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Be a surfer; watch the ocean; figure out where the big waves are breaking and adjust accordingly

June 17, 2012

The headline to this blog posting it taken from Jason Fried & David Hansson, founders of 37 Signals, a web development company. Their attitude to strategy was we built a company we’d like to do business with, we hope you do too; a simple and elegant way of describing an approach to developing a company’s strategy.  In the business vocabularies of many people, ‘strategy’ is frequently used, yet rarely useful. For all of our strategy statements and plans, marketing, financial and innovation strategies etc., the ideas that we label as ‘strategy’ often fail to affect meaningful change. We don’t surf.

The problem is not that strategy as a concept fails us, but rather that we don’t really understand what strategy is. Perhaps the reality is a lot simpler  – there is always a better strategy than the one you have, you just haven’t thought of it yet.

Here’s where I’m starting from: Strategy is the practice of figuring out the best way to get from here to there. For me, strategy is a perspective, a mind set of how to perceive the world, from which a pattern in a stream of ideas take shape. Then again, the key to effective strategy isn’t more or better ideas, concepts or frameworks, but developing the ability to use what you already have – find out where the big waves are breaking.

Consider Kodak, which went bankrupt in January. It is no great surprise that its film business was destroyed by the growth of digital photography. What is surprising is that it was Kodak which invented the digital camera, yet they declined to develop it for fear of damaging its chemical film business. You don’t need the benefit of hindsight to see this was a bad decision. Digital photography was the classic disruptive innovation.

Kodak didn’t need better strategic thinking. It needed better ways of seeing the obvious but unpalatable, and doing the simple but uncomfortable – in the same way as Waterstones recent decision to stock Kindles and digital books. The move marks a complete turnaround in the chain’s strategy, and newly refurbished stores will now include ‘digital areas’, free Wi-Fi access and coffee shops in a drive to get digitally savvy consumers through the door. Their customers are book lovers, so let them make their choice of formats, and don’t push them away from the bookshop experience.

Most strategy is like this, simpler than consultants and academics would have you believe. You are not reinventing the company, redefining the industry or creating the next Facebook. You are looking at what’s going on in your markets to identify what customers – mostly your existing customers – are likely to be asking for in the future.

Isn’t strategy about looking inside the company to see where you are making money and where you are not, and then doing something about it? Often you end up with something quite like what you already have, with some parts expanded, others shrunk or eliminated and a few things added. Recognise that you probably have all the strategic knowledge you need. The value is not in concepts or techniques, but in the ability to see clearly and act accordingly.

A great example of being able to see clearly and act effectively is that of Steve Jobs, and the insights outlined in his biography by Walter Isaacson.

Throughout the book, time and time again you come back to one thought: the bigger part of the strategy equation is to have the vision and skills to back up strategic thinking. Isaacson identified fourteen insights from Jobs’ strategic thinking, each a valuable perspective on his perspicacity:

  • Focus Isaacson wrote extensively about Steve Jobs’ ability to pare unnecessary products, services, marketing, packaging, and even buttons on Apple’s (and Pixar’s) products. A classic of the 80/20 principle, underpinning a focus on what makes a difference.
  • Simplify I can’t think of another company that has been able to simplify the user experience and deliver customer value. Apple simplified its devices, software and applications, yet at the same time based on disruptive thinking, took users beyond where they were already delighted – an example being MP3 players to the iPod.
  • Have end-to end customer responsibility Jobs’ preferred business model was to control the entire user experience, clearly articulated with Apple’s own hardware, software, applications, devices, content and the product/service purchase and consumption experience – that’s why Apple has so little competition in the digital music space.
  • When behind, leapfrog Jobs was mortified when he realised Apple had missed the boat on burning music CDs with its original iMac. His solution was to leapfrog the competition with the iPod and iTunes. The lesson here is that strategy isn’t about playing keep up, or even catch up, but going beyond what the competition is doing.
  • Put products before profits Jobs spoke at length that Apple’s philosophy is to focus on making great products, and that by doing so, the profits will take care of themselves. Sales and finance folks tend to focus more on profits than products. Jobs believed this a recipe for mediocrity in strategic thinking.
  • Don’t be a slave to focus groups Jobs was asked by a member of the original Mac development team if they should run something by a focus group. Jobs famously said No, because customers don’t know what they want until we’ve shown them and this underpins Apple’s strategy of creating such innovative products that ‘wow’ the market.
  • Bend reality A consistent point made in Isaacson’s book is that Apple accomplished great things – frequently things they themselves knew couldn’t be done – simply because Jobs believed otherwise. His vision and strategy were wrapped in his ‘reality distortion field’ so that ultimately there was no compromise to what he set out to do.
  • Impute It’s all about the book, not the cover, isn’t it? Not in Apple’s strategy map, it turns out the cover really does matter. Steve Jobs obsessed over packaging and presentation, not just in the products, but in the Apple Store design and layout, the Genius Bar formats and service, and even the Mac icon designs, all wrapping the core product
  • Push for perfection Back in the day when Mac vs. Windows was the platform war that mattered, many argued that what set Apple apart from the competition was that Microsoft settled for ‘good enough’. Reading Isaacson’s narrative, it’s clear that Jobs’ pursuit of absolute perfection was a big part of why the Apple strategy was so successful.
  • Tolerate only ‘A’ players Here’s the heart of the issue of Jobs’ perceived ‘rough edges’ of his personality. Being brutally honest (and frequently rude) was one of the ways he kept the ‘B’ players out of Apple. He refused to compromise on skill and talent, wanting only ‘A’ players, although his brusqueness and rudeness did cause tensions, but left no confusion or uncertainty.
  • Engage face-to-face Apple was an early adopter of the agile software development methodology – frequent face-to-face meetings mixing development, production and marketing folk – don’t collaborate via email. Equally, there are no spectators in meetings at Apple.
  • Know both the big picture and the details Here we have another attribute of strategy development and implementation that I think sets Steve Jobs apart. He had a big picture vision and the ability to hone in on the tiniest details that he thought mattered. Seeing the blue sky and washing the pots was his strategy mind map – heads up and open, hands on and busy.
  • Combine the humanities with the sciences There’s no right or wrong way to develop your strategic thinking. Isaacson believes Jobs was focused on the idea of marrying the influence and perspectives of humanities with science, and identifies the concept as a key part of why Apple and its products are so great.
  • Stay hungry, stay foolish Isaacson notes that Jobs stayed hungry and foolish throughout his career by making sure that the business and engineering aspect of his personality was always complemented by a hippie nonconformist side from his days as an artistic, acid-dropping, enlightenment-seeking rebel. Jobs was highly-strung, temperamental and clearly a man of contradictions, but that enabled the thinking.

Of the above factors to Job’s thinking around Apple’s strategy, Ken Segall in his book, Insanely Simple: The Obsession That Drives Apple’s Success, offers some intriguing insights from someone who worked closely with Jobs. He believes that Jobs’ obsession with simplicity was his greatest contribution to Apple’s strategy.

Segall was part of the team that dreamed up the Think different campaign, he also came up with the name iMac that would lead to the ‘I’ in a series of successful Apple products (Segall claims Jobs preferred MacMan!). He says, Despite the technological complexity of Apple products, the company always describes them not according to their technical specifications, like, say, a five-gigabyte drive on an iPod, but rather, as 1,000 songs in your pocket.

It’s easy to understand why simplicity gets sacrificed in strategy, for starters simplicity is often (wrongly) associated with a lack of sophistication and no one wants to be thought of as simple. But think about Apple’s iPod or Amazon’s Kindle, both are built on amazingly complex technology, yet delivered in deceptively simple, elegant designs.

Situations are rarely simple and the solutions to tough problems are usually complex, and it is important to understand all the angles and options before taking a decision, but as Albert Einstein once remarked, Things should be made as simple as possible, but no simpler.

So looking at the points on Jobs’ thinking, strategy needs to be focused and simplified if you are to stand any chance of success. Strategy does not have to be complicated. In fact, new strategic directions demand clarity and simplicity if they are to succeed – so back to the title of the blog and the 37 Signals philosophy.

Tomorrow rewards the curious, so keep demanding focus and simplicity and it will pay off. We don’t have to be out there with a lot of noise all the time. What we need to do is paint a vision for customers, promise them deliverables and go do it, because after all, a satisfied customer is the best strategy at the end of the day.

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