Contemporary Corporate Strategy Development:  Implications for the Michigan Tourism Strategic Planning Project
By Don Holecek, Editor-in-Chief of Michigan Tourism Business

The August 21-28, 2006 issue of Business Week magazine features a series of articles that address the question of “what makes a winner.”  Since the statewide Michigan tourism strategic planning process that we are engaged in is all about making Michigan’s tourism industry a winner, it may be enlightening to review the prevailing wisdom concerning corporate competitive strategy for insights that might have relevance in developing the strategic plan for Michigan’s tourism industry.

The article “How to Hit a Moving Target” by Robert D. Hof is especially interesting.  He points out that gleaning useful guidance from the published literature is a daunting task, given that over 18,000 books containing the word “competitiveness” are listed on Amazon.com.  To make matters even worse, he notes that their contents are “a mishmash of utterly random and conflicting advice.”  Still, the quest for competitive advantage facing companies (and the tourism industry) must go on, and at an accelerated pace, in order to keep up with ever faster changes in customer preferences and business environments.  The challenge facing companies is captured in the following quote from C.K. Prahalad, professor of corporate strategy at the University of Michigan: “Whatever advantage you have, someone will take it away from you.”

In researching for his article, Hof identified the following seven elements he deemed important to hitting “a moving target.”

1.      Experiment fearlessly. – An organization must encourage experimentation to meet the challenges presented in our fast changing world.  And, it should not confine experiments to only “safe” options since these are also likely to be under study by its competitors.

2.      Don’t just get bigger, get unique. – Organizations primarily grow because they offer unique products desired by customers and not because they are big.  Toyota has been growing, while its once bigger rivals, GM and Ford, are downsizing; Toyota’s products are perceived as unique and need not be “put on sale” to attract buyers.

3.      Why compete?  Create new markets. – Research has shown that 86 percent of new product launches are mere extensions of existing product lines, but they only account for 39 percent of new profits. The 14 percent of new product launches that targeted new markets produced 61 percent of total new product launch profits.

4.      Obsess about customers, not rivals. – The tendency to focus on what one’s competitors are doing and mimicking them is too often unproductive.  Rather, focus most attention on how best to serve the needs of your customers.

5.      Give as good as you get. – Hof observes that many of the most successful corporations today are thriving because their strategy has been to focus on building partner networks rather than internalizing more aspects of their businesses. His point is echoed in another article in the same Business Week article by Peter Coy, who notes that “more companies are finding that ‘co-opetition,’ or learning to work with rivals on certain projects, may be the best strategy.”

6.      Get personal. – The era in which mass marketing was successful has been fading for years, but corporations have been slow to respond with new strategies to better serve their more demanding customers.  These customers increasingly want the option of tailoring what they read, wear, and their travel experiences to their needs, and they are willing to pay more for that option.

7.      Stay hungry. – Despite offering the above six alternatives to “in your face” competition, Hof ends his treatise concluding that competition cannot be totally avoided.  In his article in this issue, Christopher Palmeri posits that successful competitions should anticipate the moves of competitors and practice how to respond to them.  In yet another article by Jena McGregor, successful competitors are noted as being those that can build teams around the best leaders.

The business environment in which the state tourism plan is being developed is strikingly similar to that facing individual businesses and corporations; Michigan’s tourism industry is confronting rapid social, economic, and competitive changes. It clearly needs to create an organization with effective leaders which is responsive to change in its competitive environment through consistent experimentation. Surely, the central focus should be on better understanding of and a more targeted response to the customer. Competition with other destinations can be minimized by creating unique product offerings for new/emerging markets.  More and more timely research will be required to create these strategies. And, expanded partnerships across the industry will be required to implement them successfully.

None of the ideas presented in this series of Business Week articles is new or revolutionary, after all there are over 18,000 books in print that address this subject matter.  Hof and his colleagues at Business Week, however, have done readers a favor by synthesizing current thinking about the best approaches to framing corporate strategy.  Since this information is available to corporate leaders, the ideas are certainly not in the realm of proprietary corporate secrets that can be used to beat the competition.  What then may determine who is most successful at hitting a rapidly moving target is he/she who can best package these ideas into a coherent plan and then vigorously implement it.