Real Strategy: 3 Case Studies.
Strategy confuses most people. Perhaps that’s why there are a lot of confusing articles out there in cyberspace, championing “killer” strategies that, in fact, do doing nothing more than list taglines or explain successful tactics.
STL takes a look at three strategies that will demystify strategy and inspire your leadership.
Tesla: Take the High Road
Elon Musk first articulated Tesla’s strategy in his Master Plan:
“Almost any new technology initially has high unit cost before it can be optimised and this is no less true for electric cars… The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.”
Tesla won market share from other luxury gas-fuelled models. It achieved stellar reviews with the press. The Car and Driver publication wrote that the roadster model was “not just a car, but one of the strongest automotive statements on the road.” Building on the successes of other models, the Model S sedan launched in 2013.
Besides that, Tesla was able to manage its costs by designing and assembling the cars in-house. By early 2018, nearly 225,000 Model S sedans had been sold. In 2017, Model S sales approached the combined sales of the BMW 6 and 7 series and the Mercedes-Benz CLS and S class.
Singapore Airlines: Service Excellence & Low Cost
In the turbulent airline industry, Singapore Airlines performance is peerless. The carrier rarely reports a negative return: just twice in 47 years, and since its last loss in 2017 it recovered to report its highest profit in seven years. Singapore Airlines consistently outperforms its competition and has won hundreds of industry awards and plaudits for the quality of its service.
How does it achieve all of this so consistently?
Through the successful execution of a dual strategy: service excellence and innovation combined with cost effectiveness. Between 2001 – 2009, Singapore Airlines – a full-service carrier — had lower costs than most European and American budget carriers.
Most importantly, Singapore Airlines makes these two often incompatible strategies work together by running a fleet of relatively new planes. In 2009, the average age of its aircraft was just over 6 years old, which is less than half the industry average. The benefit of this is:
- less mechanical problems and therefore a more reliable fleet with fewer cancellations
- higher fuel efficiency and less repair mean more planes flying around in the air instead of sitting on the tarmac or in hangers, and money spent on maintenance
- happy customers who prefer newer planes.
Hornby Railways: A Change of Direction
At the beginning of the century, the future of Hornby — the historic British model railway — brand looked uncertain. In order to turn the tide, the CEO at the time, Frank Martin, decided that a change of direction was required. Rather than continue to focus on a young audience he took aim at collectors and hobbyists.
Therefore, Hornby’s strategy was to make perfect scale models (instead of toys), which would appeal to a sense of nostalgia amongst the new target audience. The strategy was hugely successful and Hornby’s share price rocketed up from £35 to £250 in the next five years.
Conclusion
Give your strategy every chance of success by ensuring you put in place something worth implementing. These three case studies give you a clear understanding of what great strategy looks like.
If you want to learn how to successfully develop and implement a strategy, sign up for our Intro to Strategy course.