(A shorter version of this article appeared in the Financial Mail Redzone on 28 October 2016: http://www.financialmail.co.za/redzone/2016/10/27/crossing-the-chasm1)

Crossing the chasm

Both intrinsic and extrinsic solutions must inform a business strategy linking a company with its customers.

Mark Varder

On one side of the chasm is your business. On the other, the people you would like to do business with.

How do you reach them? What bridge will stretch across the chasm to the far side?

The far side. That phrase says so much, doesn’t it? The far side is remote, it’s unfamiliar, not as quantifiable. I may be wrong but I don’t get the feeling that the far side is where the analytical world of management consulting feels all that at home.

But there’s a problem with staying on your side of the chasm. There’s only so much that core competencies, SWOT analyses and positioning can achieve. There’s a limit to what industry and competitor analysis can provide. They are essential, of course, and must be rigorously done.

But you’re building a bridge from your side of the chasm only. You’re building what civil engineers call a cantilever. The foundations will require bolstering; the span will require extra concrete and reinforcing. It’s not an efficient or an elegant solution to the challenge at hand. And you may not succeed in getting the thing to the other side.

‘Build it and they will come.’ Well, maybe not. It doesn’t matter how incredibly competent your management team is, how great your track record is, or how confident you are.

An important source of strength for your strategy is on the far side of the chasm. Specifically, in asking the question, What problems can you solve for a particular sector of society?

This goes to the heart of creating customers.

If anything, your business strategy should start by building the bridge from your customers’ side of the chasm. Build the thing towards you. That way, your business’s intrinsic offering can be developed and modified to meet the span coming towards it.

So, what problems are you solving?

Of course, it helps when the problem you’re solving has not been solved before. It helps when you’re building the first railway across America. Or developing the pacemaker, the polio vaccine, the pill, the microwave oven, frozen food or the safety belt. Or, hey, the TV remote.

The more meaningful the problem you solve for society, the more valuable your company will be for everyone, including your shareholders.

It also helps, as Steve Jobs said, if you solve a problem that people didn’t know they had until you came along with the solution. The iPod and the iPad.

But what happens when your business is not solving something new? When you’re not Google but the hundredth company in a commoditised, competitive industry, as most businesses on the planet are?

That’s when it gets interesting.

Nourishing your customers’ lives. 

‘Nourishing’ feels like an old-fashioned word, but bear with me.

When you’re operating in a commoditised industry, the challenge you’re solving is no longer a functional one. That’s been taken care of – the intrinsic offerings have been developed and will continue to be improved.

Now, your product has a valuable opportunity: to nourish your customers’ lives with something extrinsic – something inextricably linked to their use of your product but ‘outside of itself.’

What do I mean?

Beyond the functional and the tangible, what intangible / personal / psychological / ethical issue can your business stand for? What values and ethics can it champion? What human truth will make those good people on the far side of the chasm feel that you’re on the same page?

Your strategy team needs to ask questions like: What deeply-held value needs affirming? What quiet struggle needs to be recognised? What giddy emotion needs to be fired up?

These questions are not as comfortable, perhaps, as asking what your core competencies are, but the answers can transform your business. They can give it a sense of purpose. And they can be the source of increased, sustained revenue.

This is the great power of a brand-enriched business strategy.

The more people value having a human truth addressed, the more they will value your business.

Why people came running to Nike.

To illustrate how the intrinsics of your business and the extrinsics of your brand combine to build a bridge across which your customers will come running, take a look at Nike. After all, it’s not as Nike invented running shoes. From day one it has operated in a commoditised, competitive industry.

Nike arrived on the scene with an intrinsically good product – the innovative Air Sole. But that did not stop Phil Knight and company taking a jog to the far side. There they took a good, hard look at their potential customers, getting to know them better than they knew themselves. They got to understand college athletes and armchair athletes, competitive stars and slothful slobs.

If we are going to create customers by the million, Nike asked itself, how can our brand nourish their lives?

It all looks obvious with the benefit of hindsight; at the time it was probably anything but. Nevertheless, at some point it all became abundantly clear. If Nike was going to sell truckloads of shoes it needed to inspire people to put them on. Star athletes needed to feel that Nike understood their quest. Lazy so-and-sos needed the motivation to get off their butts. In other words, a large part of American society needed to feel excited about being physically active.

That insight became the bridge coming across the chasm towards Nike. It became an integral part of why it was in business. And the heart of Nike’s business strategy became this twelve-word statement:

Nike will bring inspiration and innovation to every athlete in the world.

Some people will call the statement Nike’s Purpose. I see it as the business and brand strategies informing each other From day one inspiration and innovation are what Nike has contributed to society.

The extrinsic and the intrinsic are the twin strands of Nike’s DNA.

Because you too have got out of bed and ‘just done it’, you know how valuable the twin strands have been. Nike’s brand has been integral to the company’s business strategy.

It has always been an important part of what the company has manufactured.

In fact, when you stare at the twelve-word statement, perhaps there is a reason why inspiration comes before innovation. Perhaps Nike’s real value to society is its extrinsic contribution. The inspiration. Perhaps its shoes are secondary. Just a way of doing it.

Most businesses are good at the intrinsics. They are good at telling us who they and what they do. They are good at chest-thumping and ego-building. But they are building cantilevers, not bridges.

Their fortunes improve when they cross the chasm. The better off a company makes society, both intrinsically and extrinsically, the better off its shareholders will become.

 

Mark Varder is a co-founder of the consultancy Varder Hulsbosch