12 Nov When strategy is at odds with commercial intent
Everyone in business knows the importance of a clearly defined strategy, even though it is often eaten for breakfast by culture, according to Peter Drucker. It sometimes seems like culture and strategy are polar. That the two can never coexist. That they are combative. Divergent. Which isn’t the case, but what can be divergent is an organisation’s strategy and its commercial intent.
Take for example the recent calling-out of the New South Wales Government’s “contradictory” behaviour of spending millions on anti-junk food advertising, whilst accepting millions in junk food advertising revenue on State run busses and trains. The Cancer Council of NSW has pointed out the contradiction, and it’s absolutely spot on. If ever there was an example of strategy being at odds with commercial intent, this is it.
There are many other examples of this sort of strategic contradiction. Facebook’s strategy to create a safe, inclusive social network is completely at odds with its selling of personal data for profit. Pharmaceutical businesses that are increasing the price of life saving medicines, literally by thousands of percent, such as Valeant. And then there are the banks who have been grilled in the Royal Commission for shocking malpractice.
When it comes to owned media leverage, businesses need to be careful too. Retailers need to be clear with suppliers how they can leverage owned media and why they should value it. Some suppliers (and retailers) believe that owned media should not be paid for, because the result of driving customers to a sale benefits both businesses. And in some cases, this is a fair point. However, the value of the owned media a supplier receives should always be communicated. The trouble is, people don’t value what they don’t pay for. So, the retailer, who spends millions building and maintaining owned media assets, receives no recognition of the value they’re providing to a supplier. And in many cases the media assets the retailer owns, are more effective, better targeted, cheaper and more accountable than the media a supplier can buy in the traditional media market.
Retailers need to ensure they are consistent in their strategy and commercial intent when it comes to leveraging owned media. In our view, owned media should always be valued and, where relevant and appropriate, charged to a supplier. But the strategy has to be aligned and communicated clearly with suppliers.