Strategy at Work: Teachable Moments from The News
September 26, 2024 - (Issue # 41)
In This Issue:
The Elements that Take Away Competitive Advantage – The Case of Tupperware
A Remarkable Event occurred when every independent member of the Board of Directors for 23andMe Resigned
The Elements that Take Away Competitive Advantage – The Case of Tupperware
Photo by sapiduduk from Freerange Stock
It’s interesting to me how many times I’ve heard members of a company leadership team tell us that:
They are the Leader in their industry so all that is needed is a bit of tweaking
There is no danger that they will go out of business – everyone knows their ‘Name’
We just need to stick to what we know best
Having a so-called 'Real Competitive Advantage' is not that important
And the list goes on.
These ‘excuses’ are used by leadership teams that are going to be rewarded for this quarter’s results or this year’s results. There is little or nothing to be gained by taking many chances. They will ride what they know as long as they can (offer up an ‘innovative’ curl periodically) and if the ship starts sinking – they will simply bail out for another ship leaving all the employees (who didn’t have a say), stockholders and debt-holders with the mess.
The well-known theoretical research in the field consistently talks about how management free from most of the consequences of bad actions, will take chances that true owners will not. The reality on the ground is that just the opposite takes place. Protection of one’s position becomes paramount.
We read a hundred plus articles a year about corporate leadership failing to make truly strategic decisions that will separate the company from its competitors while collecting oversized compensation packages for their failure to act. They are replaced or leave voluntarily – only to end up leading yet another company.
The story at Tupperware should be yet another callout to executives that every business can fail if you don’t continually make strides to truly separate your offering from the competitors (and the substitutes).
"Over the last several years, the company's financial position has been severely impacted by the challenging macroeconomic environment," Tupperware's chief executive Laurie Ann Goldman said.
Well… okay… yes… they have… but they have impacted everyone. They are part of the ‘orthodox’ play in the industry. Those are the changing ‘table stakes.’
The company has powerful name recognition, exists in hundreds of millions of residences worldwide (most of which can’t find the lid that goes with their container – seems like a huge opportunity for add-on sales to me), has a number of channels for sales (one of which still gives it some unique properties in developing economies), and is a high-quality approach (since it holds food… pretty good idea to play on this) among other newer approaches that could be developed with these advantages.
Any business can go bankrupt. Most are subject to the powerful competitive elements in the quest to attract customers. There are nine well-known elements that are moving all the time and require leadership’s constant attention.
Customer Changes
Regulatory & Legal Changes
Inside Organization Issues (e.g. Talent Acquisition & Retainment, Political, etc.)
Supplier Consolidation | Changes
Existing Competitor’s Moves (DARN – Those competitors won’t just stay still and let us make money)
New Competitors (on the
Horizon)
Replacements (New Processes – What would put us out of business?)
Societal Factors
BIG UNIQUE KNOWN FACTORS IN YOUR INDUSTRY
Being an Executive is a full-time job that is Never Complete
A Remarkable Event occurred when every independent member of the Board of Directors for 23andMe Resigned
Speaking of Governance – how about the entire independent members of the board of directors sends this to the CEO Anne Wojcicki over her latest plan to take the company private?
In a letter addressed to Wojcicki, the directors wrote that “after months of work, we have yet to receive from you a fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders.”
The CEO owns 49% of the stock and has the ability to decide how the company moves with only a small brake from outside interests. In a set of moves to address the one-and-done nature of the DNA testing business, she jumped into subscription models, developing designer drugs, and various approaches to monetize the DNA information they have collected from paying customers (I love how she claims this data was crowd-sourced… it was bought and paid for by customers who expected privacy).
The company is a classic example of how a leadership (in this case fundamentally one person) throws money, employees lives and time at various ideas without any consideration of whether it would constitute a REAL competitive advantage.
Every time an organization plans to enter a new domain, they need to reset the competitor list and evaluate whether they will be able to develop a set of competitive advantages.
Subscription models work well when there is an ongoing desire / demand from customers for content related services. In the case of 23andMe, there was little or no reason to continually check for ‘advice’ about their health. There are thousands of sites with health advice. Furthermore, the specificity of that advice relative to an individual’s DNA proved to be far more generic than pitched.
Developing Drugs from scratch. OH MY!!! Really nothing that can be said here other than DON’T DO IT!!! There are many that have that capability and many more that don’t but keep losing money. Partnering with GSK was a good first step, but 23andMe wanted to do far too much of the development.
The idea that one could monetize the DNA database is quite complicated. Privacy issues that blossomed with a data breach was exasperated by complicity in law enforcement efforts to use these databases to find criminals.
23andMe has probably seen the end of its useful life unless the organization can get past the whims of a single individual and see if they can craft together something that constitutes a viable business model. Not very likely.
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Please let me know (cbamford@bamfordassociates.com) about any issues or (even better) recommendations you have for improving the value of this newsletter to you.