Beyond selling widgets in Widgetville

I have been asked several times if there is a logical progression in business strategy as a company ages. I am talking about a company’s global strategy here; the aligned set of actions to create a competitive advantage.

I have no hard evidence that a sequential strategy shift is anywhere near universal, but I can tell you that I have helped several mature organizations move from a product-driven strategy to a market-driven strategy to find more growth. I also noticed, recently, that there were several good examples of this in the news, so I thought we might explore it. By “explore it” I mean that you should attempt to read the following few paragraphs and stay awake. We are talking about strategy here, not Miley Cyrus twerking nor American Idol, but I’ll do my best to keep you interested.

Product-driven strategy is built around a core product. Harley Davidson, Coca-Cola and Ford would be good examples. Does Harley Davidson sell some leather jackets and helmets? Sure, but the driving force of their business strategy is their motorcycles. Does Ford make lots of money through their credit organization? Yes, but everything is driven (so to speak…) by cars. The next dollar invested by these organizations will likely be in enhancing their core product.

Market driven strategy, on the other hand, means that an organization identifies an addressable market and tries very hard to meet the most urgent needs of that market. AARP tries to meet the needs of seniors. I just looked at their website and it features insurance, brain health, travel discounts and job search for seniors along with a wonderful swimsuit photo of Christie Brinkley at 60. (I’m just reporting here, not voting on anything.)

Likewise, REI focuses on the outdoor enthusiast market. Do they sell products? Of course, but the senior executives likely wake up in the morning, put on their Birkenstocks, button up their flannel and wonder, “What else do those Granola-heads in Boulder, CO need for their next outdoor adventure?”

CVS dropped cigarette sales from their stores recently and are trying to reposition themselves as a “health-care” company. This shift from selling drugs (product-driven) to a broad health care market (market driven) might offer them some significant growth opportunity in the future. This is a very significant strategic shift if I am reading them correctly.

If you’re a CEO, you might never have to re-craft your business strategy. Sure you’ll do some planning, will likely introduce new products, and do some tweeking (hopefully not twerking) of your strategy but if you’re selling something like Wrigley’s gum, you might get through your whole career without taking a strategic hard right. (“Should we put silver or bronze foil on the gum next year?”)

On the other hand, if you are like some of my clients, what got you to first or second base, won’t get you home. You’ll need to do some reinvention. If you are a product (or service) driven company you might need to stop asking “How can we sell more widgets?” and start asking, “What do all the Widgeteers in Widgetville really want besides widgets?” The implications of changing the core question driving your business are significant.