Each Monday I post the next section of my 2001 book, which was originally called (by the publisher) Hoover’s Vision but which I have now retitled The Art of Enterprise. I have posted over half of it already; click on the “Monday” column to see all the prior sections. The entire book can be downloaded as a PDF for $10 at http://www.scribd.com/doc/25085990/The-Art-of-Enterprise-by-Gary-Hoover-January-2010
The Unique Vision
“In real estate, its location, location, location. In business, it’s differentiate, differentiate, differentiate” Former Coca-Cola CEO Roberto Goizueta
“Yeah, I’d be back there with everyone else,” Olympic runner Michael Johnson’s reaction when early coaches told him that he ran funny, and should run more like everyone else.
A successful vision is unique. If you try to accomplish the same exact goal as some other organization, it is not likely that the two if you will be successful. If you try to possess the same position in the market’s mind, there will not be enough room.
If you are starting a new company, developing a new division or product, or defining the course for an existing business, uniqueness is of critical importance. The process begins with finding your own space or niche in the world. While size and complexity may satisfy the egos of conglomerate-builders and corporate boards, the reality is that most successful enterprises do one thing, and do it very, very well.
Sometimes it is a small thing, or at least very narrowly defined. Cross Pens and Delta Queen Steamships are famous examples of big fish in little ponds. Club Corporation of America, whose founder Robert Dedman is a billionaire, is the largest operator of country clubs in the world. One of the most successful parts of the Barnes & Noble empire is their college textbook wholesaling operation. The Official Airline Guide is an organization with one database (airline timetables and fares) and a handful of printed publications; at its peak, it sold for $750 million. Big Charts, which provides stock charts to Hoover’s and other online services, was valued at over $100 million. The third party tech support or help desk industry did not exist 10 years ago and is today huge. Metro Networks flies traffic helicopters and was valued at hundreds of millions of dollars.
Part of the reason enterprises must have a unique vision is that they will be most successful if they strive to be the best at something, or the best or biggest in some regard. This may take some creativity of definition. In other words, maybe you can’t be the biggest (or best) car dealer in the United States, but maybe you can be the best Ford dealer in Central Texas. Once you achieve that more limited goal, you can raise your sights.
One way to differentiate yourself is by finding gaps in a competitor. In all the years I studied Toys R Us, they never had a successful toy store competitor. Chain after chain tried to copy them. None of them survived over the longer pull. I told my friends, “You know, someone could build a chain if they just got the business of everyone that Toys R Us has upset.” Not that Toys was a bad company or upset more people than normal. But every company has its weaknesses – often, as with people, the flipsides of their strengths. In a US market of over 200 million consumers, there should always be room for two competitors, even if it requires focusing on the leading company’s Achilles heel or their dissatisfied customers.
One of the most effective differentiators today is the big home improvement chain Lowe’s. Home Depot is one of the most successful and best-run retailers in history, the ultimate example of the superstore. Most of their competitors, such as Builders Square, are long gone. But Lowe’s has carefully studied Home Depot and picked all their weak points. Lowe’s revised its stores (and then its advertising) to emphasize bright lighting, good signing so you can find things, departments that are easy to find, and other attributes where Home Depot was weak. Today, that industry finally has two strong companies. Those that died off were intent on copying Home Depot, the height of folly (and perhaps impossible as well). Lowe’s has instead succeeded by juxtaposing itself against Home Depot.
After one of my speeches in New England, a fellow came up and described the following situation. I’ll call him Rick. Rick was in the local television news business. One of their competitors had changed their format, increasing production values (i.e., slicker), focusing on crime and other sensational stories, taking the “easy pickings.” Their ratings were way up and they now led the market. Rick had heard my message about the importance of quality and high standards, and wondered if his story proved me wrong.
My answer was that Rick’s competitor was profiting because they had broken from the pack and offered something different. Based on my experience in the cities I have lived in, most of their competitors would respond to this move by copying it. If so, they will all end up splitting the market they started with, and none will be differentiated. Of course, there is a real market for sensational crime stories; there are people who want to watch that. Perhaps it is the biggest single slice of the market. But that will leave the other slices – whatever they are – starving for someone to serve them. If I were a competitor in Rick’s market, I would do something different. I might have “thoughtful news” (McNeil Lehrer on a local level), the “sports zone,” the “business broadcast,” “things that matter to families,” “news for the north side of town,” or anything that set me apart and had a substantial potential audience. Not necessarily the biggest audience, but one that would be big enough to justify the investment to serve them.
For years and years, America watched CBS, NBC, and ABC, usually in that order. They all offered us the same mix of national news, sports, situation comedies, and variety shows. None of them ever stepped outside that box or challenged the definition of a network. But today among the world’s most valuable networks are CNN, CNBC, ESPN, HBO, and MTV — networks that are each based on a specialty, networks that do one thing and do it well. If one of the original big three had stepped outside the mold years ago and chosen one of these enormous niches, ahead of the upstarts, they might today be much more valuable.
In thinking about being unique, remember that a class B idea executed with passion and intensity will usually beat a class A idea executed half-heartedly. Many times, a fundamentally sound idea is badly executed, often inside a large corporation with multiple and changing priorities. But when a dedicated group of people leave the big organization with the idea and devote their energy to it, it works. When I dreamed up BOOKSTOP, the folks at the May Company passed on it because it was not their thing. Sam Walton tried to convince his employers to open small town discount stores but they would not do it. Of course, it’s hard to beat a class A idea pursued with total intensity – I guess I’m talking about Microsoft.
But when you are pursuing opportunities, trying to find your spot in the world, don’t lose too much sleep if the single best spot is already taken. Most auto races aren’t won from the pole position. Pick a really excellent alternative spot and pursue it with all your heart.
Often differentiation will come from seeing the world in a different way. An excellent example is Volvo. Volvo has never in its history sold a car. Instead, Volvo has sold durability and safety. If they had tried to sell mere cars, they would have been demolished by GM, Ford, and Toyota. But instead, they sold something different. Their current ad slogan, “For life,” is one of the best positioning lines in the world, perfectly reflecting their two key values. When Volvo thinks about diversifying its product line, maybe they should make padlocks or child safety seats instead of minivans and sport utes. Because Volvo set themselves apart from the industry, because they built their owned uniquely-defined niche, they became worth a great deal of money. Ford bought them. Only time will tell as to whether Ford understands what they bought and how to maximize the Volvo brand.
Many times differentiation comes from looking at things in new dimensions. Our MBA-like analytical minds sometimes divide the world into the most obvious categories, but we miss the opportunity to put a different twist on things. When I first met the marketing executives at Southwest Airlines, I asked them, “how are your customers different from the people who fly American?” I expected I might hear that they were higher income or lower, younger or older. Instead, the marketers told me their customers were different in their attitudes. On American, the business customers were likely to get on the plane, tighten their ties, and open their laptops. On Southwest, the business flyers were likely to take off their ties, put the laptop under the seat in front of them, pop open a beer, and laugh along with their fellow passengers at the flight attendants’ jokes.
The bigger your market, the greater your opportunity for specialization. If you build cars, you can find a spot like safety or speed. If you sell groceries, you can be a convenience store or a hypermarket, you can be famous for your produce or your bakery. If you are Coke or Pepsi, even a 35% market share means a lot of money. If, on the other hand, you are in the thermometer business or the rubber band business, you have more limited choices of strategy. But you still have choices.
The godfathers of the importance of differentiation are two guys named Al Ries and Jack Trout. Twenty years ago they wrote a book Positioning: The Battle for Your Mind. Last year they issued a 20th anniversary edition. They have written many other books which extend and apply their principles. While I have seen a lot of marketing books, I am not convinced you need to read many beyond these. Ries and Trout’s bottom line is that you should try to own a word in the customer’s mind – “safety” at Volvo, “overnight” at Federal Express. I reckon if you are the best dry cleaner in the Bitterroot Valley, you may have to own a phrase rather than a word, but the principle remains the same.
It is also important to understand that each enterprise has a personality. Once more I turn to Southwest Airlines, about which a great deal has been written. One of the most common themes is that the company has a lot of fun. Some enterprises take this as a key ingredient and try to copy it. Like Southwest, they start sending out birthday cards. Maybe like Southwest, they tell more jokes. I can just see a big insurance company telling all their employees, “you have to tell a joke every morning or you’re fired.” What people miss is that part of Southwest’s personality is it orneriness and its “unprofessionalism.” Sending birthday cards and telling jokes in mid-flight fit perfectly. But they might not fit your enterprise. I, for one, hope that Hewlett Packard stays closer to a bunch of nerdy engineers than that they start laughing all the time. I hope Anheuser Busch remains deadly serious about “the Brewers’ Art.”
On the atrium floor at the headquarters of ad agency GSD&M are the words that define the company’s character: community, integrity, restlessness, freedom and responsibility, curiosity, and winning. Always remember that human enterprises have human attributes. Is your city feisty? Is your magazine opinionated? Is your college immaculate? Is your endeavor gifted?
As you know from earlier chapters, I believe that one of the most important ways that major retailers have recognized the entry of women into the workforce, and their time constraints, is by staying open nights and weekends. I give my retail friends a hard time for “being in the dark ages” if they are not open Sunday. Imagine my shock when I entered a brand-new, high-investment Chik-Fil-A fast food restaurant only to find prominent signs declaring “we are not open Sunday and never will be.” At first, I just thought they were idiots. But as I read their philosophy – which they went to great pains to explain – I came to understand that this was a fundamentally religious company. The company and its people did not believe in being open Sunday. This policy may cost this company millions of dollars in lost revenue. But it coherently fits with their own unique view of themselves. If they can make their business work (economically) in 6 days, more power to them. Likewise, Target walked away from millions of dollars when they dropped Playboy years ago as part of their self-definition as a family store. (As a bookseller, I had to defend our stores’ rights to sell Playboy in the face of censorship. I did the right thing, and so did Target. Our customers were different, as were our visions.)
Hand in hand with being true to your personality is being true to the facts. Your vision must be valid, it must jive with what the customer (and everybody else) already knows about you. Microsoft would today probably have as much trouble convincing the world that they are “Mr. Softy” as Southwest would have convincing people that they were sullen. Your credibility is one of your most important assets. It is a shame to lose it in an expensive ad campaign.
I remember when Office Depot, an otherwise fine company, was running TV ads to the effect “where America buys computers.” The typical viewer, especially those who bought computers, did not need to see a market research report to know that Dell, Gateway, and CompUSA were more likely claimants to this title. While Office Depot’s marketing people were exhibiting their goals – perhaps wishful thinking – it was not helpful to their cause to make the statement as if it were already accomplished. On the other hand, there was no gap between advertising and reality when, some years ago, Sears advertised, “where America shops.”
Hyperbole abounds around us. I am not sure who some marketers think they are talking to. While we may have become inured to overstatements by the entertainment industry, I had to laugh a little when ABC referred to their made-for-TV movie “Arabian Nights” as “the television event of our time.” Or the Abslide ad that profoundly states, “a machine so unique it has its own US Government Patent.”
While they may not be popular at the big ad agencies, a little realism is always appreciated. “Aspercreme – it works well without the smell.” Or the ad in the US travel magazine that showed a picture of an exotic “see Australia” brochure – followed by the tag line “stop dreaming and start driving.” The ad was for the Kentucky tourism bureau.
Equally pointless are ads that are pointless. I recently saw one, “Firstar – Bank without Boundaries.” I sure would like to see a list of what banking boundaries they are talking about. I’d like to know specifically how they are breaking those boundaries and how I as a customer might benefit from their “outlaw” nature. And I am not alone. The ad I saw gave no such answers.
In any communication, your marketing is less important than your substance. When I first began studying business over 30 years ago, Procter and Gamble was viewed as the world’s top marketer. They spent more money on national advertising than any other US company, and their ads were famous for their effectiveness. Their product market shares sometimes seemed invincible, and competitors like Colgate and Unilever could only watch with envy.
But a close look at P&G showed that, at its heart, it was not nearly so much a marketing company as it was an R&D company. The reason its ads – which were good ads – worked so well was because they were reminding the public about superior products. P&G invented the commercial detergent (Tide) in the 1940’s; they pioneered flouride in toothpaste (Crest) in the 1950’s. They continue to this day to refine, refine, refine their products – from diapers to quicker-picker-ups, from cosmetics to mouthwash.
The “P&G lesson” is an important one to learn – that no amount of great advertising will (over any length of time) make up for secondary products, bad service, or other broken fundamentals. But if you do have a great product, then you need to support it with great marketing.
Marketing is all about communication. Every enterprise, like every person, is the source of a continual flow of signals and communications, of signs, symbols, messages, gestures, and language. Just hang around any office and look at the desks, the walls, the posters – even when we are silent we are always “talking.” Each enterprise is continually communicating, whether planned or not, whether thought-through or not. Successful enterprises are aware of their communication flow, they think about it, and they think about what it represents to the recipient. They understand how it has the power to set them apart from others, to differentiate them, to position them.
Differentiation starts with your name
Ultimately, the power of your enterprise’s name will be what you make of it. In other words, if you have an awful name, you can still build a great business and people will patronize you. If Radio Shack can build a multibillion-dollar business with that name, you can do anything with any name. Even names that seem great are often really the result of the value that has been added to them. When we hear the name of Saks Fifth Avenue, we think of luxury and quality. But that name (which sounds like a shopping bag combined with a nondescript numbered street) was originally established to help separate the store from its now-long-gone mid-market sister store, Saks 34th Street. The name Saks originally meant little or nothing to consumers. While Fifth Avenue already had cachet, Saks has probably done more than anyone to spread the international reputation of the Avenue by incorporating that street into its name. In short, names themselves do not have overwhelming value; they become what you make of them.
Having said that, if you are picking the name of an enterprise or product, or considering renaming something, you should at least try to do it right, and that starts with differentiating yourself.
A few months ago I scanned the usual armada of institutional corporate ads in Business Week. These enterprises were putting their best foot forward, spending hundreds of thousands of dollars to get in front of decision-makers via these institutional campaigns. It was their one chance to stand out from the crowd. But what did I see?
First, I saw their names. Aether, Allianz, Acxiom, Agillion, Agilent, Adero, and Aventis. Whoops! Who told all these companies that they had to have names that:
a) were invented
b) all started with “A”
c) were one word
d) were totally indistinguishable from each other
e) were sometimes unpronounceable?
More shocking to me is the fact that apparently no one else picked up on this, because since then we have seen even more look-alike names, including Accenture and Agere.
Turning further in that same magazine, I found Genuity, Flooz, Infinium, Neuvis, Interbiz, and Taligent. Then Rational, Order Fusion, and Ironside. At least those last three are real words. I got off that plane and walked through the Chicago airport to see more ads – again expensive ads – for Dovebid and Razorfish. Today, the favorite target of my friends’ jokes is Cingular – they can’t even spell!
This may seem like a 90’s marketing nightmare. But we have been here before. The last time around it was initials – AMR, UAL, NL, SBC and many others. The former Southwestern Bell was and is a fine company. But when it was called Southwestern Bell, it told people something about the business it was in and something about where it came from. Now, as SBC Communications, it is more firmly linked to global corporate nothingness, cut off from its Alexander Graham Bell heritage.
I earlier said that names were not the end-all and be-all. They are a secondary factor. But in a case this perverse, I would guess that the company’s name reduces the market value of the company by 2-3%. Investors see names, people browsing headlines and stock tables see names. SBC isn’t going to trigger any reaction in anyone except those who already know the company – and that’s not who we aim most of our marketing budget at. If my 2-3% number is right, I am saying that renaming Southwestern Bell “SBC” is today costing its owners $3-5 billion. They have earned the other $150 billion in value by building a great company. But why give away $3-5 billion in a single decision?
Now that I have upset all my friends who work for these many companies, do I have any positive examples to offer? Yes. I think Great Atlantic and Pacific Tea Company was a great name. I prefer names whose pronunciation is obvious, but Chevrolet has worked out. Once in a while we might try naming a company after a person, like H. J. Heinz, Goldman Sachs, or Ben and Jerry’s. If I started a new Internet company today, I’d probably name it like a law firm – Kirshbaum, Spain, and Zacharias (to use the names of three Hoover’s board members) would certainly stand out from the rest of the dot-com world.
My observation is that over 80% of all institutional name changes are for the worse. So when do you change your name? California Packing, a giant food canner, changed their name to match their lead brand: Del Monte. Dayton-Hudson, as it evolved from a department chain focused on those two brands, converted to its leading retail name: Target. These were changes that made it easier, not harder, for people to understand the enterprise. Great names score points in both the “clear” and “unique” pillars of a successful vision.
I think it is hard to beat putting your primary product or service into your name. I started three companies, and named them BOOKSTOP, The Reference Press, and TravelFest. After I had left active day-to-day management of The Reference Press, which was founded as a business reference book publisher, the Board changed the name to mirror that of the products: Hoover’s, Inc. I did not vote against the change. Mom wouldn’t let me.
In the case of naming BOOKSTOP, I first looked at all the existing companies. They all had very English-sounding names. Dalton and Walden were the industry leaders. Next were Barnes and Noble (actually run by a couple of Italian fellows) and Crown (run by Jewish men). I decided that these were ideal names. If there was only one bookstore in the US, it should have the most English name – maybe Shakespeare and Company! (Of course, that’s the name of a famous English-language bookstore in Paris.) But because everyone else had gone that way, I wanted to go another route. I decided to look for a name more like Target or 7-11. Since those were taken, we took a red octagon and put the word “BOOK” above the well-established word “STOP.”
When people years later told me what a great name that was, I could only chuckle. Yes, it was a great name if you were desperate to be different.
Your name is your first act of communication, but close behind that is your “look” – the design of your logo and products, the feel of your ads. If you have delivery trucks, if you have a physical presence such as stores or hotels or branch offices, even if you have nothing more than corporate letterhead and envelopes, you have thousands of opportunities to communicate something unique about yourself.
A simple example is Bloomingdale’s, which in the 1970s not only reflected its obsession with trendy fashions in the design of its stores, but also redesigned its shopping bags and even its type style to match the overall feeling. Historically, excellent companies as diverse as cardboard box makers (Container Corporation in the 1960’s) and Fortune 500 giants (IBM and Mobil) have made design a priority. While I believe that Apple’s ultimate success will depend on the quality and pricing of their products, they were in large part saved from failure in the 1990s by coloring their computers and expressing their “Think different” attitude through great design.
I believe we have gone into an era where design has fallen off the map at many companies. Our hotels, which are really in the business of selling living space, often fall somewhere between dull and repulsive. Go to New Orleans and compare two hotels on Canal Street that almost face each other – the monolithic slab of the giant Marriott or the completely restored and New Orleans-style Sheraton. Based on my experience, the Marriott is perhaps better run and a better place to stay, but think of the upside if you combine great looks with great operations.
Roadside inns of today are probably less distinctive than the original Holiday Inns of the 50s and 60s. In so many ways, we have come a long way since the 50s – our movies have better special effects, our homes have more advanced televisions. But hotel and motel design, especially at mass price points, has not kept up.
There are some organizations that do understand the importance of design. One of the best examples is Target. When I first studied the department store industry in the 1960s, if you went to a party and asked people what stores they found interesting, you would hear names like Bloomingdale’s, Burdine’s, and Bullock’s. But today you are more likely to hear Target. This company has hired some of the world’s savviest designers, like architect Michael Graves, to design products from teapots to lamps. Upper-end retailers like Crate and Barrel bring this kind of style to the upper classes, but Target brings it to the masses. This is reminiscent of the 1930s, when any consumer could buy Fiesta Ware ceramics, anyone could ride a streamlined train across country. Today Fiesta Ware is a highly-prized collectible, as are mementoes of those streamlined trains.
Retail great Gordon Selfridge always stressed the role of design and showmanship, the importance of (in his words) “capturing the public’s imagination.” This is lifeblood for top companies like Target and Disney. But is has a role in every enterprise. Especially if your competitors are missing it, as Apple found out.
Elements of style – naming and designing – are only the first and most superficial aspects of differentiating yourself. The smart enterprise is always looking for ways to stand out. By honestly reflecting the distinctive personality and ambitions of your enterprise, even by celebrating those differences, you can build a unique place in the mind of everyone your enterprise touches.
More Reading on Strategy and Marketing
Of course there are a million books on business strategy. And nine hundred thousand of them get tangled up in buzzwords and diagrams full of buzzwords. I have not found anything that makes more real-world sense than the work of Al Ries and Jack Trout. They may be their own best example of building an enterprise out of one position, as they have cranked out dozens of books extending the same basic theme. And others have jumped on their bandwagon. While most bookstores put these books under “marketing,” I believe their ideas are at the core of overall business strategy. At the same time that I urge you to study the “Ries and Trout school,” there are also ideas of merit in the many other approaches to strategy, so I have listed some basic books in those areas as well. One interesting book that does not fit neatly into any category is The End of Marketing as We Know It by Sergio Zyman, the Coca-Cola wizard thinks in his own patterns.
Ries and Trout and Other Single-Minded Books
Positioning: The Battle for Your Mind by Al Ries and Jack Trout is the classic. My favorites among more recent books are The Power of Simplicity: A Management Guide to Cutting Through the Nonsense and Doing Things Right by Jack Trout, Differentiate or Die: Survival in Our Era of Killer Competition by Jack Trout, and Focus: The Future of Your Company Depends on It by Al Ries. Other relevant books include Identity is Destiny: Leadership and the Roots of Value Creation by Laurence D. Ackerman, which focuses on the concept of being true to yourself, and The Power of Focus: How to Hit Your Business, Personal, and Financial Targets with Absolute Certainty by Jack Canfield, Mark Victor Hansen, and Les Hewitt, in which the Chicken Soup for the Soul guys take on clarity – and hit the mark. Jesper Kunde’s Corporate Religion and Harry Beckwith’s Selling the Invisible: A Field Guide to Modern Marketing contain more stimulating ideas along the same tracks.
The best book that compares all the different strategy theories is Strategy Safari: A Guided Tour Through the Wilds of Strategic Management by Henry Mintzberg, Bruce Ahlstrand, and Joseph Lampel. Other concise overviews include What is Strategy – and Does it Matter? by Richard Whittington and Strategy and the Business Landscape: Core Concepts by Pankaj Ghemawat. Kees Van Der Heijden’s Scenarios: The Art of Strategic Conversation is worth picking up. Despite the corporate speak of “paradigms” and all that, this book includes a lot of the most important questions to ask, and how to ask them. The author once ran Shell Oil’s highly regarded “scenario planning” efforts. In an unusual approach for an academic, All the Right Moves: A Guide to Crafting Breakthrough Strategy by Constantinos C. Markides starts with customers instead of competitive economics. And Leading the Revolution by Gary Hamel – one of the leading proponents of the “rapid change” school of thought – is always provocative.