Friday, October 19, 2012

Strategy = Economy

Pity the poor word “strategy.”  Marketers--and pretty much everyone else in the white-collar world--throw it around like a Nerf ball.  Every marketer has a creative strategy, a brand strategy, a media strategy, a social networking strategy and for all I know a bathroom strategy.

Funny thing is, no one ever stops to ask “what exactly does strategy mean, anyway?”

The term tends to conjure up images of people wearing heavy black glasses (thanks, Henry Kissenger) and maybe the war room from “Dr. Strangelove.”  However, a working definition remains rare.  I’ve give it a go, then.

Strategy means economy.  That is, strategy means achieving meaningful objectives using the fewest resources possible.  Everything else, I reckon, amounts to embroidery.

Here’s what I mean: any marketer can get you to try his or her product by blanketing the landscape with ads, coupons or samples.  However, smarter marketers deploy those resources more cagily so that the right people get wind of the product and as few as the wrong people end up wasting the marketer’s money.

To that end, a strategist trying to develop a stratgy should concern himself or herself with three big questions:

  1. Which objective matters the most?

    Unfortunately, “objective” trails only “strategy” in its misuse in business settings.  (In fact, I believe that many people use the terms interchangeably, but that’s a topic for another time)  As a result, many marketers find themselves chasing multiple objectives.  Multiple objectives mean divided attention and, possible, conflict.  

    Let’s take an example from the world of lifetime value marketing (LTV): a marketer can optimize for overall sales or participation, but not both.  That is, a marketer can use every channel to drive sales, which
    will increase overall sales, although it will drive away many customers thus limiting participation over time.

    The strategist, then, must drive focus on the objectives that matter based on a consensus from the stakeholders.
  2. Which resources need safeguarding?

    In the end, it all comes down to money, of course.  However, money can take the form of people, time technology or materials.  In the aforementioned product trial example, perhaps sampling represents a cheap opportunity, as it might for a food retailer who already has people and locations for sampling.

    Let’s take an example from a completely different sphere: chess.  An observer of the game might identify the pieces and pawns as the most important resources.  However, it would be more accurate to say that
    risk is the key resource.  The chess player wants to capture his or her opponent’s king while exposing his or her own men to the least risk.  Correct me if I’m wrong here, chess fans.

    Determining which resources need safeguarding entails understanding the relative values of the resources as well as their scarcity.
  3. Which approach will lead to the objective with the expenditure of the fewest resources?

    You know what you want.  You know what you have to go get it.  Now all you have to do is figure out the path to that goal that requires the least money, people power or materiel.

Got your own definition of strategy?  Please share!

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