The self-loathing business

As has been touched on in these pages before, there is little more insidious than a focus on gaining “market share”.

The idea encourages all sorts of self-destructive beliefs, such as:

  1. That the market you operate in is zero-sum (markets are far more blurry, fluid, and open than the market share pie suggests)
  2. That purchases for one brand within that market are made at the expense of another (typically other brands weren’t even considered at the purchase moment)
  3. That it’s theoretically possible to “own” the whole market by appealing to everyone

It’s this last belief that is particularly dangerous, and which gives rise to a phenomenon I’ve noticed regularly in my career (though thankfully not with any Basic Arts clients…) which I call the “self-loathing business”.

Self-loathing businesses, far from being in any sort of trouble in the marketplace, are typically pretty successful and mature. The pathology is certainly the privilege of a brand that is well-fed and complacent, not one that is growing and fighting. It will normally emerge when the hard work of building the business has been done, a few good years have passed, and its executives are left with nothing better to do than dream up ways to tear the whole thing down.

The problem they identify is this: in order to become successful, you generally have to be very distinctive. You have to play a clear role in the market, one that makes you stand out from the pack, and which makes you especially attractive to a certain consumer. The catch with such a business of course, is that by being particular and non-generic, it by definition must be less appealing for certain other consumers.

So for instance, it would be fair to assume that a price Cosmopolitan magazine pay for their success amongst women is not being particularly successful amongst men. A price that Burger King pay for their success amongst burger fans is not being particularly successful amongst vegans. You get the idea.

Self-loathing businesses however, don’t.

Rather than seeing the peculiarities of their demographics and distribution as a reflection of their offering, and a point of strength, they see it as a mark of shame. They become agitated by the fact that they don’t cover 100% of the market, and assume it must be because they’re doing something wrong – not right. “Under-indexing” in a certain gender, age group, region, sales channel, personality type, you name it, is a problem waiting to be fixed.

The issue with fixing such things however, is that in doing so you threaten to undermine the very thing that made you successful in the first place.

Take the smart move made by Walmart during a fit of self-loathing in 2008, which cost them $1billion per month in revenue. The core concept of Walmart from its inception was to combine extremely low prices with a vast range of goods; embodied in founder Sam Walton’s philosophy “stack ‘em high, watch ‘em fly”. As anyone who has been to a Walmart would attest, they certainly follow through on this promise; however it does lead to a somewhat less-than-premium shopping experience. Nevertheless, people loved it enough to turn Walmart into the biggest company in the world at the turn of the millennium, so premium or not, it was a pretty good business model.

But then along came Target.

Target, for those who haven’t been, is essentially the “premium Walmart”. Higher income, younger, shoppers attracted by a more polished, less cluttered shopping experience. Sure, prices were higher, variety was lower, but for these consumers that was a fair trade. As you can imagine the emergence of Target saw Walmart – uh-oh! – lose a bit of market share. Thanks to their more elegant shopping experience, Target essentially took a little trim of Walmart’s premium business, such as it was.

Walmart’s response was predictable. Having asked their customers in a fit of panic whether they’d find shopping there more pleasant if they reduced the clutter, and received an answer in the affirmative (I mean, who wouldn’t?), they set about “Project Impact”. Project Impact involved remodelling their stores comprehensively, reducing their shelf height, widening their aisles, improving navigation, and generally simplifying the shopping experience to be more like Target. Pretty sure you can guess what happened next.

Turns out that Walmart’s negatives were simply the price paid for their positives, since to undertake Project Impact they had to dramatically reduce their stock (“clutter” you may have noted is just another word for “stock” in the world of retail). This meant they ceased to perform the role people expected from them, and were rewarded with eight consecutive quarters of negative sales growth (whilst Target continued to grow).

Needless to say they fired the executive responsible and set about returning the stores to the way they were at an estimated cost in excess of $1billion.

Walmart, like any self-loathing brand, failed to realise that doing one thing well must by definition mean doing another thing poorly. And if someone else does that thing well? Tough! Their chunk of “market share” is their’s to keep, and there’s not a thing you can do about it without jeopardising all that you’ve built thus far.

This doesn’t mean you can’t grow of course – there are all sorts of ways to deepen your customer base without corrupting yourself. You just can’t indulge the fantasy of “fixing your flaws”, because nine times out of ten those flaws will be irreducibly intertwined with your strengths.

So if you are ever engaged in a conversation in your company which takes the form of “we have x problem, how can we fix it?”, take a pause. Study the “problem”. Ask yourself whether it is truly something you’ve done wrong – or if it’s just an inevitable consequence of something you’ve done right. Ask whether it’s a problem at all, or if it could in fact be a strength masquerading as a problem because you are looking at it from a self-loathing perspective.

If your business is mature and well established, it may be that you already have 100% market share, as you have 100% of the market interested in you. Find another way to grow than copying others.

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