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The “Just Plane Smart” Strategy & Activity Alignment

A key breakthrough I really grokked during one of my many silent strategy meditation retreats is that strategy is all about alignment – especially once you fully wrap your head around your goal, your resources, and the competitive landscape. Alignment is what gives systems that 1 + 1 = 3 result and misalignment can bring systems to their knees.

A strategy is a set of well-aligned activities with the aim of occupying a valuable position within a competitive landscape.

For example, synchronous rowing has been proven to be 8% faster than non-synchronous rowing. Further, when oars tangle – which can only happen during asynchronous rowing – someone is usually going for a swim. So if your goal is to win a race, then you should row synchronously.

Southwest Airlines

The classic corporate example of great strategic alignment is Southwest Airlines. Growing up in Dallas, Southwest’s headquarters and home-base, I had a front row seat to the company’s incredible growth into its current position as the largest domestic air carrier in the US (by passengers boarded). Over the past 5 decades, Southwest has delivered tens of billions in value to customers, employees, and shareholders. Remarkably, the company has been profitable for 46 consecutive years – which is completely unheard of in the airline industry.

BTW, even if you don’t care for Southwest as a customer, the lessons from this company – especially around alignment – are quintessential for developing your own strategies.

What’s the Goal?

Before digging into the alignment between Southwest’s activities, we need to know their objective. Southwest’s vision is “to become the world’s most loved, most flown, and most profitable airline.” I’m assuming that they have clear internal definitions and KPIs for most loved and most flown.

Southwest Airlines’ Activity Map

Now we can dig into their specific activities. This is obviously an incomplete list fo their activities, but it’s a starting place to illustrate the importance of alignment.

Southwest Airlines' Activity Map and Strategy

As you can see visually, most of their activities reinforce one or several other activities, resulting in very high alignment.

Alignment Isn’t Risk-Free

Southwest’s strategy is not, however, without its risks. For example, Boeing is Southwest’s sole supplier for aircraft and many parts. The March 10 crash of a 737 MAX 8 in Ethiopia (the second crash in 6 months of that model) and the subsequent grounding of the entire MAX 8 fleet worldwide is clear evidence of the risks of overly-tight alignment. Neither crash was a Southwest flight.

Southwest Airlines' fleet of grounded 737 MAX 8s

(Source: CNN)

Fortunately, Southwest only owned 31 MAX 8s as of Jan 1, 2019 (of a total fleet of 750). But grounding 4% of your fleet is a big deal and Southwest is due to buy or acquire another 37 MAX 8s in 2019 and over 200 MAX 8s over the next 8 years. I’m confident that Southwest will survive the 737 MAX 8 issue relatively unscathed, but the unfortunate events are a clear reminder that even brilliant strategies like Southwest’s are neither permanent nor invincible.

Key Take-Aways

  • A good strategy is inherently well-aligned. Good alignment is the best way to deliver disproportionate value and results (1 + 1 = 3). Poor alignment usually means that some parts of a system are destroying value that was created elsewhere.
  • Tradeoffs are inevitable, but should be deliberate. For example, Southwest chooses to invest heavily in its employees and in ways to reduce fuel costs. A myopic focus on cutting costs would be a huge mistake long-term.
  • While there may be many ways to win, just choose one. Southwest ignores the high-end travel market and focuses on a low cost strategy. The company knows exactly what it is and what it isn’t. And, just as important, they’re disciplined about it. Focus and consistency have the additional benefit of carving out a clear brand in customer’s minds over time.
  • Cut activities that don’t fit (49 services Google has killed, some of which they acquired at great cost) and double down on activities that do fit. YouTube, Android, Google Home, Maps, and Chrome may feel like expensive & unprofitable distractions on the surface, but they actually fit very tightly with Google’s/Alphabet’s core strengths: organizing the world’s data, powerful search, and monetizing intent via advertising.
  • Remember: you have to be crystal clear on your objective before you even begin to worry about what activities to perform or not.

Herb Kelleher, Southwest’s Heart

This short podcast with Herb Kelleher, the co-founder and former CEO of Southwest, is a must-listen. Herb was a living legend until he passed away early this year. I was deeply saddened by Herb’s passing but I promise you’ll laugh out loud if you check it out.

Also, Southwest Magazine did a nice job with an extended article about Herb’s life. The opening story is classic Herb.

Concept: Hidden Competition

One last thing.. writing this piece made me think about a cool concept: Hidden Competition.

When Southwest first started flying in 1971, they weren’t really competing with the major interstate airlines, whose customers were mostly businessmen with expense accounts. Southwest’s quick flights between Dallas, Houston, and San Antonio were actually competing with Greyhound and other surface travel options. For Greyhound, Southwest represented hidden competition and was a key reason Greyhound is only a fraction of its former self and filed for bankruptcy in 1990.

Lessons From Build-A-Bear’s Brilliant Blunder

DIY toy taxidermy shop Build-A-Bear had decreed that Thursday, July 12, was Pay Your Age Day in shops across the U.S., Canada, and the U.K. The self-explanatory event lets bear lovers make a furry friend, stuff it with love, and pay a dollar amount that matched their current age—a payment model that vastly favored spoiled 1-year-old knee-biters over 50-year-olds who just needed something to love.

What could go wrong

The 21 year old company was likely planning on leveraging nostalgia from grandparents and parents while building loyalty with a new generation of toy-lovers. Now was an especially great time for this campaign as Toys”R”Us has shut down hundreds of stores worldwide and there’s marketshare on the table to capture – especially for a focused, experiential brand like Build-A-Bear.

It was a good plan and a great marketing idea, save for one tiny little problem—the fans loved it too much. In fact, they loved it so much that they started lining up before Build-A-Bear Workshops opened in the U.S. The long lines made the company nervous about crowds and maybe bear riots, so they sent out a statement on social media saying it would limit the number of people who could take advantage of the deal due to safety concerns.

Customers were pissed – especially those who lined up around the block. Plus no one wants to hear you make excuses, blaming “safety concerns” and “local authorities.”

Sadly, all Build-A-Bear had to do was test this genius, goodwill generating campaign at a single store and then in increasingly larger markets to work out the kinks. To make matters worse, Build-A-Bear didn’t jump on the bad press and make anything of it.

Takeaway: Launch slowly – even if you have a great idea – so that any mistakes in your plan or missed assumptions don’t spiral out of control.

Bianca Del Rio

Building a Business from Hate

Bianca del Rio didn’t set out to be “the nastiest bitch on the planet,” but she kind of is–and it’s really working for her career.

Del Rio, formerly Roy Haylock, is the crowned queen of the 6th season of RuPaul’s Drag Race. One key to her success has been simply embracing who she is and not copying what everyone else in her industry is doing.

The queens on RuPaul’s Drag Race were all competing as queens. Bianca Del Rio realized that she needed to stand out, to do things differently. Her management recommended that she record an album. Her reply: “I’m not going to do an album. There’s enough horrible drag queens singing.”

And Del Rio’s intuition is spot on. When everyone else is zigging, zag.

What Del Rio is doing is quite expansive. Since RuPaul’s Drag Race, Bianca has headlined and sold out standup comedy tours worldwide, starred in two feature films, released a satirical self-help book, and created a line of no. 1-selling makeup removers.

“It kind of snowballed. I didn’t plan to be a comedian. I didn’t plan to be a drag queen. It just kind of evolved,” says Del Rio, who was a professional costume designer before doing drag full-time.

As a host for drag shows Del Rio got a lot of stage time, dealing with back-stage delays, hecklers, and impatient patrons. She seized the opportunity and integrated insult comedy into her hosting routine.

Since then, Bianca Del Rio has bloomed and business has boomed.

“Everything is offensive, so I’m enjoying the fact that I’m anti-kind. You’ve got to go out and just speak your mind. It needs to be heard,” Del Rio says. “There was a young boy who was 13-years-old who was in drag with his grandmother that came to see me [during a comedy show] and I was nervous because he was like, ‘me and my grandma love Drag Raceand we watch the show together!’ And I looked at [the grandma] and I said, ‘you do know my show’s going to be a little racy?’ She goes, ‘well, what the fuck do you think I came for?’ So I’m bringing families together–through hate.”

Find your niche – no matter how offensive or off the beaten path.

[Photo: Daisy Korpics for Fast Company]

Niche Positioning Lessons From A Sad Clown Who Doesn’t Talk But Sings His Ass Off

Niche Positioning with Puddles Pity Party. Hit play.

https://youtu.be/MNtR15afJZE?t=1m21s

 

That is Puddles Pity Party – a one man cover band. Puddles has nearly 400,000 followers on YouTube, many 20+ million view videos, 140,000 monthly listeners on Spotify, and he performs all around the world. Just last week he sold out the Palace of Fine Art Theatre, a 962 seat venue in San Francisco. Puddles was also an America’s Got Talent quarterfinalist in 2017.

How on earth did this happen? And how can you replicate Puddles’ odd but tremendous success?

This post will dissect how Puddles has positioned himself over time and identify lessons that might be applicable to your endeavors.

Be Remarkable

I love you – You’re unique, you’re interesting, you’re different, and people are going to remember [you]. – Howie Mandel

Puddles is remarkable – literally.

And that’s why during Puddles’ America’s Got Talent audition the judges had such high praise for his performance. Heidi Klum commented, “very unexpected, very original, very different, and I want to see more.” Even Simon Cowell had nice things to say.

Some call Puddles’ performance a gimmick. And yes, the juxtaposition is remarkable: a sad, mute clown who sings so beautifully that you can’t help but smile. But what may have started as a gimmick has turned into millions of people (and maybe you) falling in love with a fantastic performer and supporting his art.

Puddles differentiated himself so that he could stand out. Ironically, in order to be heard Puddles chooses to not speak, making his singing voice come off that much louder by further exaggerating the juxtaposition.

Hit play below and keep reading. This song should take you to the end of this article – just another 4 minutes.

 

Niche Down

Puddles wasn’t born Puddles.

Puddles Pity Party is Mike Geier – the 54 year old 6’ 8” baritone. He’s obviously a talented vocalist but that’s not enough to succeed these days.

Here’s Geier in 1994 performing Disney’s I Wan’na Be like You (The Jungle Book) with one of his previous bands, The Useless Playboys.

While entertaining, Geier’s performance isn’t unique. Geier hadn’t found his niche yet. So he kept experimenting – searching for what clicked with audiences.

Geier experimented with a lot of personas. He was Big Mike, Kingsized, Greasepaint, part of the Swing Noir band called the Useless Playboys, and a part of many other acts and groups along the way.

Puddles Pity Party Ancestor - 2009

From what I can tell, Puddles was a minor character in Geier’s repertoire for a long time before taking center stage. YouTube videos from 2009 and 2010 feature Puddles, but not our 2018 Puddles. Those videos feature a “missing link” Puddles, bridging a gap between Geier and the Puddles we know today.

Puddles’ evolution seemed to accelerate when Geier was performing at a cabaret in Seattle called Teatro ZinZanni. Geier could experiment in front of an audience every night and continuously make small improvements.

Feedback Loops

Tight and frequent feedback loops are undervalued. When done properly, tight and frequent feedback loops force you to 1) put your work out there, 2) listen to your audience’s response, and 3) to try new things in order to improve.

The problem, of course, with tight and frequent feedback loops is that you have to put your work out there, listen, and try new things – which requires a lot of motivation, time, energy, and persistance.

Iterate

When you’re just beginning, it’s important to start narrow – to do one thing well. You’ll get increasingly better at whatever it is you’re doing. But you also have to experiment and try new things.

To find the right niche, you may have to search and search and search. Hard work and persistence may pay off: You might discover your niche, your product-market fit, and become a ten-year “overnight” success like Puddles.

One obvious challenge here is balancing focus with experimentation. I think the best remedy is to be intentional – maybe even scientific – with your experiments. A “pivot” is holding most variables constant while changing others. Plant one foot while you find a better position for the other.

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The Anatomically Modern Puddles

A 2012 interview with Geier hints at a nearly modern Puddles. All of the Pagliacci hallmarks were there – white face paint with red accents and the baggy clown suit. But we also see Puddles’ trademark “P” crown and his operatic singing style.

Puddles Pity Party Artifacts - 2012Source

And by late 2012, there’s no doubt that Geier has found product-market fit for Puddles.

So we have some understanding of Puddles ancestry, but what makes a good niche?

Seek a Niche that’s Worthwhile

People want to be entertained. Puddles delivers because Geier understands entertainment. He understands fans, culture, originality, comedy, presence, and performance. And he studied and emulated one of the greats – Elvis – for years.

But your niche can’t just be worthwhile to your future customers. In order to compete long term, your niche has to be worthwhile to you too – financially and artistically.

Puddles’ niche may be focused but it’s not small.

Puddles has enormous appeal. His covers of pop songs cut cross both time and genre – attracting fans of David Bowie, Lorde, Elvis, R.E.M., Sia, Queen, Tears for Fears, Radiohead, Johnny Cash, Twenty One Pilots, Coldplay, and even a mashup of STYX + Disney’s Frozen.

Seek a Niche that’s Under-served

Niching down sends a signal to your customers that you’re dedicated to a specific thing that they care deeply about.

Go after a market that’s under-served. Your market will be thrilled that someone is finally paying attention to them and reward you with their time, attention, and money.

Going after an under-served market lets you deliver disproportionate value immediately. When you over-deliver, your fans will be evangelical, bringing others into the fold and reducing your customer acquisition costs.

Seek a Niche that’s Defensible

There’s no lack of great singers out there – in fact it’s a competitive, cut-throat market for up-start singers. Supply is much greater than demand for talented vocalists. That’s the core reason why Geier didn’t have Puddles-level success as Big Mike, Kingsized, Greasepaint, or the Useless Playboys.

But as Puddles, Geier is in a category of his own – a great position to defend from competition.

I dare you to copy Puddles. You will fail. You’ll fail because blatantly copying his ideas will make you look ridiculous. You can never be an exact clone of Puddles anyway because he’ll always be the original and you’ll always be the copy.

When considering a niche, think about defensibility. There are many ways to defend your position in a competitive landscape. Ideally, one feature of your position would be an element of self-defensibility.

Summary

When you’re starting something new, seek out a niche – a niche that’s remarkable, worthwhile, under-served, and defensible. Experiment and iterate, holding on to what works and leaving behind what doesn’t. Once you find a valuable position in your competitive landscape, ruthlessly exploit it, cautiously grow it, and begin to invest in your next move. Land and expand.

I agree with Simon Cowell. I think Puddles is “fantastically brilliant” and I think his strategy for finding and owning a niche has been a success that will continue to pay off for Geier, his team, and his fans.

PS: If you have another 4 minutes, I’ll leave you with one final video from 2014 (Dancing Queen by ABBA). I want you to note how many people are recording him in this tiny coffee shop in 2014. Puddles is safe, fun, and worthwhile – the formula for sharability – a concept I lifted straight from Ryan Holiday’s Perennial Seller.

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Your 2 Min Week in Review – March 19, 2018

Review of the week of March 19, 2018:

Dropbox has successfully IPO’d

Dropbox raised it’s expected price range mid week and ended up selling shares to institutional investors at $21. The shares (Nasdaq: DBX) JUST started trading now and the price immediately popped $9 to $30, a 44% increase.

I think Dropbox is a hot potato that you won’t want to be left holding but I’ll be keeping an eye on how things go. Personally, I’m more excited about the Spotify IPO in early April (more below).

Liquidating Toys”R”Us

The 70 year old brick and mortar toy retailer is liquidating its assets and hundreds of stores will close worldwide over the next few weeks. While Amazon is delivering the smiles these days, Toys”R”Us has one final gift for us grown-up kids: The story of their rise and fall.

Category Killer

A Category Killer is a sector specialist that leverages their narrow focus to gain a competitive edge over less focused firms through increased bargaining power, pricing tactics, large selection, and strong branding. It’s believed that Toys”R”Us was the very first category killer.

How Putin Protects His Power

Putin has been elected for another 6 year term as President of Russia. Key take away: In order to protect power, first focus on getting the right pieces to the right place at the right time. Then worry about covering your tracks and making things look legitimate.

Spotify IPO

Spotify plans to skip the most expensive and stressful parts of an IPO in early April by directly listing their stock on the market (DPO: Direct Public Offering) and letting current shareholders and would-be buyers do what markets do best: price discovery. I’m excited for this one!

The Facebook Freakout

I’ve learned that the vast, vast majority of people have no clue what the Facebook freakout is all about. Don’t be one of them – get the facts. A few hours after I published my piece on the situation, Zuck posted an adept statement – walking the tightrope of trying to please shareholders, employees, and user. This morning’s Exponent podcast has a fantastic recap and analysis.

IPO Meltdown

Speaking of IPOs and Facebook, I wrote about the crisis that happened during the Facebook IPO back in 2012 and a few tips for how to manage crisis. This pairs nicely with my post a few weeks back: The Anatomy of a Disaster.

Autonomous Car Killed Pedestrian

The first pedestrian fatality involving an autonomous car happened this week. More people are going to die because of self-driving cars. But these deaths are the cost of saving more lives.