THE LAW OF SINGULARITY

THE LAW OF SINGULARITY

“History teaches that the only thing that works in marketing is the single, bold stroke. Furthermore, in any given situation there is only one move that will produce substantial results.” So wrote Al Ries and Jack Trout in their classic book, The 22 Immutable Laws of Marketing. It’s an intriguing argument, and it fits with my experience in making money.

They argue that many executives see success flowing from beautifully executing a panoply of small moves. The problem, though they do not put it quite this way, is that tactics overwhelm strategy.

They quote Liddell Hart, the military strategist, who argued for the power of a single bold stroke, especially if it was “the line of least expectation”. Thus the US-UK allies towards the end of the Second World War decided to invade in one wave at Normandy, a rocky and tide-ridden shore, where the Germans expected invasion least.

“So it is in marketing,” Ries and Trout argue. “Most often there is only one place where a competitor is vulnerable. And that one place should be the focus of the entire invading force.”

New Coke

They were writing in the 1990s, when Coca-Cola had introduced New Coke, precipitating a loss of market share to Pepsi. Classic Coke – the old formula – lost a lot of market share, but was regaining it. New Coke was performing poorly. Pepsi’s market share was up, boosted by the confusion within Coca-Cola, and by the enduring success of the “Pepsi generation” advertising campaign.

There were a million suggestions as to how New Coke could be made a success. But Ries and Trout were having none of it. There was only one strategy, they said, that would work.

Coke had to bite the bullet and kill New Coke. And then go back to the only weapon Coke had – to bring back the concept that Coke was the “Real Thing” and use it against Pepsi.

All this advice was from the outside. Ries and Trout had no inside information about Coke. But what they said was true. And what they said was what the Coke hierarchy in Atlanta reluctantly did.

One strategy for salvation. Inglorious. Uncreative. Reactive. Reactionary. Not back to the future, but back to the past.
And, of course, it worked.

My experience with Filofax

When my partners and I took over Filofax, the company was barely alive – otherwise we would not have been able to buy a controlling stake in it for a song. It had lost enormous market share in its key market, the UK, to Microfile, a lower cost competitor. Microfile priced its personal organizers at well under half the price of a Filofax. For sure, it was not so nice a product – the leather was not British, the paper was Scandinavian, there wasn’t the brand cachet of Filofax. But hell, it did the same thing, it looked almost the same, and it was much better value for money.

The marketing people at Filofax, and their expensive marketing agency, came up with a dozen small things we could do in response. We could have a television advertising blitz to stress that Filofax, too, was the real thing. We could introduce even smarter, more contemporary new organizers. We could go digital – though at the time, the start of the 1990s, nobody knew quite how. We could introduce a hot new line of Filofax leather brief cases. And many other suggestions, which were so brilliant that I can’t remember a single one of them.

But there was only one thing to which Microfile, our rival, was vulnerable. That was cost reduction by Filofax. If we could get our costs down to our competitor’s level, we could price just above them, and everyone would prefer a Filofax if the difference in price was marginal and not double. Then we could regain market share, and Microfile would lose shelf space and credibility.

It wasn’t easy to cut our costs in half. We had to change our suppliers. We had to axe most of our product line and concentrate on our three or four most popular organizers. We had to stop doing our own production and warehousing and outsource it all. And, most heinous of all, we had to stop buying British leather and buy it at half price from foreigners. It nearly killed some of our senior managers.

But we could do it. We did do it. And within three years our sales had quadrupled and it was not Filofax, but Microfile, that was on the floor.

There was only one route to salvation.

Unpleasant.

Almost unacceptable.

Hard.

Effective.

Plymouth Gin – one route to super-premium status

Another of my early ventures was Plymouth Gin. A nice little distillery in the West Country of England. A brand with enormous heritage – it had been the leading brand of gin in the world in, ahem, the 1920s. The Pilgrim Fathers had stayed in the building that became the distillery the night before they sailed in the Mayflower to America. (I never quite understood how that could be a great story, but our marketing folks were terribly keen on it.)

Only one problem.

When we bought it, Plymouth Gin had almost no sales. Not quite zero. But so close that only a mathematician could tell the difference.

Of course it made a loss, which was why we were able to buy it for very little.

We over-paid.

So, a few chief executives, and a dozen small but quite expensive marketing initiatives later, we were scratching our heads. Should we give up, call in the receivers, or have one last throw of the dice?

Happily, our final chief executive, Charles Rolls, had a penchant for wandering around in the attic of the works in Plymouth. In it, he found that in its glory days, Plymouth Gin had been far stronger than its rivals.

And that was significant. Because high alcoholic content, apart from shortening your lifespan, makes a real difference to the taste. Flavor is contained in the alcohol. More percentage proof, more flavor. A hugely better taste.

Now, high alcoholic content is expensive. The modern Puritans, without ever spending a night in our building, priced duty – by far the dominant part of the cost of any drink – according to strength. So taste came very expensive.

But hey, if you want to launch a super-premium gin, it has to cost something.

And so we increased the strength of our gin. And before long, this gin that nobody knew about, and no supermarkets stocked, won the number one prize on the BBC’s Food and Wine program. And then all the chains wanted to stock it, and lots of people wanted to buy it.

And so we made a nice little fortune from our derelict gin brand. By finding the one route to salvation.

Hard to find.

Expensive to do.

Effective.

Conclusion

Marketing is not actually what it is all about.

It is all about business strategy.

Competitive advantage.

Doing something that rivals can’t do, or doing it hugely better, or doing it hugely cheaper.

But Ries and Trout were right.

One thing.

Something rivals can’t do. Where they are vulnerable. Where they don’t expect an attack.

Not a million smart little things brilliantly executed by brilliant smart young things.

Find your competitive advantage, and use the few strategy concepts that work, to do so.

 

 

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20 Responses to “THE LAW OF SINGULARITY”

  1. Roy Lin says:

    Hi Richard,

    Thanks for writing! I just want to let you know that I truly appreciate your work and I read every one of your inspiring and insightful posts at least once.

    I started my own small business about a year ago after working for big corporations as a financial/cost/competitive intelligence analyst for more than a decade. My current industry is dominated by a few big companies. I’ve been conducting many marketing/sales experiments in the effort to figure out the way. I think that it finally came to me while I was reading this particular post this morning.

    I’ll definitely let you know if the strategy works.

    Thanks again for generously sharing your wisdom.

    Roy

  2. Insightful post as usual Richard. Thanks for sharing.

    If you haven’t read it, Chet Richards book, “Certain to Win” is one I just picked up on this exact topic. He translates a lot of the work Boyd did around the OODA loop into a business context and hammes on the importance probing for weaknesses and then focusing unrelentingly on them once detected.

  3. Hi Richard ,
    love your focus and unique insights .
    We have just launched Australia’s first on-line AutomaticPeople
    Comparator for Vet Surgeons ,that in one minute compares 20 sub-conscious strengths of the best Vets with all candidates ,and you then you only need to interview or hire those people as good or better than the best Vets .
    The top 20% who score 80 plus out of 100 points ,qualify for the roles available .
    Your article has helped me see our singular advantage ,ie” how to hire the top 20% of Vets in Australia”.
    Thanks again for your great insight ,

    regards Denis Preston.

  4. Davd Enright says:

    Hi Richard, great point – and congruent with your idea of simplicity – which i find intuitively appealing.

    By further deduction – you could argue that the single most valuable skill for a business person to develop – is the ability to (re)create a company’s competitive advantage and scale it…

  5. Great writing. Form and content both demonstrate the theme. This has inherent appeal comparable to the 80:20 principle (elegant, practical, a bit mystical) – ‘the one bold thing’ has broad application I suspect – especially in the overzealous world we live in today.

    • I especially like the mystical bit. The reason The 80/20 Principle has sold even more in each of Korea and Japan than in the US is that it is a bit mystical – at least, that’s my theory. I believe we need mystery as well as logic to get to the root of anything, and to create something that really connects. Simplicity is mystical as well as intensely practical.

      • my guess as to why it sells well on Japan is the similarities and differences of the Lanchaster Strategy. Understanding market share and the way to attack it once understanding your position in the market.

      • “Doing something that rivals can’t do”. The challenge is neither the American nor British school system teaches even the brightest students the science of good question formulation so has to uncover one’s true talents (or become a leader in channeling other’s strengths). Neither do schools at the graduate level. Check out the curriculum at HBS, Wharton, INSEAD, SAID, Imperial, LSE, etc. The system is designed to speed bake intellectual sycophants, and paint-by-number yes men (and women). Don’t mean to sound pessimistic (I am not), just a dose of brutal reality. How do we change this, Richard?

  6. Thank you again, Richard.

    Running a business in an industry which is in long-term decline I am constantly looking for inspiration and ideas and I am finding your blogs and tweets helpful.

  7. Thank-you Richard. We met in Chicago at Perry’s event. I find myself checking in with your 80/20 teaching at least a few times per year to regain perspective and evaluate my overall direction. Hope you’re well.

  8. Mark Stone says:

    Dear Richard,

    Over a year ago I read your 80/20 Manager, then Perry Marshall’s 80/20 Sales/Marketing and I am just now finishing your book The 80/20 principle. My head has been reeling with new thoughts and ideas, ever since. Thank you so much for bringing out to me this principle that so obviously threads itself throughout our lives. If ever I came across a person who fit the description “A Towering Intellect” it is you Richard. I only completed High School and a few years of college but tried to make up for my lack of education in other ways. Having read your works and some of your blogs i confess that I wish I had gone further with my education. You are a shining example for what the best of a system can produce.
    I have been an entrepreneur and self-employed for all of my adult life mostly in Real Estate and finance. I have always felt that to succeed in business you needed an edge. Not a huge one just an edge. My edge in the mortgage business (1988-2005) was that I had 4 telemarketers working Monday through Thursday evenings 5-8:30 pm for over 12 years. The business generated was incredible and worked like a charm. Little did I know that working just those 14 hours per week, I was unconsciously using 80/20 (the most optimal hours of the week). It was really because I didn’t want to work that hard. I just told myself that it was my night job. I pretty much had most days to myself. I have been an avid reader all of my life and picked up some wonderful ideas to help me in my business such as hiring superior help and paying more than the average. Putting everyone on an incentive so that closed sales were the key focus of each employee. I picked up invaluable business principles through listening to motivational and personal growth tapes by noted entrepreneurs. An example of that was the principle of Risk Reversal which is more understood today but not so much back in the early Nineties. When I first read about it I loved the idea but couldn’t figure out how to fashion it to the mortgage business. If the interest rates dropped after I did a loan I couldn’t buy back the loan, that was totally impractical but I finally found the secret. Back then we always asked for an upfront fee of approximately $325 for appraisal and credit. Prospects would always ask what happens to their deposit if their loan didn’t get approved? I told them that since we had to pay the appraiser and credit company upfront they would lose their deposit. Many times they wanted to think about it and an appointment was never made. THEN IT HIT ME. I was good enough to know whether or not I had a qualified borrower so I had my Telemarketers tell people that since they were just meeting us over the phone for the first time, we would take all the risk and pay for appraisal and credit up front and if their loan was not approved then they would owe nothing.
    Richard, our closing rate on getting appointments nearly TRIPLED. From that point onward my business really took off up until 2005. Since that time I have been on Hiatus because of illness. I will now be turning 70 this August and have decided to go back into the Mortgage business once again but this time specializing in Reverse Mortgages for Seniors, an up and coming product here in the U.S. However since my energy level is no longer that of a 42 year old man I need to do 80/20 thinking more than ever. So I have decided to just concentrate on getting superior sales people, and have them bring in the bulk of business. I will just provide the platform to do so. Even though I am the only person operating my business at this time i can offer excellent financial renumeration because of and in spite of the fact that my business is so small. This is all commissioned earnings but a seasoned loan agent can do extremely well by coming on board with me. My big question to you is, is it possible to somehow streamline the culling process of getting my 80/20 guys? Or do I just have to hire and wait three to six months before I eliminate someone and the hire more? Somehow I don’t think that my “instinct” for people is going to get the job done. I really never had a superior sales person working for me, yet even though most were average, they always made a profit for me and the telemarketers brought in so much steady business, that I did well. I’m feeling rusty and would value any suggestions or criticisms you might offer.
    Thanks so much for your work, it has added more clarity to my thinking.
    Sincerely
    Mark Stone

  9. Dude you are so damn right. You can’t be more correct. But pepole just fail to realize that being a boss is never an easy job. There isn’t really any instant perks. The only thing you get is that you are building a brand of your own that can carry on with you as time goes by. Whereas, if you are just an employee and you have nothing when you leave your position, regardless of which big firm you used to work at. Once you are gone, you are gone, forever.

  10. That’s a wise answer to a tricky question

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