How to see the bigger picture in strategy.

An exploration into the powers and limitations of Commercial Creativity Strategy and the tools you need to see a much bigger opportunity.

It was an awkward moment.

Our Professor walked into the lecture theatre at Saïd Business School, Oxford late in 2017, he had just taken us through an overview of the 2 year Strategy & Innovation course, exploring its breadth and depth, he turned and asked two simple questions: 

‘What is strategy?’ and then ‘What is innovation?’

There was a long pause, and then a few of us attempted to answer, but it was a struggle. Bear in mind that this was a group of very senior people, from lots of different industries, from lots of different countries, many of whom had titles like ‘Global Chief Strategy Officer’ for large organisations, including me. 

Yes, we had all applied and been accepted for this course because we were all reasonably smart, all wanted to learn more, but many, I suspect felt like we should have a better handle on these pretty basic questions. It was an insight-generating moment that most of us will never forget.

As the course progressed, as we were exposed and then examined on more and more aspects of what Strategy & Innovation were, and how in each area there were also competing ideas and philosophies about how to think about those things and what defined success, each with valid arguments for and against (proper peer reviewed ones, not just opinions), that feeling of entering a new world grew.

The course left me different, it left me changed in lots of ways, but most of all in what I understood to be a thing I felt I knew a great deal about. After returning to Saïd to help teach it, that sense has only deepened.

To give some context, I was for a long time a very senior strategy person in the Commercial Creativity space (which includes the Creative, Brand and Marketing worlds). For 10 years I was the Chief Strategy Officer of EMEA for one of the largest Marketing and Communications networks, I had helped win most of the industries top awards, I had then shifted out of the agency world to take up the remarkable job of Chief Marketing Officer of the UN World Food Programme. Yes all these jobs involved core business and innovation strategy, creating a new O.S. and much other deeper stuff, but it was Commercial Creativity dominant.

I like to think I was, and still am, pretty good at Commercial Creativity Strategy, but I came to realise that I knew very little about its many bigger brothers and sisters.

Missing the bigger strategic picture means missing a lot

This isn’t really a problem until you realise that if you’d landed on earth, wandered onto Linkedin, which is whether we like it or not a very important platform for knowledge sharing as well as networking, you’d think that ‘Strategy’ was a remarkably simple thing, you’d think that for most people, Commercial Creativity Strategy was all of Strategy and that there was an elegant way to capture all aspects of what it was and how it can be done.

Why should this worry you? If you only see strategy through this lens, you are going to struggle to address the bigger challenges and opportunities an organisation faces, wherever they are on their journey, however big, however small. To not see this bigger picture is also to miss out on a fascinating, complex, evolving and nuanced world.

It’s perhaps the best example I have come across of only seeing the tip of the iceberg.

But why is this the case? My hunch is that the increasing belief that Commercial Creativity Strategy is essentially the same, or at least a good proxy for all other kinds of strategy, is because of 5 intrinsically linked things:

1. Commercial Creativity, especially when it comes to advertising, is by its very nature a discipline of reduction and simplicity, it has to be because without it, it’s hard to make anything useful and make an impact, it is one of the discipline’s greatest gifts.

2. Arguably Commercial Creativity’s other true gifts, are storytelling and getting then keeping attention.

3. The industry is full of very smart, curious, good communicators, who are willing and able to share their expertise and experience in an engaging way.

4. Social media is a force multiplier of all of these factors: it rewards simplicity, storytelling, getting and keeping attention as well as individuals who people can look to (for help, for ideas about who and what they want to become).

5. This is further compounded by Commercial Creativity stories being ubiquitous, they are everywhere in most cultures: they are famous, they are often interesting and reflect important cultural themes, they can sometimes get proper cultural traction and influence (think Nike ‘Dream Crazy’ or Dove ‘Campaign for real beauty’).

It’s therefore perhaps less of a surprise that we only see the very small tip of a very big strategy iceberg.

Now, don’t get me wrong, on one level, the idea of strategy is easy to define: it is the organising principle/s through which decisions are made to create a desired result, because it defines the shape of the tactics you deploy. 

The backbone of Commercial Creativity

Commercial Creativity Strategy, when it is done well has this shape, it can can be reduced down to some basic steps, I call it building backwards from the outcomes, it’s useful to think of these steps as flowing down in logic and then the effects flowing back up:

• What is the commercial performance we are trying to achieve? Think: Revenue Change (units sold x unit price), Margin Change (% of revenue that is profit), Asset value (including intangible assets like brand).

• How does this translate into market performance? Think: How many people buy your product or service (acquisition dominant), or, What they buy (retention dominant), or, a mixture of the two.

• What is the behaviour change required to deliver on that market performance: Who? Do you need to do what? By when? 

• What are the barriers and triggers to that behaviour? Think: What levers can you pull to shift what your audience currently thinks, feels and does?

• What is the organising idea that inspires and guides? An organising creative idea that holds everything together, think: Omo/Persil and Dirt is good. It can be a brand or campaign idea, or a combination.

• What is the activity plan that takes the idea and leverages those triggers and barriers? The what, where, when. This can often be in sequence, so the activities build on one another, often referred to as experience design.

• What channels do you use? What places are best able to deliver on that experience.

• Across all of above: A clear sense of how to measure success/progress and interaction and flow between them (this is the essence of what is called ‘Effectiveness’). This is much harder to do than it seems, and without it, it’s hard to prove said effectiveness and you end up with all sorts of problems later, especially when trying to state the case for more investment.

There are lots of other elements that feed to and from this backbone: brand strategy (helps define idea in the moment and over time, the look the feel, the equity platforms, master brand vs sub brand relationships; when done well, the very essence of an organisations place in the world), creative strategy (a broad term but often used to describe the building blocks that get you to a powerful idea) and marketing strategy (how commercial objectives translate into marketing focus and activities, budgeting allocations). 

There are also many complimentary areas that are often part of this system: brand logo and brand world design, packaging design, naming, semiotics, research (consumer insights, ad testing), role and level of investment in Performance vs Brand comms (for the latter I like James Hurman’s idea of creating ‘Future demand’), and the related area of e-commerce/social commerce, behavioural science (if there is a science of Commercial Creativity it’s this) and lastly the best and worst of marketing: ‘Purpose’ and ‘Purpose campaigns’, there are more but that covers the majority of it.

Just because the core of Commercial Creativity is relatively simple, doesn’t make it easy. Anyone who has tried to do it, will know quite how hard it is to do well and how easy it is to waste a great deal of money. It’s difficult because it requires a mixture of logic, process and chaos/magic, it’s a balancing act of what is known and what could be.

How to see the bigger picture in strategy.

So we have cleared up what Commercial Creativity Strategy is, but what’s under the water? What do you miss if you only see it through this lens?

It will come as no surprise, given what I have said at the start, to realise this is not an easy thing to capture, in fact it’s probably a stupid idea but f**k it, I’ll have a go.

The foundational ideas and the questions they seek to answer: 

• How to think about the shape of a market and its players? Porter’s seminal 5 Forces: Competitive Rivalry, Supplier Power, Buyer Power, Threat of Substitution and Threat of New Entry.

• How to think about what makes an organisation competitive? Barney’s VRIO: Valuable, Rare, Imitable, Organisation (so the capability wrapped up in the organisation).

• The difference between a Competitive strategy (so, how should a particular business compete for share within a market), and a Corporate strategy? (so, what businesses should be included in a Corporate portfolio?) How should these businesses relate to each other? How should these businesses relate to the corporate parent?

• How to make a workable global strategy? A key consideration is the balance of what Ghemawat calls the “AAA” Global Strategy Framework: Adaption (changing one or more elements of the global strategy), Aggregation (where you create economies of scale as a way of dealing with differences) and Arbitrage, which is a way of exploiting differences, rather than adapting to them.

• How to take: make or buy decisions? Which activities or products/services should an organisation make in house vs buy from outside the organisation. (often discussed in terms of vertical and horizontal integration).

• How to answer the growth paradox? When focusing on a particular industry or niche reaches saturation: profits and opportunities seemingly lie elsewhere (grass is always greener and all that), options to consider: new offerings to old customers and, or, create or find new markets. In that growth, how to avoid the risk of taking you away from makes you special in the first place?

• How to avoid the diversity discount? A sub set of the growth paradox, there are opportunities but also problems of being in multiple businesses, it is often the case that the more diversified the business, the less value you get from different parts of the business. It’s hard to find what holds it all together.

• How to understand and work with the broader context of markets? The difference and importance of Coordinated Market Economies like Germany & Japan vs Liberal Market Economy like US & UK, both types of economies create different types of competitive advantage and strategies need to consider these dimensions.

• What is competition anyway? When does cooperation work better? (I.e. ‘Coopetition’) and when does it not?

• How to bridge the strategy-execution gap? About the ability to create virtuous strategy cycle where downstream choices are valued as much as up stream ones. Related…

• How is the organisation set up to do three things that are critical to the long term success of any company, but also very rare? Teppo Felin’s, Sense: what is going on with customers, culture, category (and adjacent categories), technological evolution, then Shape: an appropriate response should it feel important for their customers (a discipline in itself), and finally: Seize that opportunity or challenge in a timely fashion (and before anyone else does it). This is from the fascinating world of ‘Dynamic capabilities’ about how organisations can successfully evolve over time.

• How to create the optimal organisational design depending on different situations? From very flat structures (think Valve Game Design), to very hierarchical models (traditional corporations).

• And the big daddy of all strategy questions: How to answer the Explore vs Exploit choice paradox? How do you balance what is making you money today, with what will make you money in the future? They are very often not the same thing. Why is it so hard? The systems needed for both have a tendency to try and destroy each other, and it boils down to this: Leaders don’t want to sacrifice the guaranteed success of today with the promise of tomorrow, especially when success is measured in quarterly shareholder reports. 

But what if an industry does not yet exist, in a market that is not well structured and the products and services are ones that people don’t yet want, or understand?

There is an area that explores these more ambiguous situations, it is often the world of start ups and entrepreneurs. It pulls in ideas and frameworks from lots of different places to make sense of these emerging, complex areas. It sits at the intersection of Technology, Markets and Organisation (an approach championed by Marc Ventresca amongst others):

Technology:

• Why we need to look for s-curves and how dominant design is decided? This is as much about the politics and networks as it is the actual products and services.

• What is the difference between invention vs innovation and why does it matter?

• Why there are arguably three different models of innovation? Routine vs Radical, Component vs Architectural and Core vs Complimentary assets.

• Why is the second mover advantage often better than the first?

• Why are the complimentary assets in which a technology plays often as important as the technology?

• Why some innovations are discontinuous but not disruptive?

Markets:

• How do markets start and end? What does that look like?

• Why the driver of new markets usually isn’t demand but the ambitions of organisations shapes that demand (Ford: ‘If we’d ask the customers they would have asked for a faster horse’, Jobs: ‘We need to make people want this computer’.).

• Why the ability to Claim, Demarcate and Control a market is as important as the technology itself? (Santos et al’s seminal paper).

• How to think about launching your products and services to maximise changes of success? Rogers ACCORD model: Relative Advantage to what it replaces, Compatibility with current behaviours, Complexity of communicating the benefits, Observability of the product benefits, Risk of product failure, and Divisibility or Trial-ability.

Organisations:

• How to think about the problems entrepreneurs face when pushing inventions into development and then onto markets? IDTIC system building model (Invention, Development, Innovation, Tech Transfer, Commercialisation) is useful to interrogate and unlock where challenges lie: Is it a problem of Information? A problem of access to strategic partners/allies? A problem of control? A problem of legitimacy? A problem of market creation and enactment? A problem of collective action and setting standards?

• How to think about Business Model Innovation? As markets change organisations often need to have a good hard look at their business models vs new technologies per se (capability mining & placement: placing different capabilities in different places).

• How to think about knowledge brokering cycles? Where ideas and capabilities can be reused in different ways in and out of the organisation.

• How to think about networks, an organisations place in them and their importance for innovation and creativity? The importance of heterogeneous networks with loose ties and less interactions (vs homogeneous with strong ties and frequent interactions define by most companies and industries).

• How to create a new value constellation? A network of value where players in a market understand their role and the value they bring. 

ESG

• It’s impossible to try and answer the Explore vs Exploit conundrum, or in fact many of the other questions above without looking at climate change, if you want to be a sustainable business you have to be thinking about sustainability, and that means answering some questions that are rarely uttered in the Commercial Creativity world:

• Does the world really need another one of these? How can we make this and not make things worse? Could we make something else and make things better? If we can’t, should we be making it at all?

And breathe.

I hope you’ll begin to realise, as I have, quite what a fascinating, complicated, and nuanced area the idea of Strategy actually is. And the above only really scratches the surface.

Could I have answered those questions before studying and then helping teach it? Very unlikely. Could I even have known which questions to ask in the first place? Unlikely also.

But, amongst all this new knowledge and expertise, one thing has remained: the enduring importance of ideas and the people who have them, they are what lights the fire and then lights the way. And if there is one place that really knows that space better than anyone, it’s the world of Commercial Creativity. The skills I learned in that space have been incredibly helpful to me in many new areas outside it, and in turn those new experiences and skills have meant I am better at Commercial Creativity itself.

So I’ll end with this.

If you are in the world of Commercial Creativity whose place is constantly under threat from lots of fronts (including the seemingly ubiquitous AI): how could asking deeper questions about your business and that of your clients help you be better at what you do? How could it help you and the organisations you work for go much further upstream?

If you are from elsewhere, ask: how well do you know the market you work in? How it is changing? And in what way? What could you learn from taking a broader view?