Emergent Strategy

The paper describes the new approach to marketing practice which may be applied to (brand) positioning. The general requirements relating to the static situation should already be relatively well known, but the identification of three different reasons for changes in the dynamic situation ( for position drift) as consumer drift, competitive drift and ego drift does, however, allow managers better control these - in particular the self-inflicted wounds of the latter might be more easily avoided. Where more major changes are involved, the concepts of emergent strategy and then paradigm shift can also enlighten managers as to what is happening; not least where paradigm dissonance is involved.

Our research[1] into the practice of marketing shows that - in general - managers primarily want marketing theory to provide a framework for their decision-making. This paper is, therefore, part of a series which, addressing topics across the marketing disciple, propose new variants of ‘theory’ which we believe better meet these needs. In general, this new ‘theory’ is presented as rules’; since this format typically offers the most supportive framework.

The starting point for this paper was the aspects of the theories investigated (Boston Matrix, PLC, Ansoff Matrix, 4 Ps, Segmentation, Market Plans and SWOT) which managers found most useful. All these theories were seen to assist strategic decision making. More specifically, segmentation was reportedly used by almost all organizations - used 'formally' by 42% and 'informally' or 'by default' by another 50%, with larger organizations more likely to make formal use of it; with 61.2% of those with turnovers in excess of £200 million pa (67 cases) formally using it compared with 27% for those under £2 million pa (81 cases).

The main problems relating to almost all these theories were those associated with over-simplification/lack of reality, coupled with their tendency to distract managers from more important issues, due typically to their narrow focus. This was also generally true of their use of segmentation:

One surprising aspect, in view of the degree of commitment needed to implement it fully, was that 'Segmentation' was not seen as difficult to use. It is possible, however, that respondents were taking a very broad view of segmentation - as a principle of strategy - and were not reporting its use as a technique in a sophisticated positioning exercises.

In view of the lack of clarity indicated by these results, we have - here - addressed the more general problem of positioning. This is a separate technique - albeit that it works most effectively in conjunction with segmentation. Unfortunately, there can sometimes be confusion between 'segmentation' and 'positioning'; and indeed the two processes often overlap. The key difference is that segmentation applies to the market itself, to the customers who are clustered into the 'natural' segments which occur in that market. The positioning relates to the product or service within the market; and to what the supplier can do with these 'products' to best 'position' them against these segments.

A further complication is that 'positioning' can sometimes be divorced from 'segmentation'; in that the supplier can choose dimensions on which to position the brand that are not derived from research - but are of his or her own choosing. Indeed, such positioning can be applied (to differentiate a brand, for instance) even when segmentation is not found to be viable! This is the practical 'positioning' of products or services so that they are they are recognizably different from their competitors - as measured in terms of their positions on the 'map' of competitive brand positions (ideally against the dimensions which matter to the consumer!) - and positively gain a competitive advantage as a result. It is this, more general use, which persuaded us to target our more practical rules on this area.

In practice positioning typically uses many of the sophisticated techniques applied to segmentation, but in its simplest application it only requires that you decide 'where' you want your product or service to be against the critical dimensions (or variables) which are applied by its market/customers.

Easiest of all to use are graphical 'maps' which show the position(s) against these dimensions.

Conventionally, such product positioning maps (sometimes described as 'product space') are drawn with their axes dividing the map into four quadrants. This is because most of the parameters upon which they are based usually range from 'high' to 'low' or from '+' to '-' (with the 'average', or mean, or zero position in the centre; where these axes cross).

In addressing positioning in general, the key aspect we have looked at is that of change. In particular, we have limited ourselves to identifying - as clearly as possible - the three types of position drift which are often overlooked by less sophisticated users of the segmentation/positioning techniques. Thus, in most markets customer requirements change over time, perhaps due to social (or fashion) factors or - perhaps more likely - to technological changes in the market. These changes may be relatively slow for long-established brands or very rapid for some fashion products. It is imperative, therefore, that you develop your existing products in line with these changing requirements. This is just as true for long-established brands as new ones, though - because the changes are slow - there is a danger that these new requirements are overlooked. If you do not develop existing brands in a regular, and rigorous, manner you may find yourself the victim of 'Position Drift'.

The positioning map, which is the key element behind our approach, typically looks like the example below;

In its ‘conventional’ static form, illustrating a brand’s current position, this map is used to position the brand as close to the ideal as is possible for the segment(s) to be addressed (and hopefully dominated). The problem is that this shows only a static picture. Over time 'position drift' can significantly change the picture. This may come about for three main reasons;

As consumer tastes change the segment (cluster) which contains them will shift its position. Its centre of gravity will move - and is size may change as consumers switch to other, perhaps newer, segments.

The position of your brand relative to the ideal position, within this cluster, will reflect this drift. It is important, therefore, that such drifts are compensated for.

Alternatively, your competitors may shift their positions - so that your own relative position, your competitive advantage, may become less than optimal.

This may pose a particular problem if you are trying to target several segments with just one brand, since any move to respond to a competitive threat in one segment may leave the rest of the segments exposed.

Whatever the reason, you should be aware of - and routinely plot - your competitors’ moves.

Perhaps the most prevalent drift of all, however, occurs where 'brand managers' (or their advertising agencies) gratuitously reposition their own brand in a less optimal location. This is usually justified on the basis that consumers are bored with the existing messages, and an exciting new approach is needed. The real reason often is that members of the management team, frequently persuaded by an agency creative team itching to make their own distinctive mark, are themselves bored.

The biggest problem caused by drift, of any of these types, is that it usually occurs so slowly that it is not noticed by the brand manager - in the timescales that he or she works to the changes are imperceptible. It is for this reason that:

It is likely, therefore, that most product/service packages will need to be redeveloped, from time to time, to compensate for this drift.

If these changes become significant, in relation to overall strategy, they are best viewed as ‘emergent strategy’.

This diagram very clearly shows how the intended strategy, decided upon traditionally or incrementally, is overtaken by events in two main ways. One, which will probably be recognized by the organization is that of unrealized strategy, where it proves impossible to implement the chosen strategy in practice.

Less obvious is the emergent strategy which is decided by events in the external environment; and, thus, forced upon the organization. This may not necessarily be recognized, in its totality, by the organization - since many of its implications may be hidden. As markets become more complex, however, such emergent strategies are becoming more common.

Many organizations see both these processes in terms of failure - they have been forced, usually by unpredictable events, to abandon their own strategy. There is, accordingly, a tendency for these unwelcome facts to be ignored until they are so obvious that they cannot be avoided. This is a major error. Such deviations must be recognized (probably through one or other form of environmental analysis coupled with networking) as soon as possible- so that the organization can react in good time.

A much more powerful approach is, though, to be proactive; so seize upon these deviations as the basis for future developments. What needs to be recognized is that emergent strategies can be the most powerful of all. By definition they are directly derived from the needs of the market, where even relatively successful deliberate strategies may not ideally match market needs. emergent strategies are, thus, likely to be especially vigorous ones.

There are two main approaches to capitalizing on such emergent strategies. The first of these, favored in the West, is the umbrella strategy. This is a form of very positive delegation, in that the overall strategies, the umbrella, are very general in nature - and allow the lower level managers, who are closest to the external environment, the freedom to react to these changes.

A much more direct, and hence even more powerful, approach is that favored by the Japanese corporations. they integrate emergent strategies with their own. indeed it is arguable that, in terms of marketing, to a large extent they use emergent strategies instead of their own deliberate strategies. This is evidenced as much by an attitude of mind as by any other feature. They deliberately go out to look for symptoms of such emergent trends which can be detected in the performance of their own products. More than that, though, they often deliberately launch a range of products rather than a single one to see which is most successful. It is almost as if they deliberately seek out the emergent strategies by offering the best environment for them to develop - the very reverse of the Western approach which seeks to avoid them! The Japanese then go on to build on these emergent strategies with a number of very effective tools - most of which are designed to overcome the major problem which accompanies emergent strategies, that they emerge on the scene much later than deliberate ones (and are likely to be visible to all the competitors at the same time) so that time is the essence. Thus, time management techniques (including parallel development along with flexible manufacturing and JIT) which have been developed by the Japanese offer them a significant competitive advantage in handling such emergent strategies.

Taking the process to the extreme, a paradigm shift - is the ultimate emergent strategy. In this case the emergent effects are so powerful that they force a complete shift in perspective by the organization. In this way. it is forced to rethink its complete strategic position from this new viewpoint. It is most obvious in the field of science (and indeed the term 'paradigm shift' was coined by Thomas Kuhn to describe the dramatic changes which take place in science when a new set of theories, the new paradigm, supersedes the old set).

The important implication of this theory is that a paradigm shift is a discontinuous process (rather like catastrophe theory). There is no gentle move from one viewpoint to the other taking place over a lengthy period. Instead there is a nearly instantaneous, almost violent, shift from one to the other.

The reason for this is the investment (in terms of management commitment) in the previous paradigm. The senior management assume ‘paradigm blinkers’ - because it is too 'painful' to abandon their cherished viewpoint. In this predicament, managers may adopt a number of devices to deny or minimize the existence of the changes; including blindness, misinterpretation, opposition.

a) Blindness - most basic of all, they simply will not see them, or will persuade themselves that they do not apply to their own position (thus the British motorcycle industry convinced itself that the Japanese were only making small bikes, which was a different market and no threat to themselves!).

b) Misinterpretation - or the signals may be forced to fit the existing paradigm.

c) Opposition - but, if the signals are too obvious to ignore, then the management may fight it by a number of means. These may include calling on the basic philosophies of the organization (the new paradigm is a 'heresy'), developing highly political defenses within the organization against them and/or partially assimilating those elements which can be accepted by the existing paradigm.

The above tools may represent stages which take place before the new paradigm overpowers the old. Assuming its overthrow is inevitable these delays in recognition may be very damaging, and are often fatal. Even if the new paradigm is eventually accepted, there is likely to be, as shown in the diagram below, a period of 'paradigm dissonance' when the organization is demoralized and its confidence sapped.

PARADIGM DISSONANCE

Unfreezing an organization which is caught in such a trap is not an easy task. It may involve political moves to encourage dissent, particularly by more junior managers, but it often requires a very strong lead from the CEO - and often the appointment of outsider (and a charismatic one) to provide this new lead.

These concepts, along with others covering the range of marketing practice, are explained in more detail in the paper-back ‘New Marketing Practice’[2] recently published by Penguin.

In the case of (brand) positioning, the general requirements relating to the static situation should already be relatively well known. The identification of three different reasons for changes in the dynamic situation ( for position drift) as consumer drift, competitive drift and ego drift does, however, allow managers better control these - in particular the self-inflicted wounds of the latter might be more easily avoided. Where more major changes are involved, the concepts of emergent strategy and then paradigm shift can also enlighten managers as to what is happening; not least where paradigm dissonance is involved.

[1] Mercer, D (1996), Management’s Commitment to Marketing Theory Compared with Actual Practice, MEG (Marketing Education Group)

[2] Mercer, D, (1997), New Marketing Practice, Penguin

TABLE 3
	Segment-ation
Problems in Use of Theory:	% Respond

Over-simplification/ Lack of Realism	46

Distracts Attention from Real Issues/Narrow Focus	43