On the surface, business doesn’t seem to comport with selflessness. There’s few, if any, captains of industry that I consider to be genuine altruists. But one of the things that has always fascinated me about business is the fact that success, in any form, is effectively built on giving a certain group a certain thing at a price they are willing to pay. It takes a high amount of empathy to get that right. You have to know what the audience wants and be willing to go through a lot of hoops to help them get it.
It’s quite beautiful. In this spirit, we view business opportunities and think “I can make something these people are going to love.”
This is a far cry from the more crude way to view a business opportunity—where one says “I can make some money here”.
Both attitudes are perfectly viable. The key is to understand how they lead to something very different. Strategy, for all its nuance and theory, emerges from this singular point, this fundamental attitude you choose at the start. Are you looking to make money or are you looking to serve? These are not mutually exclusive if you get the sequence right. It’s all about sequence.
If your first thought is to deliver something your audience will love, and price is determined as a way to sustain that effort (rather than exploit the need), you will probably have a strategy and approach that is like Shopify, Warby Parker, and SolarCity to name a few. There will be a clear mission and an understandable price and a highly committed workforce behind the effort.
If your first thought is to capitalize on the opportunity, to “make some money”, you can still deliver something your audience wants but the strategy and approach will invariably lead to different behavior in the name of profit maximization. The business will have an air of barely-tolerable greed. Because you’re playing a different game.
United Airlines comes to mind with every story that plagued them over this past year. Or consider EA or Activision in the video game industry. Their audience constantly grumbles at all the loot boxes, DLC, and other microtransactions infiltrating their games. In this approach, your work still must satisfy. But only enough to make you more money. There won’t be long-term loyalty. At best, there will be compliance from the customer. “Okay, fine. You got me. I’ll buy that, too.”
So again, every single decision cascades from this single basic attitude. Is the audience a resource to exploit or a group to serve?
In Playing To Win, the authors give an impressive example from Proctor and Gamble (P&G) that involves the product Oil of Olay. Here is a giant corporation with massive brands looking to find some way to … what? Make money? Serve an audience? Both?
It starts with a joke. The brand was struggling in the late 1990s. Its customer base had naturally aged with time to a point that the product was called “Oil of Old Lady”. Market share was diminishing and competitor products were taking hold. The audience was moving on.
P&G wanted to revive the brand. They didn’t want to cut corners and extract more money through cost-savings. They wanted to better serve the audience. In studying the consumers, they found a particular niche: women age thirty-five-plus. At this age, the first lines and wrinkles start to appear on one’s face and many women start to buy specialty skin care products for the first time, adopting skin care regimes that often continue for fifty years. Serve this group, fill their need, and you could have a loyal, long-term customer base.
So P&G dove deeper into this subset of the market, learning more about this consumer’s need. It wasn’t just wrinkles that this audience wanted to combat. It was dry skin, age spots, uneven skin tone, a whole host of needs. So P&G explored different materials and active ingredients that could help with all of that. All while balancing between quality and quantity, recognizing they couldn’t be the best product and still remain accessible to the whole market.
This exploration of unique need led to a whole new category. At the time, there were low-end mass retail products like the original Oil of Olay sold at Wal-Mart and Target. Then there were high-end prestige products sold at department stores like Macy’s and Saks. And just as the automotive industry exploded in diversity around a middle-range product (sedans, SUVs, full-size vehicles) that was better than the low-end but not as extravagant as the high-end, so too did P&G explore a middle ground with a new category they called “masstige” (mass availability with prestige branding and quality). Again, all based on the unique needs they were finding in their audience.
But how much should something like a “masstige” product cost? It’s not cheap, that’s for sure. But it’s not expensive, either. Cheap is just that: cheap. That’s because the skin care market was very similar to the automotive industry in that its customers believe deeply in the notion that “you get what you pay for.” Low-priced products sold in drug stores were considered low quality products. Just as surely as low-priced cars like the Yugo were considered (rightfully) low quality vehicles.
But Oil of Olay isn’t, and never will be, the Mercedes of skin care.
In the broad strategy, this is what fascinates me the most. P&G sought to serve the largest possible customer base within this very specific segment of the audience (women age 35+) and had the recognition that while some might pay $30 for the product, most would pay $18.99. Why $18.99? Because that price signals quality, can be sold on mass retail shelves, and doesn’t gouge the consumer.
The end result was a new product called Oil of Olay Total Effects. In 2000, the product launched and garnered double-digit growth every year for a decade, becoming a $2.5 billion dollar brand.
Did it have high margins? Yes. Just like Apple. But was it greedy? I don’t think so. Price is a signal just like placebos are a signal. Seth Godin writes about this far better than I can but, needless to say, a $50 bottle of wine always tastes better than a $10 bottle of wine. To me anyway. Because I’m no connoisseur but I’m very good at fooling myself. And in doing so, I’m happy. Which is why I (occasionally) buy the expensive wine in the first place.
It all comes back to the origins of the strategy. P&G found an audience they wanted to serve, rebuilt a product for their needs with better ingredients and a better purpose, shared this with that audience at a price that was not merely tolerable (“Okay, fine, I’ll buy it.”) but resonant (“I am the kind of person that spends $18.99 for my skin care.”), and was rewarded generously.
Maybe this is revisionist history. Perhaps P&G is run by tycoons who just capitalized a market. Maybe the story in the book is sanitized and it was really just about maximizing shareholder value. Maybe. But I don’t think so. Neither do the many people who built the product and who gave their money for Oil of Olay Total Effects.
In closing, this broad-yet-short story tells the entire cycle of how a product idea is born from the perspective of those who wish to help a group. It feels selfless to me. It feels like P&G had some pride in what they did and didn’t want to lose a brand they cared about. As we venture into the formal steps of strategy outlined in Playing to Win, I think this story is the best way to think about the fact that the formal steps hardly matter if we can’t foster the same aspiration, the same attitude. Great strategy starts with a selfless vision that inspires the business towards a self-fulfilling exchange. Zig Zigler said it even better in one of my all-time favorite quotes:
“You can get everything in life you want if you will just help enough other people get what they want.”