I’ve written about this strategic misstep in the past, but have never identified it quite this way. I’ve been reading Greg McKeown’s Essentialism: The Disciplined Pursuit of Less and caught an idea, a way of pointing to what I believe is one of the most serious missteps in many of our ministries. See also, Growth’s Counterintuitive First Step.
In the book, McKeown sets up his point with a now classic quote from Michael Porter (recognized as one of the intellectual leaders of the modern strategy field). Here’s the quote:
“Strategy is about making choices, trade-offs. It’s about deliberately choosing to be different.” Michael Porter
Early in the chapter, McKeown refers to an interview given by Herb Kelleher (the co-founder and former CEO of Southwest Airlines) where Kelleher “began to talk about how deliberate he was about the trade-offs he had made at Southwest.”
“Rather than try to fly to every destination, they had deliberately chosen to offer only point-to-point flights. Instead of jacking up prices to cover the cost of meals, he decided they would serve none. Instead of assigning seats in advance, they would let people choose them as they got on the plane. Instead of upselling their passengers on glitzy first-class service, they offered only coach. These trade-offs weren’t made by default but by design. Each and every one was made as part of a deliberate strategy to keep costs down. Did he run the risk of alienating customers who wanted the broader range of destinations, the choice to purchase overpriced meals, and so forth? Yes, but Kelleher was totally clear about what the company was—a low-cost airline—and what they were not. And his trade-offs reflected as much (p. 50, Essentialism: The Disciplined Pursuit of Less).”
Kelleher and Southwest Airlines are Exhibit A in the case McKeown makes for the strategic importance of making deliberate choices. He goes on to contrast an attempt by Continental Airlines to capture a slice of the emerging opportunity that Southwest had identified.
However, instead of fully embracing Kelleher’s essentialist approach (and making trade-offs), they attempted what Harvard Business School professor Michael Porter terms “straddling” their strategy.
“In the simplest terms, straddling means keeping your existing strategy intact while simultaneously also trying to adopt the strategy of a competitor. One of the most visible attempts at the time was made by Continental Airlines. They called their new point-to-point service Continental Lite…and adopted some of Southwest’s practices. They lowered their fares. They got rid of meals. They stopped their first class service. They increased the frequency of departures. The problem was that because they were still hanging onto their existing business model (Continental Lite accounted for only a small percentage of flights offered by the airline) they didn’t have the operational efficiencies that would allow them to compete (p. 51, Essentialism: The Disciplined Pursuit of Less).”
Continental Airlines’ attempt to do both, to try and compete with Southwest and continue business as usual led to the loss of hundreds of millions of dollars and “more than a thousand complaints a day.” I like McKeown’s observation about “the moral of the day.” “Ignoring the reality of trade-offs is a terrible strategy for organizations.”
Are you attempting a straddling strategy? Remember, “Strategy is about making choices, trade-offs.”
What do you think? Where are you “straddling”? Where have you made deliberate choices? You can click here to jump into the conversation.
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Image by Thomas Hawk