Better Odds: Which Kind of Strategy is Better?
Obvious vs non-obvious, red ocean vs blue ocean, reformation vs revolution...
I’ve been talking a lot in this series of posts about obviousness and outliers, colour-by-numbers strategy and non-obvious strategy, etc. For any readers looking for “the best way to do strategy”, there’s a danger of walking away from all of this thinking that finding mind-blowing insights and creatively reframing strategic approaches is Doing Good Strategy, and merely applying logical rigour within a commonly accepted way of seeing things is Doing Bad Strategy.
That is actually the opposite of what I’ve been trying to convey.
I’ve been trying to explain the dynamics underlying these two broad approaches to strategy so that you can understand their relative advantages and weaknesses. And if you understand those, you should understand when each approach is appropriate. The course I teach is called Strategy Without Recipes. The idea is not to give you a templated formula to roll out every time you need to solve a problem. The idea is to help you understand the structure of problems, the shape of them, the grammar of strategy.
So let’s wrap up this “Better Odds” series by talking about the two broad approaches. Quickly recapping…
Colour-by-numbers strategy involves analysing a situation logically to identify the most influential and influenceable factors, and focusing ideation on coming up with solutions which address those factors.
Non-obvious information – overlooked info, under-examined info, emerging trends, some unquestioned assumptions, etc. – can reveal new more influential and influenceable factors, but still within the same basic obvious way of framing the challenge.
Some unquestioned assumptions and new non-obvious ways of framing the challenge can reveal completely new approaches to solving a problem.
Ideation is probabilistic. The role of the strategic-creative process is to improve the odds of good enough ideas.
Before talking about when which is more appropriate, let’s quickly consider a few situations.
Let’s start with the idea of “red oceans” versus “blue oceans” in Blue Ocean Strategy. If you’re not familiar, the idea is basically that Red Oceans are markets with lots of competing businesses meeting existing demand from the same customers (like an ocean bloody from sharks all fighting for the same meat). Blue Oceans are where a business takes an active role in creating a new kind of market, creating a new demand, potentially from new customers.
Standard examples include Cirque du Soleil, which created a new kind of adult-focused circus market, and Haagen Dazs, which created a new kind of adult-focused ice-cream market. (“A kids thing but for adults” is a recurring theme there, I know.)
And of course, if you do it, wonderful. Hugely profitable for businesses to be the first mover in a viable new market, with no immediate competition – and sometimes no viable competition for years, if that first-mover advantage is substantial.
But while that prospect is sexy and appealing and you’ll get to write a book one day about how you did it, the overwhelming majority of successful strategy in the world is about incremental or occasionally exponential success in Red Ocean markets. And that’s fine and good. Most of the time, either businesses are not in a position to radically reimagine a category or a category is not in a position to be radically reimagined.
Another scenario for consideration is the example I used a few weeks ago – the Fosbury Flop in athletic high-jump competitions. It is true that Dick Fosbury won Olympic gold by reimagining high-jump techniques and that, once he did, everyone adopted his technique.
But up until that point, people won gold at the Olympics by doing a better job of the established straddle techniques. So it’s also true that, until Dick Fosbury, if your objective was to win gold, coming up with the best ways to improve straddle-technique high jumps was a winning strategy.
In the world of marketing, we can look at examples like canned-water company Liquid Death’s recent success; or Old Spice’s “The Man Your Man Could Smell Like” and accompanying responsive Twitter campaign; or the virality of Dollar Shave Club’s advertising and the creativity of applying a subscription model to men’s razors:
One thing that’s worth keeping in mind with all of these examples of “breaking all the rules” ventures is that we really only ever hear about the successful ones. The successful ones are indeed much more successful than their competition. Cirque du Soleil is vastly more profitable than any traditional circus. The Fosbury Flop is indeed a more effective high-jump technique. Dollar Shave Club took a huge chunk of market share from incumbents like Gillette and Schick.
But there is some survivor bias here. When we hear about these success stories, we are tempted to think that the secret to success is to radically reimagine our category, to break all the rules, and so on. But consider this: all outlier successes reimagined their categories, but most attempts to reimagine categories fail. We are not inundated with interviews and articles about the 99 marketing managers who tried doing things completely differently and failed. The founders of failed Blue Ocean startups don’t end up on the “40 Under 40” lists. But they’re out there.
What completes the picture is this understanding of risk and when to take it.
Ideation is probabilistic and the role of strategic-creative processes is to improve the odds of good enough ideas. When we approach a situation to come up with effective plans of action, we have a few variables:
How much time we have to solve the problem
How much resource we have to solve the problem (e.g., research budgets)
How good is “good enough”
How confident of success we need to be
A simple rule of thumb is that colour-by-numbers strategy takes a fairly predictable amount of time and resource to come up with high-confidence approaches to achieve pretty good results. The main drawback is that all of this predictability, confidence and pretty-good-ness comes with a ceiling on how much success you can achieve.
Conversely, real outlier non-obvious strategy can take an unpredictable amount of time to discover insights or non-obvious reframings, producing lower-confidence approaches to achieving potentially brilliant results.
In some circumstances, some of the risk can be mitigated with things like testing, rapid iteration and prototyping. But in other circumstances, it really can be a roll of the dice.
So when is one approach preferable to the other? Well, we can make a few simple observations.
When there’s not a lot of time, colour-by-numbers strategy improves your odds of success the most. (Rush jobs.)
When the stakes are very low, it’s often not worth investing more than the time required for colour-by-numbers strategy. (e.g., direction for Wednesday morning’s Facebook post or keeping costs down when it’s not critical to do so.)
When the cost of failure is low but the potential for success is high, it’s worth investing the time to explore possible non-obvious strategies after establishing colour-by-numbers strategy as a fallback. (Most agency campaign briefs fall into this category.)
When only great success is good enough, non-obvious strategy is your only hope. (Examples below.)
That final rule of thumb is more common than you might think.
In most of the examples given above, “pretty good” was never going to be good enough. Dollar Shave Club was up against Gillette and Schick, owned by multibillion-dollar companies who have dominated the razor category for over a century. Liquid Death entered the crowded and commoditised bottled-water category. In the Olympics before Fosbury took gold, there was less than 1cm difference between the gold and silver winners.
In any of those cases, there really is no acceptably middling success outcomes. A new razor company simply couldn’t compete with the scale economies and distribution networks of Gillette and Schick without doing something wildly different. The same kind of “little bit successful” that would be good enough for the incumbents would spell doom for the startup.
Another more relatable situation for those in Agencyland is the competitive pitch. If six agencies are coming up with ideas that are all pretty good, the client’s decision can end up being based instead on factors like price, agency fame, account-service chemistry, etc. So if you’re a smaller agency without the fame and resources of a big agency, really the only way you can win is by coming at the challenge from a completely new angle.
And the final example of “only great success is good enough” is in declining or dying industries. That is, those situations where continuing to see things the way they’ve always been seen, and do things the way they’ve always been done, will eventually result in the death of the firm even if it does relatively well. Kodak is the classic example of this – doing a very good job of marketing film while film itself was dying.
There’s a tendency to get very excited about outlier success stories and ask ourselves how we can emulate them. There’s a tendency for people to describe strategy as purely a kind of unstructured creative mess. There’s a lot of romanticisation there.
The fact is, for the majority of challenges in the business world, and even in the creative comms world, colour-by-numbers strategy is good enough most of the time. (I mean, there are some caveats with creative comms, because a creative brief still has to be at least interesting.)
The good (bad?) news is that good solid colour-by-numbers strategy is extremely rare. This is probably partly because of the over-emphasis on non-obvious strategies and a desire to find them for every challenge. And it’s probably partly because of a lack of training among strategists and businesspeople doing strategy.
Even if you never came up with a non-obvious approach to a problem in your life, you’d stand head and shoulders above most business thinkers just by thinking clearly about objectives, situations and challenges. And those “pretty good” ideas – which seem so prosaic in comparison with the headline-catching revolutionary ideas – really are better than most ideas. And perhaps best of all, they’re reliable.
So I’ll leave it there for now. If you’ve been following along, you should hopefully have a better idea of how ideas are produced with probabilistic quality, what shapes their effectiveness, the trade-off between reliability and potential effectiveness, the value of spreading uncertainty across multiple instances, and so on.
Some things I haven’t explored much are the actual mechanics of doing colour-by-numbers strategy or of exploring for insights and reframing challenges. (If you’re reading this because you’ve been through the Strategy Without Recipes course, you’ll already be familiar with the basic tools involved – issue trees, strategic maps, identifying unquestioned assumptions, etc.)
But I hope you’ve found it useful. If you’ve made it to this sentence, you probably have. Thanks for playing.
Next, a few interlude articles and then a new topic.