Need For Schizophrenia
Corporates in consumer oriented businesses are increasingly looking at delving with multiple personalities!
One of the bedrocks in strategy exercises the world over was to be consistent and drive focus; in positioning, execution or communication. It has always been taught and practised that delving in too many things is sub-optimal. It has been consistently advised to have a clear position. However, with changing times, this oft practiced philosophy is being revisited as consumer oriented businesses try to simultaneously delve across multiple ends of the same spectrum. This article looks at key dimensions in front end consumer facing businesses.
To be or not to be!
One of the sharpest changes that has occurred is in operating philosophies of consumer oriented businesses. A decade ago, the key question for consumer companies, especially technology start ups, was to choose between being a 'big fish in a small pond' (think Paypal in early 2000s) or a 'small fish in a big pond' (think Dell when it started). In contemporary times, the operating philosophy is often to strive to be the 'biggest fish in the biggest pond' (think the new age technology giants in Silicon Valley).
My channel or yours!
It is extremely interesting to see how consumer oriented businesses address the channel issue. They often adopt a simultaneous contradictory strategy of 'channel control' (think Xiaomi having its own stores to establish channel control) and 'channel outsource' (think Xiaomi driving a third of its sales from online channels where it has little control). In addition, the quality of distribution also seems to be suffering from this contradictory focus. Leading FMCGs are adopting a contradictory strategy of adopting both 'high quality distribution' (think direct distribution) and 'low quality distribution' (think indirect distribution via wholesale) with equal fervour.
To control the channel is good. So is to outsource the channel. To pursue direct distribution is good. Equally good is to pursue indirect distribution!
Fifteen minds within a mind!
Leading consumer oriented businesses adopt a strategy of 'one size fits all' (think all strategy exercises done at the beginning of the year talking about one consistent consumer proposition) and 'multiple sizes for multiple people' (think Nestle having 15 Indias, Unilever having 20+ Indias) while defining their consumer profiles. Both these seemingly contradictory philosophies seem to be happily married!
Schrodinger's manpower - on and off my payroll at the same time!
Treatment of frontline manpower is akin to a newly married couple. They start off by being very close (think front line manpower on a company's payroll) and slowly drift apart (think front line manpower being outsourced to a third party agency). Depending on the ebbs and flows in a couple's relationship, leading FMCGs keep absorbing manpower on their payroll and then outsourcing them to a third party agency. However, at any point of time, front line manpower often stays 'on and off' a company's payroll!
Be like a bottle of wine - marry the appeal of the old to the new!
Almost every consumer durable firm's operating strategy is to penetrate the old (think rural) and the new (think e-commerce) at the same time. Rural and e-commerce operate at two ends of the spectrum targeting different age groups, regions, buyer values and relative affluence. The structure and executional capability required to tap into both of them are vastly different. However, most of these consumer facing businesses seem to be running after both of them at the same time.
Key focus product is every product!
Product portfolio strategies of most consumer facing product companies are borderline hilarious. They typically range along the following diktats. Every new product is focus. Every old product is focus. Every core product is focus. Every non-core product is focus. Every product has potential. Every product is the future. Every product is important. Every product needs to be invested in. Every product needs depth. Every product needs breadth.
You are a premium but basic player, I am a basic but premium player!
As a result of the product strategies, the pricing propositions of most consumer oriented businesses (barring an Apple) seem eerily similar. A basic company has products from entry level to premium. A premium company has products from entry level to premium!
In summary, the explanation for this schizophrenic behaviour is fairly straightforward. With increasing competition and decades of growth, vast barren opportunity appears limited. However, there are pockets of micro-markets that exist for lucrative tapping. To tap into these micro-markets, which are not related and are spread across the spectrum, consumer oriented businesses need to operate across contradictory elements in the spectrum. Hence, revisiting what has been taught and practiced over decades of experience seems inevitable.
Or it is just 'good greed' where everyone wants to play everywhere to capture everything. What is sauce for the goose is also sauce for the gander!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.