Strategy at Work: Teachable Moments from The News
February 1, 2025 - (Issue # 42)
In This Issue:
Sonos Fails At the Most Fundamental Capability
The Re-Imagined EXPENSIVE Network
Photo by: Chance Agrella At Freerangestock.com
Sonos Fails At the Most Fundamental Capability
Success in business is all about getting customers to bypass your competitor’s offering and buy from you. That is, of course, tied intimately to your competitive advantages. Crafting those, promoting those, and enhancing those should be a focus for any organization.
However, that is only half of the strategy equation… and honestly… it really is probably less than half. The strategic success of any organization is ultimately tied to their ability to ‘NOT FRUSTRATE THEIR CUSTOMERS’! Customers are generally frustrated when their standard expectations of the business or product are not met.
What frustrates customers generally falls into one or more of a set of categories:
1) Ease of Use in EVERYTHING
2) Ability to Obtain Information
3) Responsiveness to Questions | Complaints | Suggestions
4) Transparency
5) Information Sharing
BUT – MOST IMPORTANTLY
6) That All the Fundamental Elements of a Customer Interaction are NO WORSE than Any Other Competitor
Most of what is done, most days, by most employees, constitutes the standard operations of the business.
· The standard elements of any organization MUST BE DONE. If you fail to meet the standard expectations (for your industry) of your customers, then they will stop buying from your organization.
· The standard elements of any business MUST BE DONE WELL.
· However, the standard elements of any business need only be done at the MEDIAN expectation level relative to the comparison competitive set. This is not why they buy from you, but it can be why they don’t buy.
What constitutes these standard expectations is decided upon by the customer as the customer compares our offering to that of our competitors.
When you enter a hotel you simply EXPECT:
· A check-in desk that can quickly and efficiently get your room for you
· The bed to be what you ordered
· The bathroom to be functional
· The carpet to be clean
· The Elevators to work and the list goes on
You did not choose the hotel because – WOW – have they got the cleanest carpets in their rooms. However, if the room has nasty, stained, dirty carpets – you may not ever come back.
All that said, I have to really wonder what the leadership at SONOS was thinking when they decided (a terrible move on so many well-known levels), to completely re-vamp their entire APP speaker interface in one fell swoop.
No need to even talk about how the APP might (and I say that while biting my tongue) ever be an advantage relative to their powerful competition. The most essential element of the APP was that it WORKED! One of the many articles that effectively outlines the issue appeared in The Verge.
This is both a recent and unfortunate reminder to all executives at every organization – Pay attention to the fundamentals of the business. They matter and are at least half of what all Executives should consider THE STRATEGY!
Many thanks to John Lavelle for pointing out this tragedy to me.
The Re-Imagined Expensive Network
It’s interesting to watch the pendulum swing in various industries that at one point were considered utilities. On January 1, 1984, AT&T was officially broken up into one long-distance carrier and 7 so-called baby bells. It was never going to be a viable business model. Today the landline is all but a relic of the past (although way too vivid in my memory – standing in the middle of the kitchen using the only phone in a house full of kids). Today virtually everyone has a mobile phone of some kind tied to one of just a very few carrier companies, of which AT&T (in a reincarnation) is one!
The in-your-house entertainment industry is following a course not defined by the courts, but the opportunities. Amazon, Netflix, Hulu, and even YouTube are becoming Networks in the truest sense of the word. They are charging an increasingly premium price for access to content whether you are willing to watch commercials or seek a more enabled experience. In addition, there are a whole host of smaller players coming into view as they grow content.
The classic networks (ABC, CBS, NBC, and FOX) are trying to compete in this new world, but are burdened by their legacy business operations and their late move into the brave new world of what it means to be a network.
Let’s assume for a moment that most of the players in the new Network industry will be able to handle all of the ‘orthodox’ expectations of their customers (per the article about Sonos). Then what and how can they attain competitive advantages that allow them to reap significant financial rewards?
· Quality of Content? – Much like the past in the past when MAS*H dominated the airwaves for CBS allowing them to charge outsized fees for advertising – it is hard to imagine that any of these players will be capable of sustaining success in this area – albeit fleeting success can lead to stickiness in subscribers. Having periodic ‘must-see’ shows, movies or events is orthodox.
· Breadth of Content? – Movies, new shows, old shows, sports, and even news. Okay, they all have or will have a lot. Does anyone know where that movie you want to watch tonight is? I have reverted to using the microphone on my Roku to find where X content is and then going to that provider to watch! Lots of content is orthodox.
· Subscriber Base? – Okay…. There is some substantial stickiness to this that provides a positive. It is really an outcome, not a strategy. You can’t force someone to subscribe. There must be a reason. However, once you have them (much like using the bank you still use) – you might have them for a long time without any thinking. Sort of – AN IS!
· Device Flexibility? – The ability to watch on various devices, including smart TVs, game consoles, streaming media players, smartphones, and tablets. This would seem to be a goal of any of the players. Orthodox.
· Various Subscription Plans? – Commercial-free, commercials, limited content, etc. This is just a capability of the technology and an attempt to appeal to many groups. Orthodox.
There may be others that you would consider as potential advantages – remember to evaluate whether you believe that advantage is rare, durable, and relatively non-substitutable! When we see an industry trending this way, we expect to see consolidation into just a few players yet again. We are likely to get back to our days of CBS, NBC and ABC competing for content and availability. ONLY this time we will all be paying hundreds of dollars a month for the opportunity to watch it!
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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. If you see a news story about a company strategy that looks fantastic or terrible, please reach out to me.