All the Right Moves. A guide to crafting background strategy (Book Review)

Review written by Takehiko Umeshita. Translated by Marc Wilkinson.

There is a flood of more than 5,000 business books published every year, and it is very rare to find a book on management and marketing strategy that is worth reading.

This book came into my hands by accident. I was intrigued by the theme of strategy, which is based on the trinity of uniqueness, positioning, and innovation. I am well aware that this is not a new book, but I am eager to introduce it. The original book was published by Harvard Business School Press and was written by Constantinos Markides.

Markides is a professor at the London Business School. He has been selected as one of the “Thinkers 50” (“the world’s most influential management thinkers”) published every other year, and I feel that his rich career in both practice and research makes this book unique.

As for his reasons for writing this book, Markides said, “This book is about strategic planning. From the perspective of a senior manager who is about to embark on strategic planning, this book will guide him or her through the thought process of how to achieve strategic innovation.”

With the above three points, I judged that a book that is as thick and not as difficult as Michael Porter’s in the area of business strategy, more systematic (theoretical) and easier to understand than Jack Trout or Al Reis’ in the area of marketing strategy for uniqueness and positioning, and more understandable than Clayton Christensen’s in the area of innovation strategy is very valuable and rare.

Positioning, the core of marketing strategy

The concept of positioning itself dates back to an article published in the Harvard Business Review in 1969 by Al Reis and Jack Trout, but it was their co-authored classic book on marketing strategy, “Positioning Strategy” (originally published in 1981), that made the concept known in Japan, with Professor Kotler praising it as a “revolutionary concept” and even writing a recommendation. In the same book, he wrote, “The basic method of positioning is to manipulate the image that already exists in the consumer’s mind and link the product to it. It is not possible to create a new and novel image that does not exist in anyone’s mind.”

In “Trout on Strategy,” Trout’s book on strategy theory, he says, “Positioning is a way to make your company stand out in the minds of potential customers. It is a way to make yourself stand out in the minds of your prospects.” (Japanese translation of “Invincible Marketing, The Most Powerful Marketing”).

Michael Porter, in his book “Competitive Strategy I” (originally published in 1998), also says the following. “Competitive strategy is about being different. By daring to choose different activities, you can uniquely combine value and deliver this.” He also states, “Competing strategically can be thought of as a process of finding new positions.” And “Strategic positioning is often difficult to understand, and finding it requires creativity and insight.”

There is a common denominator among the many definitions. Strategy is the construction of positioning to achieve sustainable competitive advantage.

In other words, in management or marketing strategy, whether for a company, product or service, finding or creating a unique positioning is the key to building and maintaining a competitive advantage, and finding a strategy based on “positioning” is so important that it is also powerful in branding strategy.

I have mentioned several times that the “essence” of marketing is to create, maintain, and strengthen a competitive advantage in the marketplace, rather than a marketing “definition” that changes with the times and the market environment – lifestyles, technology, communication, etc. The reason for this is the knowledge I have gained from both these books and my own experience tells PR & marketing are very powerful tools for creating, maintaining, and strengthening a competitive advantage in the marketplace.

Strategic Positioning and Innovation

The importance of positioning in strategy has been mentioned above by various eminent people, but in the introduction, Markides discusses strategic positioning in relation to innovation, drawing on various examples.

Xerox, for example, whose hegemony, was a brand so unchallenged in its dominance that even companies as big as IBM when entering the copier business, ended up falling into the arms of Canon, a Japanese camera manufacturer that was barely recognized at the time.

Nestlé’s “Nespresso” service (the original model of “Nescafe Ambassador” for Japanese businesses), which brews and serves coffee to customers one cup at a time using special cartridges, started out as a service for offices, but the business was such a disaster that the company was considering withdrawing from the business. However, with a change in strategy, the business took off in a big way. Incidentally, the Nescafe Ambassadors were not sure whether they would succeed or not at first.

Intel had been doing well in the DRAM business from the 1970s to the 1980s, but fell into a tight spot after the 1980s when low-priced, high-quality DRAM from Japan began to dominate the market. At that time, senior executives at the time were prepared to give up on the DRAM business, and made a strategic shift to concentrate on microprocessors, which enabled the company to maintain its growth.

In addition to these examples of the relationship between strategic positioning and innovation, Markides explains how strategic positioning and its conception are the most important issues in business strategy, which is also marketing strategy.

He also discusses how we don’t notice “rule breakers” until they appear, and by then it is too late.

Following this introduction, this 300-page book is divided into the following two parts: Part 1: “Establishing Your Unique Strategic Positioning” (Chapters 1-6) and Part 2: “Dealing with Other Companies’ Innovation Strategies” (Chapters 7-9).

“Echo Chamber” and “Filter Bubble.

 In “Chapter 1: Defining Business Domains,” Markides  writes that in order to establish a good strategic positioning, one must constantly ask, “What is my business domain?” and be able to clearly answer this definition over and over again. Here, Markides points out the importance of overcoming mental models (values, beliefs, worldview, etc.).

Mental models have a significant impact on the way individuals and organizations think and act, but they act like unconscious tacit knowledge (such as unwritten organizational rules) that can be harmful. This is known as the “echo chamber phenomenon”. Therefore, in order to seriously achieve innovation, we need to force ourselves to become a “thinking organization”.

Markides  mentions “rule breakers” are characterized by different definitions of the business (i.e., eyes, ideas, and starting points). When it comes to eyes, ideas, and starting points, it is probably easy for anyone to understand the different approaches to products that have been taken recently by the existing cell phone manufacturers, including those in Japan (highly functional, portable phones) and Apple’s idea (a PC that fits in your hand with phone functions, even though it is less functional).

In 2007, during a presentation at the launch of the iPhone, Jobs said, “Every few years, a new product comes along that changes everything. This “reinvention” of the cell phone had an impact on the market and our lifestyles as a new product that would change everything that followed, much more than the Macintosh (1984) or the iPod (2001).

In the real world, the above-mentioned “echo chamber phenomenon” and even the “filter bubble” (Eli Pariser’s term) added to today’s online (social media, etc.) daily life, is unconsciously further reinforcing the distancing of us from the power of thought and the questioning spirit (critical mind and senses).

Therefore, Markides strongly advocates the need to have a thinking and questioning mentality, both as an organization and as individuals.

The follow chapters in the first part of the book is particularly concerned with internal, or corporate, resources. The latter chapters of this first part, such as “Chapter 6: Building a Superior Strategic Positioning,” focus on what Markides calls the “organizational environment” – human resources, organizational culture, organizational structure, incentives, etc. – and how to cultivate or build it, highlighting the need to continually change the starting point of your thinking to identify assets and capabilities to acquire. It also emphasizes the need to be able to elicit emotional commitment and even empathy from employees in order to implement strategies based on acquired capabilities.

He also argues that when the market changes and the strategy must be changed, we must be willing and ready to change the organizational environment to be optimized for the change.

Cultivate the courage and wisdom to overcome mental models by constantly asking the right questions.

Any strategic positioning based on uniqueness cannot avoid obsolescence and cannot be eternal. Therefore, if you want to continue to develop in the future without being satisfied with the status quo, you must recognize that strategic positioning has a lifespan, and you must continually create, pursue, and explore new positions. Otherwise, you will fall behind your competitors and unexpected “rule breakers”.

In any industry, innovation emerges as a small niche market, but there are startups that grow out of it and gain significant market share.

Large companies lose out to these startups when their current strategic positioning is so profitable that they forget or don’t ask what their business is, who their customers are, what they have to offer those customers, and the ever-changing markets and customers, making it difficult and inevitable to overcome their mental models.

Markides strongly cautions against falling into such mental models, as successful companies are generally prone to the “side effects of bad success stories” such as complacency, overconfidence, and arrogance.

He also advocates the strategy of establishing the latter as an independent organization outside the company, in case there is a conflict of interest between the existing position and the new position.

He even goes so far as to assert that in order to develop the new strategic position (strategic product) into a future core business, “the best thing to do with the old position is to gradually exit it. He even goes so far as to assert that “the best strategy for the old position is to gradually exit it.

IBM is the first company that comes to my mind when I think of the above words.

In 2004, there was a global news story of the sale of IBM’s PC division to China’s Lenovo Group. The general understanding at the time may have been that the PC business would not be profitable in the future. I am not familiar with IBM’s situation and circumstances at that time, but of course such a decision may have been made.

However, if you think about it from the perspective of what Markides talks about in “Chapter 4: Strategic Assets and Capabilities” – I don’t know if this way of thinking can be applied for IBM or not, but it is an undeniable fact that IBM’s strategic assets and capabilities at that time resulted in a major shift in the company’s “core business”, and the company’s transformation into today’s “AI” (IBM Watson) and cloud services (IBM Cloud) company, resulting in a major evolution and breakthrough.

In other words, as mentioned by Markides above, “the best thing to do with the old position was to gradually exit”, which IBM boldly decided as a strategic option at that time.

Even if your core business has been successful in the past, you must break away from it and evolve boldly like another company or you will be forced to exit the market. I personally call such successful corporate strategies that skillfully transform the core business “Corporate Metamorphosis”.

And finally, Markides concludes with the following: “There is no end to the search for good strategy. No matter how well you are doing, you need to continue to question the fundamentals of your business and question the assumptions of the ‘success formula’ (in fact, this is how successful companies got to where they are today).”

All strategic principles – uniqueness, positioning, innovation

In a nutshell, this book is based on the idea that the best strategy is a two-sided strategy: strengthening the current core business by adopting a highly unique positioning strategy, while at the same time constantly exploring and creating new positioning strategies (new businesses and innovations). In a sense, this is a basic and natural principle of corporate strategy. However, this is a typical example of “easier said than done”.

Rather than trying to give the reader a highly theoretical and systematic knowledge of such matters, the book is designed to help the reader understand the strategic positioning from the perspective of what ideas and inspiration led to strategic positioning through concrete and abundant examples, while taking care to eliminate arguments and technical explanations as much as possible. This is what makes this book so easy to read.

Many people, including myself, may have never heard of Markides before this book. As I mentioned above, he is not as well known as Michael Porter, Jack Trout, Al Reis, or Clayton Christensen.

So, I have no idea how much buzz or readership this book received when it was published. If someone were to pick a list of the best books on strategy, perhaps this book had gone unnoticed.

Nevertheless, this is an excellent book that provides a compact, clever, easy-to-understand text with concrete examples and careful, helpful guidance on today’s schemes of positioning strategy, uniqueness, and innovation. It is one of the most interesting and thought provoking books I have read in recent years, and I am grateful to have found it.

This book was published in 2000. Most business books deteriorate quickly and have a short shelf life. Some of you may be surprised or dismayed that I would introduce such an old book in a book review. However, after reading this book, I realized that aside from the fact that the examples presented are a bit antiquated, the reader is not made aware or aware of the fact that the book is that old while reading. The core concepts are still as relevant today as they were 21 years ago. If the examples could be updated, it could easily be re-published for today’s new marketing and business generation.

It is important for each reader to understand the essence of the book and to read it in the context of his or her own issues and current situation. And it is important for the reader to digest the contents of the book and use the essence and principles as their own knowledge.

Unfortunately, this book is no longer available in general bookstores. Today, however, even such books are readily available online. My honest impression after reading this book is that I highly recommend reading it if you are interested in positioning, uniqueness, and innovation in management and marketing strategy.

I personally wish that Markides would write an updated version of this book (expanded or new edition).

(Click here for original Japanese language post)