Milk-Free Ice Cream And Limits Of Strategy As We Know It

I wish entrepreneurs would go to business school! I mean, they really don’t know how strategy is supposed to be done. And their success despite (or perhaps because of) this creates a major dilemma for those in the strategy field--and an opportunity if we are willing to look beyond.

Here is what most textbooks and corporations say strategy should look like: gather reams of market and customer insight data, crunch numbers, and cram them into a 70-page PowerPoint briefing. Then present a recommendation, armed with fact-based answers to any question a C-suite member might post. Then win funding, build a team, write operating plans, execute, and report back after 10 months.

Simple. Linear. Straightforward.

Now here is the problem:

  • It wasn’t until IBM bugged Bill Gates a second time for help finding an operating system for their new PC that he set in motion the move that would become Microsoft.
  • It wasn’t until Shaun Neff realized professional snowboarders' contracts prevented them from wearing his T-shirts, but allowed them to wear headgear, that he bought 20 headbands, labeled them as “Neff” with a black marker, and set in motion the move that would become Neff Headware, arguably the world’s most successful snowboard lifestyle apparel brand with advocates like rappers Lil Wayne and Snoop Dogg.
  • It wasn't until David Mintz, a restaurateur and caterer, had difficulty meeting the needs of Kosher orthodox Jewish customers, that he set in motion an experiment that lead to Tofutti, the leading brand of milk-free food products from ice-cream to frozen pizza.

That entrepreneurs don't follow strategic best practices gives them, in fast-paced environments at least, an advantage we can learn from.

I interviewed Shaun Neff for our Outthinkers video series and will elaborate on his story in a couple of weeks. In the meantime, let's dig into Mintz's Tofutti business to uncover where traditional strategic planning principles may limit your success.

1. The world doesn’t reset in January.

Yet every strategy process I have seen is built around an annual rhythm. Sure, they allow for some flexibility--the most sophisticated ones even contemplate scenarios that might unfold during the year--but they all come from the viewpoint that sometime in November and December the world comes to a close and in January we start a new game. I didn’t ask Mintz exactly when he started experimenting making ice cream with tofu instead of milk, which led to the breakthrough that produced a product that tastes as good as the real thing (it really does by the way!), but I am willing to bet 1 to 12 odds it did not happen in December.

What would it be like to move from an annual strategy cycle to a monthly one?

2. Act before you are "80% confident."

At McKinsey I was taught to drive for an 80% answer, instead of a perfect one, because to remove the last 20% of uncertainty would take more time than that certainty was worth. As the pace of change accelerates, waiting an extra quarter, or even an extra month or week, can mean the difference between being first to market or an also-ran. Your opportunity cost rises. An entrepreneurial approach that encourages a small bet quickly--an experiment--rather a bigger bet slowly is a better choice. One of our CPG clients would typically spend three years studying a new product category before considering a test. By contrast Mintz says, “Every day I'm tasting food, new products, all day long.” As soon as the formula meets Tofutti’s standards, he gives it try.

What if you pulled a (smaller) trigger on a new idea before you reach 80% confident? What would change?

3. The market is your test.

Before a new product launch, best practices suggest you commission a huge consumer research study to find out with whom the product might gain traction. Market research firms live off of this habit. But to an entrepreneur, launching with lower-cost efforts, the market is the research. Who could have predicted that Tofutti’s “Cuties” (miniature milk-free ice cream sandwiches) would be popular in South Africa and Israel (where Cuties are Tofutti’s number one product)?

What if you took your market research budget and instead spent it on a soft launch. Would you end up in a better place?

4. The CEO isn’t the strategist--we all are.

If you are in a multi-business corporation, your CEO should be concerned with things like your corporate portfolio, efficiency, and investor relations. The big, bold decision that will determine if your business is a break-out or ahead in the pack will be conceived of, advocated for, and executed by … you. Be Gates, be Neff, be Mintz, be the entrepreneur, think of corporate as your investors, and manage them while you build something great.

If you were the CEO of your division/brand/unit, what would you do differently?

[Image: Flickr user Guian Bolisay]

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