Even though business is complicated, it always pay to keep things simple, because this gives us clarity and focus for making decisions. Speaking of which, they used to say that a company had basically three broad strategies to follow.

Either you could focus on customer intimacy, and compete by being super close to your customers.  Think Zappo’s, the celebrated US online shoe retailer now owned by Amazon.  Or, you could go for product leadership, and design and build the best product on the market.  For this you could name Apple.  Lastly, you could major in on operational excellence, and do things much more efficiently than your competitors.  Ryanair would be a good example.

Imagine that each strategy sits at the point of a triangle.  When crafting your strategy you can only move around the outside the triangle.  You pick your strategy, or perhaps you opt for a combination of 2 strategies – a bit of one and a bit of the other.  But you can’t hedge your bets and go inside the triangle, looking for a combination of all three strategies.  That’s no strategy at all, just a big compromised mess.

In this sense it’s just like the holy trinity of delivering software, the price-quality-time conundrum.  If you move in one strategic direction, you lose elements of the other.  For example, focusing on quality has an impact on price and time (to market).  (You’ll also hear people talking about the triangle of cost, time and scope, all of which determine product quality, but you get my point.)

The trouble is, everyone’s starting to realise they HAVE to be customer intimate, regardless of their strategy.  If you’re not customer-focused, it will always come back to bite you.  For a long time I’ve been arguing that Ryanair’s drive towards operational excellence at the expense of customer happiness will rebound.  Charging you excessively to check in a bag reduces weight in the plane, fuel required for transportation, and flight turnaround times.  But your customers resent you.

Interestingly, Ryanair has started to acknowledge that its lack of respect for the customer has to change.  Furthermore, and if you have time, for an altogether funnier take on the resentment people feel that the initial price of a flight is never the final price, this song is well worth a look.

So if customer intimacy should be everyone’s strategy, we now need to think outside of the triangle.

Advertisements