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August 28, 2017

2

Apple’s Steve Jobs would’ve told you “never build your strategy based on low-hanging fruit”

by Frank Sowa

dent-in-universe-steve-jobs-strategy

I’ve been a successful strategy consultant since 1981. I’ve worked with Apple. I can tell you Steve Jobs (postmortem) is practically idolized for creating customer-driven strategies for Apple. I can also say, Apple’s Steve Jobs would’ve told you, “never build your strategy based on low-hanging fruit.”

First of all, many so-called internal strategists “feel falsely” that strategy is all about achieving goals and/or favorable outcomes, solving problems, building on strengths, and overcoming competitive weaknesses, Too many times they say, “What’s your plan?” I’ve also heard many of them first ask me or other strategy consultants about SWOT charts (strength/weakness; opportunity/threats);SWOT-image_03-1-1024x515 or discuss a ‘problem’ by asking for a ‘program proposal’, or a plan to resolve that MAJOR problem (and/or problems like that). I hear organizational presidents explain that their “strategy” will be to ‘listen’ to what’s happening on the front lines in the field, and then respond, (react), as things change, based on what their competitors/rivals do. This was recently even copied by the President of the United States in regards to Afghanistan policies going forward. NONE OF THAT IS STRATEGY! It may be ‘tactical.’ It may work for short-term gain. It might even be a very sound field tactic. It is NOT STRATEGY. What it really deals with is usually only the most superficial low-hanging fruit, and as a matter of policy — should be being taken care of by good operational practices and governance already! It isn’t strategy.

In the last post, I discussed a concept for X-Celerator Labs™. In that post, I discussed how local venture capitalists chose the “better-branded” TechShop™ instead, for this Pittsburgh region. Whether, their supposed strategy was based on ‘branding,’ or based on ‘other things –market share? …profits? … the competition? …customers? … sales volumes? …units sold? — I don’t know. What I knew then, and will repeat, is that the health-spa-style membership sales model used by TechShop (and many other “me-too” maker facilities use) was NOT a sound business (or association, or non-profit, or start-up) model — as the primary means of revenue-building. In Pittsburgh, the TechShop membership model has failed (TechShop announced they are departing Pittsburgh in September 2017), and it was not for lack of “maker interest.” Health-spa-membership models are built upon three bad premises: 1) They are based on moderate-to-high volumes of unit sales to rapidly gain market shares and operating revenues; 2) They are based on non-committal, ‘in-the-moment,’ ‘feel-good,’ urge-buying of the membership to satisfy a desire rather than evangelizing and satisfying customers in a manner that drives a long-term, retained clientele; 3) They are based on ONLY DESIGNING for a 20-30% regular usage by the total membership to save on costs. (When more than 30% use the facility, at any one time, there is lack of access to equipment and it leaves the member dissatisfied with their experience. I should note here that hospitals, and health care providers often also fall into the traps of health-spa memberships when dealing with patients, or establishing a patient-driven medical approach.) TechShopTechShop, in my professional opinion, chose the wrong business model (a model built on quick short-term returns, and rapid/consistent membership churn). TechShop provides a valuable and needed community service (just as health care providers do); but, it cannot function if in every month it loses money. What, then, should TechShop have done? What numbers should your strategy use to determine its success? TechShop’s initial strategy assumption is that they will only grow revenues/profits if they grow market-share. Is that a good assumption? There are many companies that follow this mantra as if it is always the fact by which one should set up an organization. But is it a true assumption?

Successful strategies are not always about solving problems, or making comparisons to Samsung-VS-Appleunderstand how to attack your real or potential rivals. Sitting in MBA classes, graduate students often look at case studies. One that was presented in my school was the strategy of Samsung vs. Apple in regards to smart-phone roll-outs. Over 85% of the class came to collective agreements during discussions that Samsung was beating Apple in smart phone strategies because their profits “were almost equal with Apple’s” and Samsung and Android were “dominating in market share.” (This, by the way, is much of the rationale of how pollsters often get their studies of markets/customers wrong as well.) To those majority of students, it was only a matter of time before Apple would lose its leadership, to be replaced by Samsung. Their recommendations, as business’ future strategists were to look at this, the arguments, the SWOT analysis, and other analyses — and state unequivocably that Apple needs to rework its strategy in advance of the impending threat of Samsung. Were they right? What if they were wrong?

What made everyone think that Apple’s strategy was the same as Samsung’s? Is strategy based on the same things in every case? Is it based on market share? …profits? … the competition? …customers? … sales volumes? …units sold? …units retained? To understand strategy you have to determine what it is based upon. To understand how to correctly compare your strategy with your rivals, you have to understand what their strategy is based upon, what conditions are present, how you’ve both positioned similar resources, how you’ve positioned different resources, and how you and your competitor has protected intellectual and proprietary properties. (After reading this, you may even wonder if all of this is necessary. Harvard’s Michael J. Porter would answer your question multiple ways that would probably state its value — and through that, reply ‘yes’; I would answer your question regarding strategy as, “It depends.” — both of us would see the tremendous value of and possibilities that came from knowing your rival.) Does market share, greater profits, etc. ‘Put a Dent in the Universe?’ … then, it is probably just someone discovering solutions, strengths, opportunities, threats — based on low-hanging fruits — essential for daily operations and tactical successes — but NOT (really) a strategy.

Applying my over 36 years of strategy consulting to this, I would say that probably one of the first great acid tests (acid tests: a rigorous and conclusive test to establish worth or value): “If the perceived strategy can ONLY resolve issues, or overcome competitive positions by tackling short-term low-hanging fruit problems — then it may NOT BE a strategy.” I stated “only,” because a good/great strategy is inclusive of resolving low-hanging fruit issues WITHOUT compromising its real purpose.

 

 

2 Comments Post a comment
  1. Sep 1 2017

    I think it really depends on how you are going to change your organization to secure the opportunity. If you can do it through improvements, low hanging fruit is on your path to greatness. If you can do it through a major transformation in your business and culture the end game is where you want to keep your focus.

    For every tool, thought, and person there is a right time and place where each will be the best choice.I think it really depends on how you are going to change your organization to secure the opportunity. If you can do it through improvements, low hanging fruit is on your path to greatness. If you can do it through a major transformation in your business and culture the end game is where you want to keep your focus.

    For every tool, thought, and person there is a right time and place where each will be the best choice.

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    • Sep 2 2017

      Do you really think that changing your organization by using “improvements” is a “strategy,” Chris? Or, is it something that is a tactcal response to a strategy? Can a strategy built on what you are saying have any long-term “stayng power? … Or is it just business or organizational problem-solving?

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      Reply

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