Two stories, both telling the same tale. Both consider the art and practice of fighting unfairly.
First, a bit of classical history. The first discusses the use of Greek Fire, a secret weapon whose employment razed the siege of Constantinople in 674AD by destroying the attacking Muslim fleet. Greek Fire was the X Factor of Byzantine medieval warfare. Here was a trade secret beyond the pale of Coca Cola’s formula, the composition of which was passed down orally — never written down for fear of it falling into the wrong hands — from emperor to emperor. So demoralizing and effective was the use of this weapon that a contemporary witness described its effect in these visceral terms: “… every time they hurl the fire at us, we go down on our elbows and knees, and beseech Our Lord to save us from this danger.”
My second story is about the greatest promotion I never did. Back in my Sony days, I stumbled upon our own mysterious Greek Fire, a promotion that could not have been copied by our competitors, that would have hit home to the very soul of our users’ needs, and would have tied us closer to our channel partners and sister divisions than blood. It was a game-ender. Which is probably why it never happened.
It looked like this: a consumer walked into a “rekkid” store (think Tower Records back in the mid-1990’s) and in the process of picking up a “brick” (industry speak — a 10-pack — bear with me) of Maxell XLII audio tape caught sight of a comparable Sony SKU. But this one offered a free CD — any CD — with purchase. Eyebrows go up. A switch is made, uneasily, because Maxell users bought Maxell, not Sony. The product comes home, the certificate is removed, maybe mailed in (a little slippage won’t kill anyone), and the consumer then walks back in to Tower waiving the certificate, shortly thereafter walking out with the CD of their choice. Cost of the brick: about $19. Cost of a CD: about $12. Impossible. What a deal.
Sony’s consumer media group (about $250 million in revenue) was related to Sony Music, who controlled the distribution of all Sony artists’ music to the US market. We were also related to Digital Audio Disc Corp., or DADC — the company that, at the time, physically produced the lion’s share of all music CD’s sold in the country. So follow the money. We pay the music retailer back for the free CD given away in free goods — CD’s from Sony Music. We pay Sony Music back for the free goods they give to the music retailers in free goods, too — they get their own CD’s, paid for by recording media, at the cost of goods (plus royalties) basis. The retail price of the promotion is $12, but only costs us about $3.50 at 100% face value. Assume half lose it and half don’t redeem. Our promotional cost burdening our $19 brick — a $13 trade price item, for which we clear about $5 — is less than a buck. We need a break-even of about 20% when the usual lift is around 80% when on end-cap. Who knows what the lift will be with this promotion riding on it. And we’ll own every end cap in the western world. Because we have friends and relatives in high places. Amen.
Alas, much like the expression, “there is no ‘I’ in ‘TEAM'”, there was no ‘synergy’ in ‘Sony’, so Greek Fire never saw the light of day. We, in the recording media world, were seen as the physical embodiment of both satan and home piracy by our distant relations at Sony Music. I guess I can relate to how they must have felt.
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Key Takeaways:
> There is something unique about your company and its structure. Something. Look at it in a novel way. Disassemble it, reassemble it, see how the different pieces fit back together, and figure out how you can bring something to market that the other guys structurally, financially, or profitably can’t.
> Encourage your competitors to follow you onto the new thin ice of your own making! Ask your channel why your competitors aren’t offering them the same value, and then let your competitors bleed themselves dry. Really, it’s fun.
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Go forth and find your Greek Fire. Think about your structure, your suppliers, your sister divisions, and how you can create unfair advantages. I think Microsoft might have used this idea once or twice.
Then go out and fight unfairly.
Regards.
Copyright (c) 2007 Stephen Denny
