Time to Re-read “What is Strategy?”

For the uninitiated, “What is Strategy?” is the name of a best-selling Harvard Business Review article that Michael Porter, a “University Professor” (i.e., the highest of the high) at the Harvard Business School and the Grand Poobah of Strategy, wrote in 1996. I will address only one of its many ideas in this post. I thought of it because of a recent visit to an upscale mall – and an announcement by a major company.

The visit was to an Apple retail store. I needed to connect my Mac to our Sony plasma TV, but could not remember the exact pin-configuration of the TV’s socket. The Apple employee helping me suggested that I ask at the Sony Style retail store located nearby and so, there I went.

You may recall that Sony began opening these stores when Apple started eating its lunch. The stores would make the vast array of great Sony products accessible to consumers. The moment I told a salesperson – who looked like a supervisor – that I was there for information, not to buy, he visibly lost interest in me. Not that the store was busy; you might have been able to hear a pin drop if you cupped your ear. Undeterred, I asked my question. The salesperson responded, “Do you have internet access at home?” “Yes,” I said, “But how does that help me now?” “Well,” he replied, “When you go home, look up the answer on our website.” “You can’t do that here?” I asked. “No,” he said, walking away. The ludicrousness of the idea that I would search their website instead of looking at the back of my TV did not even occur to him. And he is supposed to convince affluent consumers how to spend their money? In the time he spent losing a once and future customer – perhaps for ever – my teenager used my iPhone to get the information.

At the Apple store, the same salesperson greeted me again. He apologized for not thinking of going online and gave me the cable I needed. My wife asked for his help in selecting a graduation gift for my niece, who was finishing her high school. He showed us several fun software, but my wife picked up an expensive productivity program. “Oh gee,” he said sarcastically, “I just finished school and in the Fall, will start college. And my aunt gets me a productivity software! How nice!” We laughed, saw his point and decided to defer the purchase. He lost an immediate sale, but he reinforced the link between Apple and me.

Porter’s article says that strategy is about “fit.” Multiple small, individually inconsequential items must work together seamlessly for a strategy to be successful. The reason why Apple’s retail stores work – one in two purchaser of a Mac in an Apple store is new Apple customer – is that they are a seamless part of Apple’s corporate strategy. From the Genius Bar to the highly knowledgeable, non-pushy employees, everything fits together perfectly, just like the components of any Apple product. (Even the employees’ clothes match those of the Steve Job-like pitchman on its highly effective advertisements, “Hello, I’m a Mac” “And I’m a PC.”)

Sony once knew this lesson, but has forgotten it. Retailers speak of “location, location, location.” Sony’s location did not help it seal a relationship with me.

It is in this context I have been waiting to see how Microsoft’s newly announced retail stores will turn out. So far, this venture has been defined by location: the stores will be near Apple stores to give consumers non-Apple options. This is strategy?

For the sake of Microsoft’s shareholders (of which, regretfully, I’m one), I hope that the people in Redmond have thought this out a bit more. And if they haven’t, they should take this opportunity to first read Chan Kim and Reneé Mauborgne’s book, “Blue Ocean Strategy.” The essential thesis of this book is that too often, companies compete head to head with each other, leaving blood in the waters (“Red Ocean”) instead of seeking “Blue Oceans” where there are no established competitors. The Redmond strategists should also remember Porter’s message about fit: business history is full of examples of companies which tried to copy an effective strategy of a competitor, but failed miserably. The copying was typically superficial and small, seemingly inconsequential elements did not fit together. The Sony Style stores are a great example. Oh wait, Wintel machines and Windows Vista are even better ones.

Category: Business Environment, Business Tools, Company Performance, Corporate Culture | Tags: , , , One comment »

One Response to “Time to Re-read “What is Strategy?””

  1. snmukherjee

    While we get the attitude, mentioned by Dr Mukherjee, in many developing countries, in big small and medium stores of all kinds of wares on sale, I was surprised to read that attitude shown by an employee at an high end store in fiercely competitive market in USA. What that employee proved that the employer do not train its sales employee to be proactive. Who do we blame?


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