How successful brands die

Understandably we talk a lot here about growth.  That’s what most founders are interested in.  However, this is should only be one part of their agenda.  The other, less discussed, is survival.  Simply sticking around and maintaining your brand’s position – hopefully long into the future.

When it comes to the growth side of the equation, strategy is useful, but, frankly, optional.  It’s perfectly possible to create a booming business with no strategy at all – indeed this is what normally happens.

This of course might leave us wondering where the point of strategy is, if we can do perfectly well without it.  Sure, perhaps it may marginally improve our profitability, or generate a sexier and punchier brand – but if we’ve got a good chance of growth without it, then is it all it’s cracked up to be?

The answer of course is yes, but not simply because strategy helps us grow.  Because it helps us survive.

The reason for this is simple.  A successful business with a strong strategy will know, intimately, why what it does works.  What the logic behind all its elements, policies, and behaviours is; how they interact with each other and the wider market.  An equally successful but un-strategic business won’t know this.  They may be doing just as good a job in any given moment as their strategic cousin, but they won’t fully understand how they’re doing it; the dynamics behind their success.

As a result, they will be vulnerable to things falling apart without warning, whilst the strategic business can avoid this through considered adaptation of its operations in line with the strategy.

This explains why many successful brands – who seem to have everything worked out – can suddenly go “pop”.  Just because they’ve managed to grow doesn’t mean they have any control over their situation.  A couple of small changes to the market context, and their advantage can vanish – and worst of all they probably won’t have any idea why.

Jim Collins has touched on this idea through his comparison of Southwest Airlines, and Pacific Southwest Airlines (a totally separate business).

Although Southwest has a great reputation for creativity and strategic thinking (and indeed we’ve discussed them here before), what is little known is that their initial idea was simply to copy the model of another airline – Pacific Southwest – and to bring it to Texas.  Pacific Southwest was doing many of the things Southwest became famous for long before the latter’s success.  They had a fun atmosphere on board, used a limited range of aircraft, minimised on-the-ground turn around times, and even had a jaunty smiley face painted on the front of their planes.  Obviously, these were all good ideas, and as a result both airlines prospered.

However the difference with Southwest was that they were able to zoom out and understand why these were good ideas strategically.  To establish what they added up to, and unify them into a larger whole.  This then enabled them to continue this idea even as conditions changed, whilst PSA allowed themselves to be buffeted by the currents, thus losing their position.

Southwest then didn’t actually really use strategy for growth at all – at least not initially.  They used it for spectacular survival.

(Let’s not forget that they were the only major American carrier not to go bust in the 90s and 00s, so I mean this quite literally).

I’m sure we’ve all heard the stats about how short-lived most companies are – especially today, when supposedly the life expectancy of a business in the S&P 500 is only 20 years.  So many brands burst onto the scene – proving they have a recipe for success – only to fade away shortly afterwards, and this is because they never contextualised their successful approach within a strategy. They mistook fluke for skill, and were left baffled when their ideas suddenly stopped working.

Look at Clubhouse, for instance.  The new YouTube only a couple of months ago, and now effectively dead on its feet.  There was something there alright, but it appears the founders never quite figured it out, and so were left flat-footed when change (i.e. the lifting of corona restrictions) occurred.

So by all means, feel free to pursue any path you wish to strategic growth.  Yes strategy can help.  But it’s not a prerequisite.  However if you want to stay alive, that’s a different matter.

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