The Monday Morning Memo for July 4, 2011
Chronic problems in business are usually the result of binary thinking. “It’s either this way or that way. It can’t be both.”
Strangely, the answer is almost always “both.”
“Should I try to attract the price-driven (transactional) customer, or should I go for the (relational) customer who cares about something other than price?”
Both. Create and schedule ads that speak convincingly to the question of price. Create and schedule other ads that speak of important matters beyond price. Just don’t try to do both in the same ad.
“Should I manage with strict policies, procedures, methods and systems, or should I empower my employees to make decisions on their own?”
Both. Systematize the 90 percent of your company’s activities that are recurrent so that your employees have the freedom to humanize and customize the 10 percent of your activities that are ever-changing and unusual. A company without freedoms is a sweatshop. A company without policies, procedures, methods and systems is a country club for unproductive employees.
“Should I promote an exclusive brand and risk the manufacturer betraying me by allowing my competitor to sell that brand for which I’ve created all the demand, or should I create my own in-house brand so that I can remain in control of it?”
Both. You need the credibility of established brands to lend strength to the new brand you will introduce. Advertise both, but never in the same ad.
“Won’t this make me seem unfocused?”
No. You must get on board with proven procedures. You must also do your own thing and go your own direction. It’s not only possible that you do both, it is essential.
Mechanics across Europe began building cars in 1886 and each time they built a car it was different. More than 2,000 different garages built and sold cars one-at-a-time before Henry Ford’s 1913 introduction of the first moving assembly line employing conveyor belts. Henry popularized the concept of interchangeable parts. It was efficient. It also made him the richest man in the world. By 1923 Henry Ford was personally earning $264,000 a day. He was declared a billionaire by the Associated Press.
More than 17,000,000 Model T’s rolled off Henry’s assembly line and you could have any color you wanted as long as it was black. The inefficiency of building cars one-at-a-time forced the other 2,000 garages to sell their cars at about $2,500 apiece while the price of a reliable, new Model T was only $849.
Soon the other carmakers got on board and America became an automotive Wonderland.
But we always take a good thing too far. Fifty years later, General Motors decided to take this idea to the next level. “Instead of designing 5 different brands each year and retooling our machinery to build Chevrolets, Pontiacs, Oldsmobiles, Buicks and Cadillacs, why not just put a different interior package and grille and taillights in the same, basic car and sell that car under 5 different names?”
A Chevy Cavalier is a Pontiac Sunbird is an Oldsmobile Firenza is a Buick Skyhawk is a Cadillac Cimarron.
A Chevy Nova is a Pontiac Ventura is an Oldsmobile Omega is a Buick Apollo is a Cadillac Seville.
A Chevy Caprice is a Pontiac Catalina is an Olds 98 is a Buick Electra is a Cadillac DeVille.
On the surface, this looks like exactly the same idea that made Henry Ford rich. The problem with the “platform engineering” introduced by GM in the late 1970s is that it eroded the distinctiveness of their brands. Two decades later GM was forced to close Oldsmobile and a few years after that, Pontiac fell as well. Analysts speculate whether Buick or Cadillac will be next.
Conformity is essential or you will not be efficient. Differentiation is essential or you will not be special.
Differentiate the 10 percent the public sees and experiences. Manage the 90 percent that happens behind the scenes with the efficiency of systems and procedures.
It’s never one or the other. The answer is always “both.”
Systematize the 90. Humanize the 10.
Roy H. Williams