive level not just interpret how they have acted or will act based on patterns. Instinct will count as never before.

Increasingly, this suggests to me that CMOs will be called on to take responsibility for overseeing much more than marketing strategies. The 4Ps marketers have known for so long will give way not just to 5Ps or even 6Ps, but to an idea that supersets all that and more.

Marketers will in time oversee a brand’s entire market presence: to market, in market and beyond market. And their ability to represent and advocate for customer wants internally, market to buyers warmly and distinctly (directly and indirectly), and monitor and engage with prospects, influencers and analysts socially will help decide the brands consumers are drawn to, and who they choose to disregard.

More reading

The great customer vanishing act: what happens when you can’t track them?
The portfolio approach to strategy
The fall of the wall between customers and culture
The power of being purposeful

Other perspectives

Does my brand look big in this?

Nederlands: Japanese blowfish (fugu)

Japanese blowfish (fugu) (Photo credit: Wikipedia)

As marketers, we’re often encouraged to puff up our brands to look as big as possible so that they appear significant and credible in a global marketplace. There’s a sense that if you’re big, you must be successful and if you’re successful, then there’s a higher than likely chance that you’ll continue to grow.

Size matters. But not always in the senses that we have been led to believe.

My own view is that the size of your business is actually less critical than the scale and/or extent of your thinking.

A big brand on the hoof is a thing of beauty, to be sure. Strong, assured, competitive, resourced and focused on bringing its vision of the future to life. Big brands command presence and respect.

But the biggest companies aren’t always the smartest, they’re not always the pace setters and they’re certainly not infallible even though they might like to think they are. I have only to direct attention to the GFC to remind all of us that neither history nor size counts as an immunity pill. Sometimes the bigger they brand, the harder they fall.

And what if you’re a minnow? What then?

If you’re a small company in a sector dominated by companies that are large, powerful, respected and ebullient, you’ll never beat them at their game. They’ll outgun you quickly, arrogantly, even dismissively. But all is not lost. You could look for ways to lay down a big attitude that draws attention and gets people interested and attached to you. Such an approach may be your key to truly downsizing the cachet of those who otherwise will simply try and lord it over you.

Being a larger than life brand brings with it opportunities to achieve greater presence and respect than your natural mass might suggest. By pushing up your profile and achieving greater front of mind than your competitors might expect or than you would otherwise command, you can “blow-fish” your size in the market by being more cheeky, fun, rewarding and engaging than all the staid big players around you.

Competitive radicalism

All this leaves brands with four options in my view – all oriented around a competitive radicalism that I predict will increasingly see brands exiting the middle ground, in attitude at least.

To stand out, think very big or very small – or be one, and act the other.

1. Be the monster – the brand that the whole world can’t help but notice.

2. Or be the upstart – the brand that someone can’t wait to discover and tell others about.

Better yet:

3. Be a monstrous upstart – a cult brand that is noisier than its size warrants because it wields a big attitude and a loyal community.

4. Or an upstart monster – an established brand that tirelessly challenges its own rules.

Strong brands project. They cast a powerful image of themselves to the world that may or may not correspond to their size. And they can project a future for themselves that is immensely powerful.

Loom large in the minds of those who buy from you and those who compete with you. Or slowly but surely fade away (or get eaten).

Stark choices.

More reading

Market leadership: the –out and the -est
The business of cloning
Always be branding
You can’t lead as a brand if you follow another brand
Great brands unearth
Is your brand ready for the experience war?
Brands at the speed of life

Other perspectives

Handpicked – the wider opportunity of curation

A picture of a display in Brooks Brothers

A picture of a display in Brooks Brothers (Photo credit: Wikipedia)

The first time I really thought about the role of an astute retailer was while watching Mary Portas. Her point: any retailer can stock. Smart and profitable retailers, by contrast, handpick items that their shoppers will crave – and that is where they add value. In a great shop, she was saying, you don’t just come to buy, you come to discover things you wouldn’t normally find housed together. Fine point, well made.

These days, curation is all the rage. As Trendwatching so rightly observed in an article aptly titled “Everyone’s a curator now”, what used to pass for selecting, choosing or finding (Didn’t we once call that editing?) has been transformed into the more scholarly-sounding art of curating. That’s hardly surprising, Trendwatching observes, given the massive levels of choice that consumers now face, nor it is actually that new. In fact, the idea morphed out of the art galleries more than a decade ago, and really picked up pace with the arrival of Facebook, iPod playlists and Flickr.

To Steve Rosenbaum, author of Curation Nation, the trend is the next step in the democratisation of information. Twitter, blogs, Google and Facebook have brought a “daily data deluge” to people’s lives, he says in this article in Wired. Humanising that down into what people want to see, read and discover has generated social search, he says. Curation amounts to “a human-filtered web”.

John Doyle agrees. The VP of digital strategy at Cramer-Krasselt/Chicago says, in an article in Mashable, that marketers are excited by the thought of curation as an evolution in online influence. It helps shoppers sift through the huge range of choices available to them and, just as importantly, it does this with a human touch. (That to me is the interesting part.)

Doyle points to the way that Pinterest lets people organise the things they discover and he sees huge potential for retailers to put a new twist on this online. “Shopping curated collections can be a lot like shopping in a real-life boutique … where the goods are selected and stocked to meet the needs of its best customer: you,” he says. “And because these collections are created by real people (in many cases, friends from within the shopper’s own personal social network), the resulting shopping experience is authentic, powerful and hugely influential on purchase behavior.” He has some great ideas in his post as to how brands can take advantage of this.

OK – Google meets the personal shopper. I get that. But what are some of the wider implications of this handpicked phenomenon? It works for retail. Does it carry into B2B? What if you’re a consultancy or a professional services company? What role could curation have for you?

Exactly the same dynamics are at play in this space it seems to me: a plethora of thinking and new developments that client businesses don’t have time to sort through. Sure, some of them are just updates or revisions. But some are more than that. There’s new approaches, either from your field or another, that people deserve to be aware of. If you’re a consultancy, you can’t own others’ ideas of course, but you can add value by bringing your professional perspective to those ideas and to the evaluation of their wider worth.

For example, the other day I had a really interesting discussion with two strategists I was mentoring on when to use a Disruption-type model versus when you might want to use an amalgamative model like Medici. Neither of these models is my idea. But the principles of each are sound, proven, well documented and applicable, to best effect, in different circumstances.

There is some amazing thinking coming from the big names, but some of the most dynamic thinking is coming from bloggers and thinkers who aren’t at the top of Technorati – or at least not yet.

To me, part of the role of thought leadership is championing the leading ideas, whether they are yours or someone else’s. I think things get really interesting when, just as the Pinterest group did with Brooks Brothers, you start aligning the ideas and approaches of a whole range of thinkers. As long as – and here I completely agree with Mark Schaefer – you attribute generously and openly and don’t just colonise someone else’s intellect for your own gain. If you have the good sense to borrow from someone else’s mind, at least have the good manners to acknowledge that you have done so.

It takes huge skill and a massive amount of time to bring ideas to life. Especially big ideas. But, you know what, it takes an equally big-hearted person to evaluate an idea and to draw attention to it.

A facilitator it seems to me gets between an idea and the person it will benefit and tries to make money or gain profile from just being there. A selector just picks from what they know and feel comfortable with – so, essentially, more of the same. A curator finds an idea or a product and brings it to light in ways that will really benefit the community they are part of. Whether you like the term or not, there’s little doubt in my mind that the value any intermediary can add today is curational not just functional or selective.

In the fast moving, multi-channelled, multi-market, competitively converging world that we all work in, true value-add can’t just be about more of what you know. That’s stocking. Increasingly, it’s about having the confidence and the integrity to bring to the table the whole world’s best and latest thinking – yours and theirs – sifted, layered, organised, appraised and consideration-ready.

Incidentally, if you don’t think you have time to do that, what do you think constitutes a better use of your time as far as your clients are concerned? Today, it’s not just what you have that counts, it’s what you’ve found and what you’ve done with it.

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Other perspectives

Not a problem: success pivots on what you solve, not just what you know

If you’re not a fan yet of the Scattershot blog, then I’d like to suggest you should be. In a post published earlier this week, Rajant discusses the concept of “ground truth”. Ground truth, as its name suggests, is the view on the ground that verifies and informs the satellite view. It’s a great way to separate a problem from a truth.

What’s interesting about this is that the perspective that brands have of situations gained from afar can be very different from the reality closer to home. In fact, those on the ground may not see that they have an issue at all. That’s a significant hurdle when your cue for action is something your audience doesn’t recognise. Rajant gives the telling example of P&G’s launch of Febreze, which initially failed. The reason? You only need an air freshener if you understand that you are surrounded by bad smells. The problem with that: “even the strongest odours fade with continual exposure … And Febreze’s reward (an odourless home) was meaningless to someone who couldn’t smell offensive scents in the first place”. If my house smells fine to me, then my truth as a consumer is that scent is not a problem and therefore there is no reason to take action. There’s literally nothing to fix. That premise isn’t going to fly.

The actual problem for most marketers is seldom the problem we’re presented with or that we think we have. Often what we’re seeing, or thinking we have to solve, is either something we’d like to solve or a trigger action, the last straw that convinced everyone looking on of the need to take action. If you take either of those literally though, you’re breathing in the wrong air.

Selling what you want to sell is wishful thinking. And that’s all it is until you establish need, habit and (probably) scale.

As for trigger actions – falling sales are not a problem, they are a symptom. Same for increased competition, lack of market share, consumer antipathy … Any solution based on addressing that data alone risks the same outcome as Febreze. It solves something that no-one but the brand owners recognises or feels pain over. It’s not an answer. It doesn’t actually address the real underlying need. The one based on the ground truth.

Most brand strategists run a discovery process, at which they seek to uncover the facts and get to grips with the situation they are being asked to solve. They fact find. And of course that’s necessary. But the real purpose of the discovery process is not to gather information. The purpose of the discovery process is to overlay what you’re learning (facts) over what’s happening (symptoms) in order to unearth the real problem or opportunity (driver).

One of my favourite reminders is that it is not the job of a marketer, or anyone else for that matter, to revive sales, close out competitors, lift customer survey results or increase the Klout score. Because those are all things outside of a brand’s control. They are customer decisions. The role of people who work for a brand is to really understand why those things are happening and to address them in ways that delight, surprise, engage, provoke, and/or motivate buyers. The sign that they have done that well is when sales lift, market presence increases, customer survey results climb and the social media metrics increase.

As HL Mencken once remarked, “There is always an easy solution to every problem – neat, plausible, and wrong.” Marketers love to look for simple answers to easily identifiable problems. The ground truth is that consumers aren’t simple people.

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Other perspectives

The business of cloning

There has been a carbon copy approach to business for some time, and business schools are  at least partly to blame. Management is now a taught vocation. OK – we all have to learn, but the problem is that everyone’s taught the same things and taught to work in the same ways. Same ideas. Same principles. Same rules.

As Dr Dan Herman observes, “All  those managers who are supposed to compete with one another … are using the same data; they conduct the same focus groups and the same surveys, analyse the data with the same tools, and use the same concepts and approaches in order to create distinctive products and brands. The result? … [they] achieve the same results, simply because they think the same way. In other words, they are MBA clones.”

Today, we teach process rather than the ability to process information. We form models rather than opinions. We rely on frameworks rather than asking people to extrapolate by drawing on experience. In this context, differentiation is a risk.

Too many managers, it seems to me, think they can rely on precedent, risk minimisation and sheer volume and speed of actions to achieve steeper and steeper results. That approach is a black swan bird-strike waiting to happen. Imitation may be the most sincere form of flattery, but looking to produce more of the same than everyone else isn’t the most effective way to compete. It just makes you more and more replaceable.

And in precisely the same way as people in commerce are encouraged to think alike, they are also taught to measure success and relative competitiveness in the same way.

Let me go out on a limb here. I see benchmarking as possibly the most dangerous tool businesses have. Not because comparison is wrong in itself, but because of the way companies use it to yardstick all the wrong things. Instead of referencing what other companies are doing by the numbers, my view is that they should be examining how effectively top performers are thinking. And instead of focusing on just players in their own industry, they should be comparing themselves with other industries – adopting what has been proven elsewhere, and using those learnings to change how they can succeed.

The irony of replication is that once you think alike, look alike, process alike, distibute alike and message alike – there’s nothing left to like. Every ounce of charm has been carefully and methodically ironed out.

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Credentials as comfort food

How does the fact that I’m travelling on the world’s biggest airline change my travelling experience? Or the world’s biggest cruise liner? How does the fact that I’m working with the world’s biggest professional services firm change what I get from the lawyer, accountant, engineer etc assigned to me? What more do I get from buying a bottle from the world’s biggest winemaker? Or a toy from the world’s biggest department store?

It makes no difference.

And yet brands love to emphasise their size or the number of countries they operate in or the projects that they’ve been involved in. They think it provides reassurance. They think it gives them a storyline. It doesn’t.

It gives them big numbers but in most cases, it says nothing at all. Credentials in my view are much over-used and much over-rated. They don’t add to the excitement that consumers feel. And, given the complexity of most corporate structures, it could be argued that they often don’t ameliorate the risk of dealing with many entities. Credentials might feel important for investors, perhaps even for staff, to know they are part of a  scale-driven entity, but at an individual customer level they are often a meaningless part of any promise and they seldom amount to proof of quality of delivery.

Roger has this phrase that sums up the use of credentials so well. So many companies, he says, are experts at writing to themselves. They find all this scale and proof remarkably comforting. It makes them feel like part of something great. It makes them feel they have something impressive to talk about.

But unless you can specificially show me how all this scale, all this wealth, all this knowledge, all these resources are focused on improving what your customers get in their day to day dealings with you, too often the gizmo presentations and the “About us” pages and the map-packed corporate profiles are just popcorn. Crunchy data – and hot air.

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Highs and lows: the new value equation in the social economy?

The dynamics of customer service are shifting. Not so long enough, the ultimate goal was to deliver customers “high tech, high touch” – a highly digital experience that was nevertheless comforting and personalised.

Increasingly that framework is becoming a paradox I believe as brands sort new economic models for dealing with cross-channel customers. The current trend of sift online, buy offline is unsustainable in so many circumstances. High tech is jeopardising the economics of high touch. It encourages customers to price hunt, and then to bargain down prices in a physical environment using what they’ve found online as a cost index.

The implied “plus” between high tech and high touch doesn’t work. So I think we’re going to increasingly see it change to “or”. And with that shift will come more delineated choices for consumers. Brands will seek to attract customers by experience or by engagement.

In fact, the separation of those two thoughts – engagement (focused on cost conscious availability) and experience (focused on one-on-one immediacy) is interesting because it suggests that rather than trying to integrate their online and offline service offerings, it may make more sense for brands to look to segment consumers according to what’s important to buyers. In other words, we could perhaps expect the on- and off-line markets to radicalise rather than homogenise.

In a post on the dramatic shifts that brand face in the social economy, J Walker Smith refers to a marketplace dynamic in which nothing is worthwhile or valuable unless it is shared with others. He also quotes Ted Levitt’s observation that consumers “don’t buy things, they buy solutions to problems.”

Applied to the discussion over high-tech, high touch, the opportunity for retail brands in particular as I see it is to define in much more precise terms what gets shared, where, how and what perceived problem can be solved as a result.

In a social economy, I think high tech will become increasingly low margin – as organisations move budget-conscious consumers online to cut the cost of service, and then use their technical nous to engage them to cart. No surprises there. Plenty of brands are doing that now. The emphasis will be on the spontaneous. You’ll be able to buy efficiently and at a discount through brand stores online, and much of the communication that you have with the brand will take place across social media, with offers to mobile and plenty of online interaction through blogs and tweets. Fast and fun.

As J Walker Smith points out, “It’s about brands delivering more opportunities for people to have the kinds of conversations they want … Customer service should no longer be based solely on consumers having to engage with brand representatives. People should be able to seek help from other people to fix what’s wrong. In other words, build service around the relationships people have with other people.”

Such interactions are as much about the economics though as they are about the social. Encouraging people to interact amongst themselves online will lower the cost of serve and make the model more viable.

But I also believe that the ability to engage with brand representatives will evolve from a given to an option – one that brands will increasingly ask consumers to pay for. That’s because the high cost end of the market – what we used to call luxury – will revert increasingly to high touch. I’m expecting more and more of these brands to go back to face to face in a bid to match eye contact with margins. I’m also expecting many of those stores to be smaller and much more enjoyable as environments. The value add in those spaces will be the quality, experience and working knowledge of the staff. Pricing will be less flexible but service standards will for the most part be far higher than they are now. Concierge.

So high tech will become increasingly low value, and high touch will be increasingly low tech. Isn’t it interesting how value equations change?

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The new take on redundancy

In a world where we’ve never been so aware of being watched, everyone wants to “look busy”. Actions are good for that. Actions help everyone look like they’re working hard to get to the answers.

And along the way it’s very easy to believe you are doing things right, and therefore you have a strategy, when in fact you are simply part of what the market’s doing. If the market’s growing, it’s not a strategy to be there for the ride.

A lot of companies told a lot of people over the last decade that they had sound strategies proven over time. They didn’t have a strategy at all. They had actions that had kept them busy over time, and those actions were successful as long as the market rose. The key action was to acquire and revalue assets upwards, and then tell themselves and their shareholders that they were creating wealth.

The answers are not the actions. And plenty of actions don’t necessarily generate the answers. And yet there’s unswerving faith in many quarters that they will. Busyness is the new raindance. The more people do, the more reassured they are that the answers they need will sweep over the horizon and drop market share in their laps.

It’s not hard to do a lot of what you’re familiar with, especially if it keeps your team at the office long after home-time. It’s not hard to convince yourselves that all this hard work must have a pay off. It’s not hard to confuse predilection with productivity. In fact, it’s all very convenient. Because none of these actions requires leaps of faith. All of them all but stipulate continuing with what you and those around you know.

And while you’re busy doing all this, someone somewhere is changing the rules to tilt the market dynamics in their favour. What’s scary is that the people in your office are probably working so hard on what they’ve told themselves they need to get done – they haven’t even noticed.

We’re used to thinking of redundancy as a concept meaning “no longer needed”. In point of fact, the wider take, for brands at least, should probably be “no longer valued”. And one of the biggest contributors to brand redundancy is slavish addiction to action.

By embracing their “to do” lists, brands deceive themselves into believing they are doing more, achieving more, getting ahead – when in fact, often, they are actually eroding their value because they are too busy taking old actions to create new value. In effect, people are staying late, working hard and stressing themselves out so they can make their brand redundant. (Sadly, they also think that by doing these things, they are doing exactly the opposite.)

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The efficiency debacle

I’m continually fascinated by how much companies ignore context. And the irony of that of course is that this is happening at the very time when we have more access to information than ever before.

Ask many companies what they are doing and they will happily tell you. Ask them what they are doing to be more competitive and the answer you get back rarely makes mention of those competitors and why a brand’s actions will stand them apart.

It’s easier to act than to distinctualise.

And that’s because actions feel like something is happening. Managers monitor their operational improvements, and believe they are future-proofing the business, maybe even outperforming their competitors. But just as quickly as they are improving their actions and becoming more efficient, their competitors are doing the same. In equally splendid isolation.

So there’s this strange dichotomy of awareness. Everyone knows how to keep up. But not how to overtake.

Continuous improvement is now a hygiene factor in so many industries. Everyone is acting to stay steady with those around them. They are all improving the same way, without particular regard for what their competitors are doing, and yet each believes that their improvements must be best and therefore that their improvements will somehow win.

The problem with “conventional wisdom” is that the better you are at acting on it, the more like everyone else you become.

Telcos used to just have to worry about phone lines. Not any more. Now they all have to deal with technological upheaval and convergence at an alarming rate.It takes huge energy just to stay in the game. But everybody’s doing it. Everybody’s got their actions together. And now they’re …

Interchangeable. For all this work, all this energy, all this time, money and upheaval, most consumers see telcos as being as good as one another. A no risk swap.

Telcos haven’t helped the situation. They’ve been so busy being busy that they’ve lost the art of engaging their customers. Many of them have lost sight of the customer completely. People have been reduced to billing units. Airlines have done the same thing. People have become load factors. Insurance companies too have lost it. They’ve reduced people to policies. Banks have turned people into accounts. When you’re so busy doing, it’s easy to take your eye off the real reasons you exist.

The more these unthinking actions happen, of course, the more the company’s real value to the consumer recedes. Little wonder then that customers churn and market share declines. Faced with these threats, companies take more action. They respond by dropping prices and peddling faster to try and stay where they were. They do more. And so does everyone else.

And the faster they go, the faster they need to go. Speed necessitates actions, but they are actions predicated on no time to think. Everyone’s peddling madly, but in reality, in the words of art collector and sage Jim Barr, “the wheel’s still spinning, but the hamster’s dead”.

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Strategy, or resource budget?

strategy

Strategy? (Photo credit: Sean MacEntee)

Why have management teams reduced strategy to a compliance matter – something they go away to do once a year. Some have even invented a host of reasons why they can afford to take strategy off their list of tasks. “Strategy is a talk-fest.” “Strategy isn’t real.” “Strategy isn’t practical.” “Strategy is just a fancy name for planning.” In so doing, they have overlooked the creative, pre-emptive and competitive opportunities that great strategy should go looking for.

In an interview with McKinsey Quarterly in November 2007, Professor Richard Rumelt of UCLA’s Anderson School of Management, says most corporate strategic plans don’t deserve the name. Far from being strategies, they are actually three-year or five-year rolling resource budgets tied to a market share projection (designed, I imagine, to appease shareholders’ demands for dividends). Calling this strategic planning, Rumelt says, creates  false expectations that the exercise will somehow produce a coherent strategy.

Amen to that. Great strategy is not about all talk and no action or the talk before the action. I  don’t think it’s about just talking at all. Strategy is about seeing. It’s about visualising the company that you most want to run, and that your customers would most want you to be, at the point in time when that aspiration is most likely to be most effective. And then it’s about calmly, clearly and ambitiously thinking your way forward based on what you see. Along the way it’s about continually challenging everything you take for granted. It is, as Rumelt asserts, about delivering a clear pathway to substantially higher performance, something that “resource budgets” simply can’t do.

Last year, Rummelt’s new book Good Strategy/Bad Strategy  expanded on another  idea he coined in 2007. He summarised his key points from this book in another McKinsey publication in June 2011. “Bad strategy”, he says, is what happens when strategists go for the buzzword approach at the expense of differentiation. So there’s goals and ambitions and visions and missions – there’s just not a compelling and competitive approach to overcoming a defined and qualified challenge. “If you fail to identify and analyze the obstacles, you don’t have a strategy. Instead, you have a stretch goal or a budget or a list of things you wish would happen.”

The key causes of bad strategy in Rummelt’s view? Mistaking goals for strategy, bad objectives and obfuscation … caused by indecision and a templated approach to strategy.

The other problem with many strategic plans of course is that so many don’t include checkpoints. The actions run until the plan finishes, then more numbers are drawn up, and new actions start. Context, contribution and competitiveness – or the lack of them – go unchecked. A failure to solve any of the articulated problems or achieve any of the stated goals is greeted with a collective shrug of the shoulders and another management retreat to figure out what to do next.

And it’s not a once a year thing either. I’m with Rumelt in believing that strategy and its development should revolve entirely around opportunity. Every company, he suggests in his 2007 paper, should have a separate, non-annual, opportunity-driven process for strategy. In other words, strategy should  be cued by  conditions – and those conditions don’t necessarily just fall on a given number of calendar days when a favourite conference centre is available.

For me, the most important thing about a strategy is that it is very clear – about what’s faced, what’s needed and what success looks like. So, a clear strategy in my view has five aspects:

1.     A specific dilemma, challenge or opportunity that the organisation faces

2.     A detailed explanation of that situation, including an exploration of what has happened, who is leading it, what their motivations might be, where it might lead,  and those parts of that situation that pose the greatest threat and the greatest opportunity

3.     A distinct and articulated goal that resolves the dilemma or challenge, or maximises the opportunity

4.     A differentiated, on-brand approach to achieving that goal

5.     Actions within that approach that are specific, measurable, budgeted, resourced  and yet flexible enough to be adapted if the situation changes

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