Strategy & Planning The Agile Way
We previously have been delving into what constitutes Marketing 4.0.
As we enter June for many Marketers it is ‘strategy season’. So to assist with this we are going to spend this month digging a little deeper into some of the critical capabilities businesses need to develop successful strategies and plans in today’s dynamic environment.
But first, let’s get our language straight. Strategy is making choices about WHERE to play and HOW to win and Planning is making choices about WHAT to do. All businesses should be able to answer 3 simple questions no matter how volatile the market or what size the business:
There is a lot of pressure on businesses now to do it the ‘agile’ way. I talk about agile a lot at conferences because a) that’s what people want and b) that’s what people think they want. They want to deliver value quickly to the customer, they want to do more with less, they want high engagement scores and they want to be an employer of choice. The fact is, while they may want these things and the benefits that come with them, simply stating that they’re going agile or copying someone else’s approach isn’t going to work.
So what are the critical capabilities that a business needs in order to answer these questions?
A business needs to understand the role it plays in the lives of its consumers & customers and the value it creates for them. Or as client, PepsiCo would put it: ‘A good company is more than just an engine for the generation of profit. People want corporations and brands to stand for something’. PepsiCo’s mission is ‘Performance with Purpose’. This clarity of purpose should act as a North Star – a guiding light that is fully understood and embraced by all employees.
Businesses need to hold fast to this purpose whilst adapting to the constant upheavals in the world around us. We need to anticipate opportunities and threats while managing our day-to-day tasks and responsibilities. And, above all, be responsive to changing customer needs.
The extent to which we need to adapt will depend on the nature of the market in which we compete. The more persistently unpredictable the environment is, the more adaptable we need to be. The Spanish fashion retailer Zara, which claims that ‘the customer is at the heart of our unique business model’, does not rely heavily on a formal planning process. Instead it has built a highly flexible supply chain which enables it to respond quickly to information from its retail stores and smoothly adjust to events as they play out.
Compare this to some of the large oil companies or other established businesses in mature markets. Here, a company sets a goal, then tries to build and fortify its position through orderly, successive rounds of planning. Once such plans are set, they tend to stay in place for several years.
In today’s environment, even large businesses in mature markets need to learn how to do new things. Businesses which are thriving today are quick to read and act on signals of change. They have worked out how to experiment rapidly, frequently, and economically—not only with products and services but also with business models, processes, and strategies.
Take the example of Ikea. After the company entered Russia, managers noticed that whenever it opened a store, the value of nearby real estate increased dramatically. So Ikea decided to explore two business models simultaneously: retailing through its stores and capturing the appreciation in real estate values through mall development. It now makes more profit in Russia from developing and operating malls than from its traditional retail business.
‘Disruption is now our friend not our enemy’ say PepsiCo who advise setting up internal disruption groups that are able to question every practice and look in unusual places for ideas. This is a tangible example of a company building a strategic capability to enable it to become more agile. If we don’t disrupt ourselves deliberately, we can be sure that the competition will do it for us. Just ask Nokia.
And we need to be prepared to fail. Experimentation necessarily produces failure and as Bill Gates said ‘it’s fine to celebrate success but it is more important to heed the lessons of failure’.
So, has agility killed the need for strategy and planning? Definitely not. A great strategy is more essential then ever, but we do need to be more agile in the way we deploy it.
CMO Perspective – Meghan Farren KFC
A brand that has had to be agile with it’s planning has been KFC
KFC faced disaster in February 2018 when it was forced to shut hundreds of restaurants temporarily because it had run out of chicken. Beyond the obvious hit to its business, the shortage threatened to derail the brand as well and left its marketers facing a question over how to respond.
Where many brands might have tried to take a serious tone in fear of annoying customers still further, KFC instead chose wit, rearranging the letters of its name to spell FCK in a print ad apologising for the mess-up. That ad, created by Mother London, was a recognition that the apology needed to be both sincere and not too serious, a tough balance to find while also remaining on-brand.
KFC UK’s CMO Meghan Farren admits it was a risk, saying she was initially “incredulous” that Mother wanted to turn the brand name into what was effectively a swear word. But the risk paid off. Mother gained praise from across the marketing industry and has been widely rewarded for its creativity. It won a number of Gold Lions at the Cannes Lions Festival of Creativity and KFC was nominated for Brand of the Year at the Marketing Week Masters awards.
More importantly, the response helped turn what could have been a damaging PR disaster into a coup. YouGov BrandIndex figures show that while the company’s index score (which measures a range of metrics including quality, value and reputation) plummeted at the height of the closures to -10.6, it has since recovered to -0.7, higher than in the weeks before the crisis.
Its impression score has also rebounded, from a low of almost -15 up to 6.2, again back to pre-chicken shortage levels. While KFC system sales in the UK fell by 9% and 6% respectively in the first and second quarters, by Q3 it was back in growth with sales up 1%