Corporate strategy advanced … but left communications behind

Fifth in a series on strategic communications.

At each stage in the evolution of corporate strategy as a discipline over the past two to three decades–from an emphasis on “positioning” to “process” and now to “people”–its dependence on equally strategic communication has become more essential.

But strategic communications as a discipline has not kept pace. And neither have the bright minds driving the strategy trains inside corporations or the leading consulting firms grasped the rapidly escalating need for communication strategy to mature as an essential input into corporate strategy.

Let’s take a look at the evolution of strategy from the eyes of a corporate communicator:

  • Positioning–As the “father of competitive strategy,” Harvard’s Michael Porter defined strategy as positioning. “Operational effectiveness” shouldn’t be confused with strategy, he said. “Competing to be the best” equates to “running the same race faster.” Strategic positioning is “creating a unique and sustainable competitive advantage,” that is, “choosing to run a different race.” Years ago, Hewlett-Packard pioneered a strategy aimed at market dominance of small printers for personal computers–HP would follow the classic Experience Curve model of a market leader driving down its prices to drive share and volume gains, in turn lowering its costs even further. In fact, HP would sell its printers at a loss in anticipation of building a highly profitable business selling expensive ink cartridges to its printer customers. HP’s strategy wasn’t to maximize its share of “printer units sold” but its “share of pages printed.” HP’s competitors have been forced to follow this strategy, resulting in both a price war for printers and sticker shock for customers needing replacement ink cartridges (leading to this less-than-forthright explanation from HP). This market dynamic creates an opportunity for a daring competitor to seek a counter positioning strategy: Kodak in 2007 began to sell its printers for a premium with the promise of low-cost replacement ink cartridges. Aimed especially at the “big burners” (customers printing lots of pages), the strategy has been only partially successful. Clearly the strategy works only to the degree it is communicated effectively–customers are willingly to pay a premium for a printer only if they are attracted to the appeal of lower ink costs. Advertising, point-of-purchase displays and successful PR (including participation in social media) should all be aimed at communicating the benefit of low cost ink, and, importantly,tapping into the anger of customers outraged by high ink costs. A smart, fully integrated, emotional communications blitz strategically aimed at outraged customers would be much more successful than the staid campaign Kodak has pursued. It’s a mistake to attempt marketplace positioning without a strategy actively positioning within the sphere of customer awareness. Communications should not have been merely a conduit of Kodak’s positioning strategy, it should have been one of its pillars.
  • Process–Total Quality Excellence, Re-engineering, ISO and black belt certification and the like are systematic efforts to wring out further improvements in productivity and product quality.
    Relentlessly reducing costs and shortening cycle times are critical to survival in competitive industries, and what industry today isn’t competitive? But process improvement isn’t enough–except for market leaders selling commodities solely on price who can exploit scale advantages over their competitors. Eliminating waste and shaving costs are important, but they amount to what Porter called “running the same race faster,” and Walter Kiechel calls “Greater Taylorism.” Not very inspiring as strategy or battle cry, and therefore unlikely to prove transformative.
  • People–Today more than ever, competitive advantage is fleeting. Globalization and the ever-quickening pace of technological advancement (e.g., Moore’s Law) allow competitors to leap-frog complacent market leaders. Contemporary corporate strategy focuses on capabilities and competencies, rather than current product advantage. Strategy aims to unleash the creative power of the team. And the team may be defined broadly to include customers, as in the case of open-sourced technology development, such as apps for mobile devices. (The greater availability of free apps for Android will be a critical competitive advantage vs. Apple’s I-phone.) In this paradigm, information is power not when it is protected, but when it is shared broadly. Cloud-computing can make formerly proprietary resources available to anyone in the world, and facilitate the rapid generation of ideas into concepts, concepts into products, products into social fads, and, perhaps, fads into adaptive (and therefore lasting) cultural icons. Sharing information and encouraging individual expression are foreign concepts for most corporate managers–and, therefore, true culture change will become an ever-more important element of strategy. Corporations traditionally have been designed to enforce norms of behavior and productivity through top-down authority. Actively urging people to push beyond the expected requires a shock to the system. “Innovative,” “creative” and “entrepreneurial” aren’t just buzz words; they describe the essence of people-centered enterprises built to continually produce competitive advantage.

Next: Enough with the concepts already! How can strategic communications deliver results NOW?

- Jon Harmon

 

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