November 2020

Last week, General Motors’ Chairman and CEO Mary Barra increased the company’s commitment to electric vehicles from $20 billion to $27 billion by 2025 and announced the company’s plan for an all-electric future. This week General Motors sent another significant signal of this pivot by withdrawing from the Trump administration-led litigation against California’s tough fuel economy and emissions regulations.

Startups often pivot multiple times before settling on a winning business model. What GM is doing is much trickier.

The auto industry has been a mature industry for quite some time. When industries approach the end of their life, smart companies try to “jump” to another S-curve still in the startup phase. That’s what GM (and every other automaker) is trying to do. Making that jump isn’t going to be easy. Big mature companies are complex. GM customers, employees, and dealers are all heavily invested in the company’s gas-powered legacy. The company’s business model and economic engine are fine tuned for the way GM has always operated. 

While it might seem that logically GM has a strong starting point, the investment that the company needs to make to transition to electric vehicles may be greater than for a pure-play startup like Tesla. General Motors also has everything at stake. Their existing revenue streams and loyalties can easily be lost if the company stumbles in this transition.

Billy Durant successfully led his companies through the S-curve jump from horseless carriages to automobiles in creating GM. Can Mary Barra do the same as GM tries to jump from gas-powered to electric-powered vehicles? We will have to wait and see.

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This week, BuzzFeed announced that it was acquiring HuffPost (acquired by Verizon in 2015 as part of the $4.4 billion AOL acquisition) in a complex deal with Verizon Media. Meanwhile, AT&T is still looking for a buyer for DirecTV (which they acquired in 2015 for $49 billion). Also announced this week, T-Mobile is shutting down their TVision Home service that they aquired in 2017 (while confusingly launching a similar service also called TVision). These transactions are just the latest in a long line of symptoms of a consistent problem. While mobile operators are great at operating wireless networks, they fail their stakeholders when they stray beyond their strategic boundaries.

Verizon and AT&T have reached their similar situations by moving in opposite directions. Verizon seemed to start without a strategy, so they made some big mistakes, and now that they have a strategy they need to unwind those mistakes. AT&T had a strategy, but they ignored it and made some big mistakes. They now don’t seem to know what their strategy is, but still need to unwind those mistakes so their debt doesn’t kill them. Meanwhile, T-Mobile was a scrappy, under-resourced upstart that executed against a focused strategy.

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Rich Horwath is a consultant who helps companies with their strategic planning. In StrategyMan vs. the Anti-Strategy Squad Horwath uses a super-hero vs. super-villain comic book to teach his approach to strategic planning. He does so by introducing the factors common in businesses that lead to “bad strategy” in the form of the villains who are set on killing the strategy for TechnoBody, a fictional company. At each step in the process, the villains show up, only to be defeated by the heroes from the Strategic Thinking Institute (Horwath’s company). The heroes teach basic principles and tools that lead to successful strategic planning. 

StrategyMan is a fun and informative book. While a relatively quick and enjoyable read, it contains much to help business leaders recognize common behaviors that can impede strategic planning and learn tools and principles for doing it right. Optimally, the book would make a good pre-read for a team heading into the strategic planning process. Unfortunately, Horwath leans heavily on the terminology and some frameworks that are unique to his approach to strategic planning. While there’s nothing wrong with the Strategic Thinking Institute approach, companies that already have their own terminology, processes, tools, and timelines may be hesitant to confuse participants by introducing an alternative framework.

Read the full review here.

Maybe it’s just that I’m getting older and more perceptive (or perhaps more cynical) but with each election cycle, voters seem increasingly to be voting against a given candidate rather than for the one that gets their vote. So much of campaigning these days is trying to convince voters why the competitor is a bad choice rather than making the case for why the candidate is a good choice. It’s sad. And I’m glad businesses, for the most part, don’t work that way.

Smart businesses, on the other hand, realize that they don’t need to please everyone. In fact, trying to be “all things to all people” is one of the hardest business strategies to pursue and one that is rarely (if ever) successful.

Successful businesses carefully select which customers they want to please and then focus all their attention on that subset. For most businesses, this is a very small minority of the overall total market. And while business leaders, especially entrepreneurs, are always looking for opportunities created when existing solutions poorly serve customers, businesses do best when they focus their marketing and personal pitches on the value that they create rather than on the shortcomings of their competitors.

And when customers feel really good about the choices they make in the marketplace, we all win!

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