Insights on Strategy

Business Makeovers

A Monthly Newsletter published by Strategy Development Group, Inc.                             July, 2002

Thinking Outside Your Industry

"...If I want to grow my business, why don't I just do a better job than my competitors? We all know what our customers think is important; I'll just be better at it." Maybe it's "quality" or "great execution" or "having the best people". If you're in a fashion related industry, it might be "design". In the medical field, it might be "product development". Every industry tends to have certain characteristics that are taken on by its leaders and that soon become the standard way of competing. The problem is that if everyone is competing in the same way, the cost of maintaining a competitive advantage becomes very high or impossible unless you are an industry leader.

What if you could find some other way to compete, one that was never or infrequently encountered but might still be appreciated by your customers. You might be able to "leap frog" the competition and then not work as hard to retain your advantage. But where does one find this other way of competing? One place to start is looking outside your industry.

In every industry there are success stories, companies that excel by doing something different or unique. Why not identify one or more of those companies, uncover the elements that made them successful and reformulate the elements to apply to your own industry. We know there are very few "new ideas";, just reformulations of old ones; so let's find a successful company and see if we can learn from its unique business model. 

To illustrate this approach we'll look at the education industry and consider a San Francisco based for-profit company called Landmark Education. This company, whose courses focus on personal growth and development, is a successful, rapidly expanding enterprise with training centers all over the world. Each year over 100,000 people attend its core product, a three-day seminar called the Landmark Forum. As a strategic thinker and participant in some of their courses, I have always been intrigued by their unique business model.

For the purpose of this article, I have identified four reasons why this company continues to dominate its market niche. First, Landmark delivers a great product. Participants of its programs claim they are one of the most impactful events of their lives. Its programs are constantly expanded, improved and updated in response to customer needs.

The second and more interesting reason is that it offers high-level training in the areas of communication, productivity, and leadership in exchange for free "assisting" (volunteer work) in support of its programs (such as coaching, course production, seminar leading, administration, etc.). This form of bartering is not uncommon, but what is unique is that the assisting activities are a part of the training process. Think of the "Wipe on wipe off" exercise in Karate Kid. Volunteers outnumber employees at Landmark by a ratio of almost 7 to 1. This allows Landmark to deliver its programs very efficiently and at very competitive prices resulting in greater value for the customer.


Third, prospective customers find out about Landmark only by "word of mouth". Unlike some of the hot clothing brands that unwittingly developed a following among the youth culture, Landmark's approach is clearly by design. Landmark, as part of the training, encourages its students to share their personal transformation with others. Through sharing prospective customers find out about Landmark's programs and are invited to find out more by attending a free seminar. Imagine what the impact on your sales would be if customers were to share with your target market their experiences with your product or service two or three times a day.

The fourth reason, mentioned earlier, is the method used to sell its core program, the Landmark Forum. All prospective customers are asked to attend a free two-hour seminar that explains the program and allows one to experience first-hand how Landmark's educational process works. These seminars, which are led by volunteers, are very entertaining and thought provoking and the guests are not pressured to register for the course. Those guests who want to register can do so during the seminar

What makes this business strategy so successful is that each part leverages off the other. Satisfied customers as part of their training share their successes and enthusiasm with their friends who notice the positive changes in their friends and are eager to find out more about the training. Prospective customers are then asked by their friends to attend the free seminar, which also serves as a training ground for volunteers. Graduates of the Landmark Forum continue to take more advanced courses or join the assisting program, both of which reinforce the sharing of the Landmark experience in the larger community.

What can be taken from this business model and applied to your industry?

1. First, note that the model relies heavily on customers to advertise and promote its products and has developed a mechanism to encourage that activity. For Landmark, it's part of their training, but how might this concept work in other industries? In what ways can your customers find it in their interest to advertise and promote your products or services?
2. Second, it allows you to experience the product first hand. Product or service sampling has been around for a long time, but how often can you get the customer to participate in the sampling process (for example, live demonstrations at customers' facilities).
3. Third, the customer provides a valuable service in return for some future benefit, creating a win-win situation. For example, customers participating in testing programs in return for future improved products. In Landmark's case, volunteers received special training and everyone benefited from lower course fees.
4. Fourth, all four ways of competing leverage off each other. The high quality of the programs keeps the customers engaged and sharing their experiences, which brings in more customers and so on. Creating leverage is the key to developing a powerful business strategy.

As you start to think of new and more effective ways of competing in your industry, consider, as an example,  how you might take some aspect of this business model into your planning process. Or consider analyzing how other successful companies compete in other industries and begin to notice how some parts of their strategy might be tailored to the peculiarities of your business. The elements of Landmark's business strategy or those of other successful companies are not unique or original but the way they have been crafted together is unique and their market success proves it.