Ignoring Customers and Competitors (Strategic Planning Dissent - Part II)

From everything I read, two pillars of effective strategic planning are intimate knowledge of your clients, and detailed analysis of your competitors. Beyond the very obvious – you can’t be in business without very close daily contact with your customers and competitors, and any leader not paying focused attention to both has been long since fired – the wisdom of placing either or both right at the core of your strategic planning efforts isn’t obvious to me. Feel free to help me out here.

Customers: Effective strategic thinking has to anticipate a different future, right? If everything is going to stay the same, just focus on ‘best practices’. The thing is, when we ask our clients what changes they’d like to see, they invariably say more of the same, only better. We’ve had several clients instruct us clearly to ‘stay in our box’. It’s Henry Ford’s observation: “If I asked my customers what they wanted, they’d say ‘faster horses’.” And that’s as it should be. Our clients have their own business pressures, it’s not their job to spell out how we should be innovating and structuring ourselves to serve them better – isn’t that what they pay us for? Plus, they have the luxury of having a lineup of our competitors at the door, all they need to do is carefully pick the best one from an array of presumably impressive offerings, and then get back to their own pressing priorities.

The problem is actually deeper, I think. Our customers don’t agree, sometimes even within their own organizations, what they want from their builder/contractors (it’s sometimes hilarious). Which customer should we listen to? And should we listen to the CEO, the Senior VP of Development or the Project Director. Plus, our clients’ demands can suddenly and dramatically shift as they go through their own strategic changes, get defeated at the polls, or simply hire and fire senior people. Or this: In 1989, we had a strong stable of ‘Developer’ clients, by 1991 they were all (literally) broke. The only viable strategic plan in 1989 was not just to ignore them, but to ditch them all (of course, no-one saw it coming).

So perhaps be careful with that ‘know thy customer’ strategic planning mantra, it might not get you very far. Another business icon agreed with Henry Ford: I read once where Steve Jobs said that he never listened to his customers, as they were entirely unreliable. His anecdote was the introduction of desktop video editing, which was a huge instant success, and which he reported not a single customer had shown any interest in before it was right in front of them. Your customers won’t do your heavy lifting for you.

Competitors: We’re not talking ‘best practices’, of course, or being fully aware of your competitors’ activities. That is a discipline, not a strategy. If your competitors have a process, relevant expertise or technology that you lack, then focus everything on getting yourself to the same level before contemplating the future, if you want to have one. Still, shouldn’t we be investigating our competitors’ strategies, for all the benefit that knowledge would confer? Sure, I guess, except for two things:

First, they aren’t going to tell you what their strategy is, or (more importantly) why. We’ve done several competitive analyses. We have pored through Annual Reports (which are mostly filled with self congratulatory marketing, even in bad years). We have investigated and surveyed. We’ve learned a reasonable amount of ‘what’, very little ‘why’. Unsurprisingly, people are pretty tight lipped about this sort of thing, except when they’re actively misleading you (and good for them).

More importantly, it comes back to the intellectual ‘heavy lifting’. If you are going to copy someone else’s strategic plan, or even be influenced by it, given the paucity of knowledge you have about its foundation or goals, then aren’t you already lost? In the 1970’s there was a Canadian fast food chain called Red Barn. They let their competitor, McDonalds, do all the site location research, and then simply opened across the street. You already know how that story ended.

So what do you do? Unless you’re a savant, then you acknowledge that you have no idea about what the future holds, nor does anyone else. Your clients don’t really have any idea what they will or should want from your company in the future, and their own world is very full of threats and rapid change. Your competitors aren’t talking and by the time you figure out what they’re thinking, it’ll be too late. The available ‘experts’ are awash in old school conventional blah blah and don’t know your industry anyway.

I don’t have the answer. As I mentioned, I have a weakness for too many strategies. EllisDon’s founder built the company from nothing to over a billion in revenue; I don’t think he ever had a strategic plan of any kind. He sure worked hard, though.

Thanks for reading.