Middle-sized Companies and Misconceptions about Strategy
I had 8 years working in marketing agency for both global and local large-sized corporations. The work was fun but I realised that its contributed value to my clients’ businesses might not be much because working in agencies my agency was only allocated a small part of their marketing work. Thus, I decided to end my career with agencies who served large-sized businesses to pursue my goal of helping the middle-sized local companies compete in the global context.
Now in 2018, after 2 years of pursuing that goal, I have to admit that it is not as easy as expected. The differences between large-sized and middle-sized companies are big, especially when it is about the mindset of people and resources for investment. The fact is I am honored to have my chances to work with companies’ owners and directors as their marketing consultant, the people who are understanding and highly professional. Still, there are several cases in which I had to reluctantly accept the projects and later on canceled them with disappointments for both sides.
I have to admit that I was also a part of the problems because I didn’t take enough amount of time to talk to the clients and really understood what they needed and expected. In many cases, the misunderstanding between two parties at the beginning of the project is the main cause of that project’s failure. Simply put, when a client comes to an agency for strategy consulting, sometimes it is not exactly what they need. Thus, I want to write this article to share my experience in the hope that clients will understand more about agencies’ capabilities and both parties can cooperate better in the future.
Below are some of the most common misconceptions about marketing strategies that I often encountered, but first let’s define what strategy is.
What strategy is
Up until now, experts have not altogether agreed on a single definition of strategy. However, from agency’s point of view, strategy is an arrangement of the limited source to maximize their capability in order to have a better chance of achieving the desired goals. However, sometimes people express the need for strategy like these:
What strategy is not
– My business is not running very well. I need a marketing strategy to save it.
No. Strategy is not a miracle that can save every business. In fact, it requires a lot of investment in terms of finance, human resource training and of course time. Strategy is meant to be built and executed for years or at least some quarters to be effective. In some cases, it can be too late to implement a strategy if all resources of the company are nearly depleted.
Case study: One of the biggest coffee exporters came to me asking for a brand strategy to enter consumer market and connect with coffee shop owners. After a short interview, it turned out that their B2B business was in fierce competition; they were only looking for the escape and assumed that entering B2C was the solution. I wished that I could assist them, but having a brand strategy without any operating experience operating in B2C coffee marketing spells a certain failure.
– Our strategy is to build brand, push sales, and nurture customers all at the same time.
This typical answer is very common among marketing and communications projects, yet doing everything at the same time is not a strategy; it is only unrealistic ambition. In order to build a good strategy, one must abstain from the temptation of doing everything at the same time and then focus their resources on the most important subjects. In other words, strategy is more about what one should not do, the priority of resources given a small set of specific tasks.
Usually, a marketing strategy that tries to achieve both brand and sales objectives in a short period of time requires a lot of finance to succeed. Similarly, a marketing strategy that targets both the young and the old, both males and females, both the urban and the rural, will not be successful.
Case study: A classical case-study of Pepsi Cola is worth mentioning when they entered the soft drink market which was entirely dominated by Coca-Cola at that time. By focusing their resources on the younger generation, Pepsi Cola successfully convinced them to leave Coca-Cola and adopt a newer brand which was more lively and fashionable. If Pepsi Cola had instead invested all their money into pursuing the all masses population like Coca Cola, they would have failed by the lack of resources (compared to Coca Cola’s of course).
– Our strategy is to increase revenue 150% this year
At the first sight, it looks professional. However, it is not even a strategy if one looks deep enough. Setting clear objectives at the beginning of a business growth phase is crucial, but it is not strategy; it is simply measurement. Before setting such targets, an experienced strategist has to look for multiple solutions to meet those targets so that he can balance the resources and know for sure that these targets are achievable. In short, strategy is not just about setting targets and measurements; but it is more about finding coherent resources and methods to assuredly achieve them.
Case study: Clients sometimes have pre-arranged targets as a strategy and hire agencies to take care of the rest. It is not fair because there are many factors that will influence the execution, most of those are related to the business, not marketing factors. In order to solve this, client and agency must be crystal clear at the beginning of the project regarding marketing KPIs which are agency’s responsibility and business KPIs which are client’s responsibility. A good client should only ask for an agency to commit on business KPIs if they have worked together for a long period of time.
– We hire you – the agency – to do it. It is your work, not ours.
– We don’t want to let everyone in the company know. It should be only among the senior
This problem is about people involvement. Unlike the old day when business strategy was only known among a very selective group of people, today’s strategy requires a consent of all stack-holders of the business, agencies and employees included, to be successful. Before the launch of any marketing strategy, there should be a soft internal launch, in which the CEO will aspire all employees about the promising strategy so that everyone can understand it correctly and execute it right.
Case study: I build the brand strategy with a 5-year roadmap for a furniture company in the Northern area of Vietnam. After the strategy was approved, I had a session with all marketing team to present it and the CEO held a speech to all 2,000 workers so that they would know and follow through. As the matter of fact, there is a lot of executives’ involvement in the strategy in order to succeed.
– We had a very good strategy. Why didn’t it work?
Well, strategy is strategy; it is not reality. In fact, strategy requires a lot of attention and day-to-day monitoring to be effective, not mentioning the miscalculation of the context and resources from the beginning also, yet some clients tend to skip the preliminary research and jump right into the solution. Lack of resources, attention, or vision can all be accounted for the doom of good strategy.
– When a company really needs a strategy?
When the business has passed the infancy stage is my certain answer. Marketing strategy is rarely needed by start-ups because these business models change really fast. However, when one company has passed the infancy stage and gradually noticed the limit of its growth, it is the right time to find and implement a proper strategy. As an example, a one-storey house does not even need the foundation, but there is no way for a building to reach 20-storey height without a concrete one. The relationship between strategy and growth is very much similar to this illustration.
Case study 1: I canceled a branding project of a delivery start-up after two weeks into the execution because there was no clear answer for the direction the company was heading to, not to mention the founder who kept changing his thoughts all the time.
Case study 2: Another example is for the furniture company that reached the revenue of $20 million per year and got stuck there for years. After the transformation from state-owned company to joint-stock, they began to build their first brand strategy and the result was the 10% growth immediately after the first year.
How to do it properly?
In summary, there are four attributes of a good strategy that I learned from my experience as well as reading a lot of strategy books. I would like to share them here as the food for thoughts and motivations for further research into this abstract but very interesting subject of the 20th century. These four attributes are:
A good strategy first of all has to focus on homogeneity, prioritising the important issues and abandoning the rest. It can be the objective of brand over sales, or a small group of customers over mass audience. Whatever it is, strategy needs to be focal because all companies have limited resources.
Whatever one does, do something unique. This statement may be a little hard to achieve, even cliche, but the need to really look into it is crucial. At the end of the process of strategic thinking, at least a company can find some relative differences to leverage on if there is nothing unique being found.
As mentioned above strategy should be built on facts, not hopes. Therefore, any objective or KPI must have a supportive set of actions. For example, a 15% increase on sales should be supported by a list of new clients and forecast of revenue growth; otherwise, strategy is just a plan that is far from reality.
Last but not least, flexibility in implementation, the need for monitoring and regular adjustment are required to keep the strategy relevant to actual context and ascertain a higher chance of success.
Disclaimer: this writing reflects the personal view of the writer.
Nguyen Hai Minh