Two Smart Strategies For 2010

Yesterday is gone. 2010 is the time to start anew. It’s true that many of my clients and colleagues are tightening their belts now through the first quarter of 2010, but it’s not due to fear carried over from 2009. Instead, many of them are streamlining processes and making divisions more efficient in preparation of new growth during the second half of 2010.

That thought may seem counterproductive - reduce to grow - but as I’ve illustrated before, sometimes it takes a crisis for business leaders to implement new tactics. Many strong companies, with good products and customer service, have struggled over the last two years. But outthinkers have used this opportunity to identify waste. Now they are ready to make some final changes in order to be lean, mean, profitable machines in 2010.

 

Beyond eliminating waste, it’s important to look ahead and take calculated chances. Below are two unique strategies that might help you develop an innovative approach this New Year. As you will learn, well-known brands, such as McDonald’s and Toys “R” US, are using these exact approaches to make sure 2010 is stronger than 2009.

1.   Seize the opportunity to lead the sheep away

2.   Await the exhausted enemy at your ease

McDonald's new free wi-fi strategy is an excellent example of “seize the opportunity to lead the sheep away.” By challenging Starbucks with its new coffee selections, and now offering free Wi-Fi, McDonald could steal cost-conscious consumers. Because Starbucks depends heavily on these offerings for profit, it faces a significant "copying cost": reducing coffee prices or going downscale, for example, would probably cost Starbucks more than it would gain by doing so. This stratagem basically suggest we look at what our competitors will not do because they are not motivated to or because they are distracted. I predict that the burger giant will focus on its location atmosphere next to create a more appealing consumer experience.

 

Toys “R” Us is using the strategem  “await the exhausted enemy at your ease.” A recent New York Times’ article clearly highlights the positive changes within Toys “R” Us under the leadership of Gerald Storch.

You see, while most toy companies have been occupied with the immediate challenge of lowing costs and prices, Toys “R” Us has recently snatched up most of the well-known specialty toy chains, including F. A. O Schwarz and KB Toys. It opened more than 80 temporary holiday toy shops, and it started the holiday season early by opening stores just after midnight on black Friday. It also purchased etoys.com, toys.com and FAO.com, thereby locking up the major “toy” related web sites.

Toys “R” Us has been preparing for the post-recession battle. It started differentiating itself by offering more locations, owning a more diverse roster of toy retail brands, expanding brand presence (with temporary stoes), and controlling the “toy” cyber war.

These two companies offer examples of how established businesses need to adapt to changing market conditions. Ask yourself the questions below to see if you can leverage these stratagems to make 2010 a breakthrough year for you.

1.   Where do we get most of our profits and what would happen if we stopped doing everything else?

2.   Is there a way to do more work with our current infrastructure?

3.   What does my competitor most care about and what would happen if I attacked that (e.g., what if we offeref it for a low price or free)?

4.   What will the battlefield look like after we and our competitors trim costs as low as they will go? What can you do today to prepare for that battlefield?

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3 Comments

  • Gail Nichols

    Very interesting. Having worked with major restaurants (including McDs) and retailers for 30 years, we know the "Perfect Storm" of the current economy and rapidly escalating Internet sales delivered from off-site warehouses is negatively affecting shopping center owners' revenues, profits and market cap. Malls (and their stores) can apply both strategems to recapture lost revenue and attract new customers with local rapid order fulfillment (in-store shopping & delivery in 30 to 45 minutes instead of 3 to 10 days). More info at http://bit.ly/6IFPSS

  • Leanne Smith

    The last 4 questions are worth their weight in gold. How many business owners and executives never ask themselves the first question less alone the other 3? Good, succinct and value driven article. Thanks, Leanne Hoagland-Smith, The Results Coach

  • Nadia Laurincikova

    Thanks for a great post Kaihan and for bringing up these 2 recent examples of how companies can strengthen their competitive position by leveraging the power of The 36 Stratagems, two of which are mentioned in this post.

    As you so precisely put it, the beginning of the New Year is the time to look ahead, to seize new opportunities, and to take new changes. But as we think about our next steps, I would also like to remind all the business owners and business managers out there that we should not forget the lessons we all learned in 2009 when the economic crises pushed us all to think harder, to challenge ourselves more often, and to innovate like tomorrow depends on it. Even though 2010 should start to bear the fruits of our work, it is no reason to become complacent and get comfortable with the well thought-out strategy we put in place in 2009. With more new companies starting out during a recession than a bull market (according to Kauffman Foundation's recent study "The Economic Future Just Happened"), 2010 will be a bull year, but it will be a bull year full of bulls like you. So keep your sense of urgency that you so painstakingly developed in 2009 and continue the fight with the same motivation and innovative spirit that allowed you to get this far. If you do, it will pay off for all the years to come.