Opinion

Two companies who need to go back to strategy basics


RIM and HMW – two brands who have both been in the business spotlight recently.  And both brands, which, in my opinion, need to grow a pair to arrest startling declines.

I’ve written about RIM’s ‘Janus Strategy’ recently, as well as offering up 7 thoughts to help HMV recover themselves, bobbing along as they are in a maelstrom of tumbling sales.

However, you’ll appreciate my surprise, first at seeing the news about a CAD$549 carrier free Playbook, and then at seeing HMV’s ‘social media cafe’ plans.

Both of these ideas suggest that neither brand knows who their audience is, nor what they want.

The last decent piece I saw about RIM suggested that the company was going to pull back from the consumer market, and focus on the B2B segment instead.

That, in itself, is sensible strategy.  Blackberry is designed for business, the B2B segment has very specific needs which the company can fulfil and, as the linked article suggests, this is a historic area of strength.

So what the hell is the company doing trying to flog an over-priced iPad rival into the consumer sector?  Trying to continue to appeal to both sides of the purchasing equation is bad business sense – especially so given RIM’s current woes.

HMV, meanwhile, is pinning some hopes on this ‘social media cafe’ store in Cambridge.

Aside from the WiFi and coffee, everything else is already in existence with my local (sub-standard-retail-experience) Worthing branch.

Taking a leaf out of the Waterstone’s book (many of their stores already contain cafe areas) might seem like a good idea – but it isn’t answering a fundamental question:

Why aren’t people buying music instore in the first place?

And, following on from this, will increasing dwell time make that much of a difference?  The coffee had better be good – many small independent coffee houses already offer free WiFi, so if you’re using that as a point of difference, it had better be the best Cup Of Joe for miles around.

It’s also entirely possible that the free HMV Wifi will increase scan-and-scram – the brand’s prices aren’t that competitive and you can often find the same item at three different prices on shelf anyway.

The space for local bands isn’t a new concept, and the ‘local exhibitions’ area is lifted straight from Starbucks…  Hardly ground-breaking and, I’d argue, not that attractive either to the wandering consumer.

For every brand, there’s a big red STOP button. HMV and RIM need to find theirs and thump it for all that they’re worth.

But that requires huge amounts of bravery – to admit that you’re wrong and, rather than plough blindly ahead like a ship in the fog, take a few moments to sit back, look at the data and work your way out of it.

RIM needs to drop the fluff and get back to serving the business market, providing solutions that enable owners/managers to pull their business to the next level of profitability through streamlined mobile technology.  Leave the consumer market well alone – Apple, Google et al have this sewn up tighter than a 50 Shades Of Grey WOM model.

HMV, on the other hand, has two issues to deal with.  One is the instore experience and the declining sales.  The other is slightly further outside their sphere – the decline of the High Street which provides a meta-environment to their current crisis.

I’m pleased that HMV adopted one of the ideas raised in my ‘7 thoughts…’ post (the cafe), but they still haven’t fixed the rest of it.

And with the other six points forming the bedrock of a business model, that’s a problem…

In order to remain viable, both RIM and HMV need to take some time, and innovate.

What I’m seeing today is more of the same.  And if you only do what you’ve always done, you’ll always get what you’ve always got.

Which, judging by both brand’s last financial results, is diminishing by the day…

Neil Hopkins is a Marketing and Branding Theorist at heart, and a Marketing Communications Manager by day. His blog – interacter – is the primary location he shares insight and information relating to marketing, branding and advertising strategy.
You can follow Neil on Twitter, circle him (like an escaped bull) on Google+ or track him down in any number of other ways.

Featured image is from oddsock’s Flickr stream under Creative Commons

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3 thoughts on “Two companies who need to go back to strategy basics

  1. Great post Neil. I’ve written about both of these companies before, so will keep this post short and to the point. The same advice is applicable to both, lets call it Plan B(urt):

    1) Fire your strategy advisors. Either they are giving you great advice and you are not listening, or they are giving you bad advice and you are. Either way – change them and get someone who knows what they are doing AND you will listen to.

    2) The starting point for both companies is to provide products (and by that I mean services) that i) your customers want ii) are willing to pay for iii) You can deliver and still make a profit at doing. You could add more such as iv) That are differentiated and leverage your unique capabilities, but lets forget about that for now. Will HMV survive as a coffee house? No. Will RIM survive by launching a Tablet. No. Both neglect your core market, steal resources and don’t address fundamental weaknesses. They also delude you into thinking you have a plan. They are tactics that should be part of a bigger plan – but I don’t see the bigger plan. Coffee shops and wifi should have been there 10 years ago. Offering them now is nothing more than a maintenance factor.

    3) Hurry up. Your business is dying. It really is. You might argue with analysts, commentators and bloggers. Both business models are vapourising, so figure out the new model quickly whilst you still have some cash, some confidence and some staff. Don’t count on keeping your best people though (although I doubt both have already lost their best people). As a customer experience HMV is horrible. As a smartphone RIM’s UI is horrible. FIX THIS FIRST.

    4) Whilst we are on that point – hire some smart people who know where you need to be as a business – and have ideas about how to get you there. Hire people who will inspire you and motivate you. Having credentials of running record companies or dying phone brands means nothing. Hire for what you need. Hire from small successful companies, not monoliths.

    5) Think disruption and innovation, because nothing else will work over the long term. The end destination is not ‘music shop’ and ‘the secure enterprise smartphone company’ because these models are not working – so what is the model? How are you evolving these definitions. Both business models have been eroded (arguably mortally wounded) by innovation OUTSIDE of your company. Both companies left this space and didn’t close it when they could have done much easier. So how are you going to innovate? In both cases, your market share was there for the taking and a combination of arrogance and incompetence meant that you did nothing to react to this. HMV still doesn’t know who I am, has outdated shops and still doesn’t allow me to preview music!!!!! RIM … well anyone who has used IOS or Android knows how to answer this. Find the solution and hurry up. Trial and test new ideas QUICKLY. Prototype, concept test, mockup, whatever you do – do something and get a move on.

    This is Plan B.

    Or there is keeping with Plan A. Don’t change your business model, implement small changes years too late and ignore your customer. There are lots and lots of companies that followed this route … and your kids cannot name any of them because they dont exist.

  2. Some interesting comment from The Register on this topic and the absence of comment on BBM. http://www.theregister.co.uk/2012/08/14/rim_bbm_pundit_breakdown/

    But:

    1) Android and Apple phone sales eclipse RIM sales, so the influence of BBM is waning.
    2) I see teens use a number of services to communicate (including texts) and will switch services/apps as needed.
    3) The evidence in falling sales is that whilst BBM is valued by existing users, it is not enough on its own to attract iPhone or Android buyers.

    The original post from Jean-Louis Gassee is worth reading. Don’t miss the comments too. http://www.mondaynote.com/2012/08/05/saving-private-rim/

    • Thanks for the input, Gary – I’ll check those links out!

      At the moment, I have no idea how either business’ future will play out. It wouldn’t surprise me, however, if talks of sell-offs and buy-outs start being heard in the next 12 months.

      This is a situation for fast experiment, fast fail, fast develop. Whether either of them have the balls to do that is another questions…

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