#161: How To Create A Strategy – Let’s get real.

The Empire Builders Podcast

Do not confuse Strategy with Best Practices. Creating a great strategy will allow you to stand out, not fit in.

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well it’s us. But we’re highlighting ads we’ve written and produced for our clients. Here’s one of those.

[Colair Cooling & Heating Ad]

Dave Young:

Welcome back to The Empire Builders Podcast. Dave Young here, with Stephen Semple. The topic you whispered in my ear today is not a brand name, it’s not a service, it’s not an invention. My favorite word to describe this is President Bush, the young one, the W.

Stephen Semple:

Okay.

Dave Young:

He called it strategery.

Stephen Semple:

Strategery.

Dave Young:

You want to talk about strategy today.

Stephen Semple:

I do.

Dave Young:

Or strategery.

Stephen Semple:

Strategery. Well if you think about it, this whole podcast, every episode is really about looking at a business and strategically, what did it do that made itself really successful. I get a bit frustrated because, a lot of times, businesses don’t invest in strategy. They don’t want to have a strategic session and invest in that. We all know that strategy ends up becoming really important. Then there’s lots of things that are being paraded around as strategy, that frankly, aren’t strategy, they’re other things.

What I wanted to do is talk a little bit about what strategy is, isn’t, and how you create it, and why it’s important. Basically, I think it distills down to this. When people sit around in a group and go, “Hey, let’s think about this thing that we can then parade out to people in an industry, we have this idea.” That’s not strategy. That’s best practices.

Dave Young:

Okay, yeah.

Stephen Semple:

They’re best practices because they’re looking at, “Oh, here’s the best things that have gone on in the industry.” Those are best practices. If it’s something that’s really common, it’s a tactic. It’s not a strategy because a strategy can’t be repurposed.

What a strategy is, is a business looks at its problem, “I’ve got this problem. I have these assets that I can leverage. Here’s a creative way in which I can use these assets to solve this problem.” Now what often ends up happening is it solves the problem so well, that they then systematize the solution, and now it becomes a best practice. Then that best practice gets so adopted in the industry, it becomes a common tactic that everyone does. That’s what happens.

But for it to be a strategy, it can really only be used in that situation.

Dave Young:

Okay. Can you give me some examples?

Stephen Semple:

Great examples. M.M. LaFleur. They invented this whole idea of mailing out clothing to people on this subscription basis, where they then try it on and send it back. They didn’t start off going, “Hey, let’s do this.” They had a problem. They had clothing and they couldn’t find a place to store it. But because they had been doing these private fittings, they had an asset. The asset was, “We have the contact information of all these customers, along with their sizes, and their preferences. We can actually send clothing out to them that we think they would like.” They did it to solve a problem, and in the process, made more sales in a month than they had done in the entire history of the company. They then went, “Huh, let’s turn this into a thing. Let’s systemize it and make it actually our business.?”

Dave Young:

Yeah. I looked it up, it’s episode 54.

Stephen Semple:

Thank you. That was looking at their problem, looking at these unleveraged assets, and solving it in a way in which it had not been solved before. That is strategy that then actually turned into a business model for them. That look, other businesses have also since copied. I wouldn’t say it’s necessarily a best practice or a tactic yet. That’s strategic solving of a problem.

We see it with customers. Roy Williams, our founding partner, who really, I don’t know that he invented, but really leaned into the whole idea of home comfort clubs in the home services industry. They didn’t exist 20 years ago. What was the problem? Okay, you’ve got a heating and air conditioning company, and you’ve got this huge problem in the shoulder seasons, in terms of keeping your people busy and generating cashflow. What do you do? Create a monthly subscription program. What’s the unleveraged asset? Not enough people are having maintenance being done.

Dave Young:

Yeah.

Stephen Semple:

If I put them on a program, I develop that cashflow, they’re now a customer. I send out my technicians in the shoulder seasons.

Dave Young:

It lets you keep them on staff. It levels out some of your income, so you don’t have these really hungry periods where people don’t need furnaces and they don’t need air conditioners.

Stephen Semple:

Yeah. A few did it, which was strategic. Then it became best practices. Now it’s pretty much a tactic that is used by pretty much every home services company. You see it plumbers, you see it with heating-air.

Dave Young:

Yeah.

Stephen Semple:

It went from strategy, to best practices, when not many people are using it but the most successful are. Then to a tactic that is pretty much across the board.

Dave Young:

When it hits that phase, when you start looking at strategy, you’ve got to now come up with something new, something different?

Stephen Semple:

That’s my view is. My view is a strategy is something where you are solving … Because in other words, I don’t have an tactics I can use. There’s no best practices. Therefore, I’ve got this problem that I can’t solve, which means I need to find a new way to solve it.

Dave, you’ve referred to this often, where you call it business topology. Because one of the ways that those problems are solved is you can look at other industries. I like calling it as the shape of the problem, you like using business topology, which I think is better. But is there a business in another industry that had a similar problem? How did they solve it? Then oh, can I solve it that way? That’s a unique way to solve the problem because the industry’s never done it that way before.

Dave Young:

Right. Even if you’re in, like this air conditioning business, doing something different.

Stephen Semple:

Yes.

Dave Young:

I know another client of Roy’s, they stay open until midnight.

Stephen Semple:

Right.

Dave Young:

They’ll send a truck to your house at 11:00 PM at no different charge than if they came at 3:00 PM, because that sets them apart.

Stephen Semple:

That sets them apart.

Dave Young:

Not every company is willing to do that. They want to charge you for after hours.

Stephen Semple:

Right.

Dave Young:

Make it an emergency kind of call.

Stephen Semple:

Right. Because sometimes, the problem can be how do I differentiate myself? How do I differentiate myself? Well, you differentiate yourself by doing something different. Or, we’ve talked about this before. There’s this friction, there’s this thing that’s here. Well, what’s a unique way to solve that? How was somebody else solved that friction point before in a different industry?

Kinko’s. Kinko’s went 24/7 in their operations because they saw what it did for convenience stores. They applied that idea to a company that photocopies, and prints things, and whatnot. Strategic. That was a business topology one. “How do we set ourselves apart? Oh, look. Convenience stores did this, and this really set them apart from grocery stores, and made them successful. We’re going to do the same.” Kinko’s was really interesting, actually. I would really recommend people go back and take a look at the Kinko’s episode.

But what I’m saying is strategy can really set you apart. But how strategy is done is for solving a problem that you’ve been unable to solve using tactics or best practices.

Dave Young:

Yeah.

Stephen Semple:

Then you start with okay, what’s the problem? Then you start looking for assets that you can use to solve that problem. That’s one way you can do it. Or, you do the business topology where you look out to the rest of the world and go, “Is there somebody else whose solved this? In a different industry, how have they done it? How can I now apply that to mine?” Or you do a Crazy Ivan, like an M.M. LaFleur, where she just threw a Hail Mary and said, “Let’s just ship these things out to people.”

Dave Young:

Yeah.

Stephen Semple:

“We got nothing to lose at this point.”

Dave Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

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Dave Young:

Let’s pick up our story where we left off. Trust me, you haven’t missed a thing.

Stephen Semple:

Sometimes it’s a Hail Mary pass.

Dave Young:

Yeah.

Stephen Semple:

You’re like, “Oh my God, that worked!”

Dave Young:

That was strategic. As it turns out.

Stephen Semple:

As it turns out. But in a way, even a Hail Mary pass is because you’re trying something different.

Dave Young:

Yeah.

Stephen Semple:

She was leveraging an asset that she had. “The one thing that I have that a department store does not have, or a brick and mortar retailer has, is this information, this database. This unique database, let’s leverage that.”

Dave Young:

Yeah. A couple of things that I love. It’s the problem topology. I love, we call it an uncovery. It’s that time when you go visit a client in their market. Often, a client will say, “Well, what questions are you going to ask me, so I can have answers prepared beforehand?” I don’t have an answer for that. I have a list of things I want to know, but I don’t want them writing the answers down. I actually don’t want them thinking about it beforehand, because what I’m looking for is a moment where they show me an unleveraged asset.

Stephen Semple:

Yeah.

Dave Young:

They have this database. Oh, they have something else that is just unique to them because of how they do things.

Stephen Semple:

Yes.

Dave Young:

That you can then turn around and utilize it as a strategy, and messaging. It truly does set them apart.

Stephen Semple:

That’s what we do in the first part of the uncovery is the Bold Idea Bay. Then we go and then uncover the stories. So that Bold Idea Day is the discovery. It’s that one day where we discover that. The reason why I call it bold idea rather than strategy day is, well first of all, like I started off at the beginning, people are not interested in strategy. “Oh, I don’t want strategy, I just to differentiate myself. I just want to make more sales.” I named it different just simply because people are like, “Well, I do want that bold idea that’s going to separate me from everyone else,” so I called it Bold Idea Day. But really, the test is, is it something that no one else is doing? If it’s something that no one else is doing, or it’s something that even just makes you a little nervous to do, that actually, by definition, is bold.

Dave Young:

Yeah.

Stephen Semple:

I did a really interesting one recently, where somebody said, “Oh, I came up with that idea three, four years ago.” I said, “Great. Why aren’t you doing it? You thought it was a great idea, it’s four years later, you’re not doing it.”

Dave Young:

Yeah.

Stephen Semple:

What was the preventer? What we ended up doing on that day was breaking down all the barriers that he had had, that had prevented him from doing it. So that now, he can go forward and actually do the idea. But the problem was they hit a couple of things that made them nervous and they stopped. I’m like, “Of course you’re going to be nervous and you’re going to stop, because you’re looking around in your industry and no one has done it.” That’s what actually makes it bold.

Dave Young:

Yeah.

Stephen Semple:

There’s a certain part where you got to just go, “All right, I’m going to have the bravery to do this thing.”

We did one with a landscaper. We created a service for this landscaper which, I don’t know in the end whether they decided to stick with this name or not, I think it was named something different. But it was My Daughter is Having a Wedding. That was the name of the service.

Dave Young:

Okay.

Stephen Semple:

It was this idea that he would come to your home, intensely spend, I can’t remember whether it was a month or two months, making your yard perfect. Now here’s what I want to tell you. The average customer, when you’re going and doing residential lawn care services, is $3000, $4000 a year. He charged $15,000 for this service. In the first month that he was promoting he, he sold two.

Dave Young:

Okay.

Stephen Semple:

Now, strategically, what did this do? It was a new service to sell. But more importantly, what did that convey to the marketplace in terms of the quality of his services?

Dave Young:

Right.

Stephen Semple:

It was actually not about selling the $15,000 package. We were fine if we had sold zero of them. Because guess what also happened? His regular service went up because everybody goes, “Oh my God, you’re that good that people pay you this much money to do this? You can actually do this?” It’s like, “Yes. Yes, I can.”

Dave Young:

Yeah.

Stephen Semple:

But it separated him from the marketplace.

Dave Young:

That’s really what you’re looking for.

Stephen Semple:

His unleveraged asset was the guy is actually really good at it. I said to him, “Can you actually make it perfect?” He said, “Yeah, I would just have to go every day. I’d have to re-sod, I’d have to do this, I’d have to do this, I’d have to be there every day.” I said, “Great. What would you have to make on that?” He goes, “Oh, no one will pay it. I’d have to charge 15 grand.” Great, we’re charging 15 grand.

Dave Young:

Yeah.

Stephen Semple:

Strategy is really important, and best practices is good. But best practices was something that’s done by the leader. You’re playing a bit of follow the leader. Not that it’s not effective, but leadership comes from strategy. Strategy is doing something different. You can either form a strategy by solving a problem using unleveraged assets in a unique way. Or doing like what we recommend in this podcast, learning as much business topology as you can, looking at another industry, and bringing how they solved that problem to your industry, which then creates solving the problem in a unique way. That’s strategy. Then what will eventually happen, everybody will start copying you. That’s best practices. Then eventually, it just becomes common, every day tactic. That’s how it moves down the chain.

But I wanted to define it, just because it gets so misused and it’s so, so important. I just wanted to put it out there. Then the last thing I want to say about this is if you are in that situation and you’re seeking strategy, it’s really hard to do in your place of business. There’s just something mentally, and I’ve seen it over and over again. Anytime I’ve tried to do it at somebody’s place of business, its never been magical. Don’t even just go to a different meeting room, go somewhere completely different. Enjoy some good food, enjoy some good … That’s when it comes. It won’t come fast, it’s a day. There’s just something about you got to put your brain in that different place. Book the Academy for a day, and go down to the Academy for a day. There’s lots of interesting places that you can book that are not traditional meeting spaces that you can do.

Heck, even if you rented a really interesting Airbnb for the day, and hung out there. That would be good.

Dave Young:

We’ve done it at least once a year, for the past few years that I’ve been at Wizard Academy, where we leave the Wizard Academy campus for a couple days.

Stephen Semple:

Yes.

Dave Young:

We just go wander somewhere. It’s where we’ve had some of our best ideas.

Stephen Semple:

Absolutely.

Dave Young:

One that popped into my mind was go to a pool hall.

Stephen Semple:

Yeah, there you go.

Dave Young:

Play pool, shoot pool, but don’t play by rules. Somebody breaks, and as you just are wandering around the table shooting balls in, nobody’s keeping score so you’re not having to keep track of something external. But you’re doing this activity while you’re conversing. It just lets your brain think of other things.

Stephen Semple:

Absolutely. That’s brilliant. Just putting you in that different space.

Dave Young:

Yeah.

Stephen Semple:

Yeah.

Dave Young:

Often, you’d need to have an outsider involved.

Stephen Semple:

Yeah, an outside perspective does help.

Dave Young:

Yeah. We always say you can’t read the label when you’re inside the bottle.

Stephen Semple:

Yeah.

Dave Young:

Somebody that’s an outsider can often hear your stories and say, “Oh, well have you thought about this? Or have you thought about that?” Oh gosh, we never have.

Stephen Semple:

Yeah. That’s the value I find. What I do is I’m a member of a program called the Strategic Coach. I go once a quarter and guess what? I’m meeting people who, all the people in the class that I share with that once a quarter are different industries, different people. That outside perspective brings me a lot of … Just explaining things to somebody else brings clarity to yourself.

Thanks for letting me take the time to share this with you, Dave.

Dave Young:

Fun episode on strategery. Thank you, Stephen.

Stephen Semple:

All right. Thanks, man.

Dave Young:

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