Positioning, Strategy, and AI
Blair and David are hearing all kinds of people talking about how their positioning needs adjustment because of AI. Blair does see an issue developing for many creative firms, but more with business strategy instead of positioning.
Links
Positioning: The Battle for Your Mind and The 22 Immutable Laws of Marketing by Al Ries and Jack Trout
Good Strategy / Bad Strategy by Richard Rumelt
Playing to Win by Roger L. Martin
The Lords of Strategy by Walter Kiechel, III
Transcript
David C Baker: All right, Blair, positioning and strategy. Wait, is that the title?
Blair Enns: How's this for being on topic? Let's not title this, and let's title it at the end. Let's see if it even makes it.
[laughter]
Blair: Do you want to share your skepticism with the audience?
David: Well, if people could just see how the sausage is made, it's like-
Blair: [laughs] Looks like sausage.
David: -you send me this little text, "Okay, here's the topic." It's like, "What? This isn't the topic. This is just a little text from you, and then you say, "Well, I'll--"
Blair: Then you qualified that, and you said, "I haven't even been drinking."
David: Yes, I know. [laughs] Yes, I said, "I have no idea where you're going with this, and I haven't even been drinking," right. Then you said, "I'll flesh this out later." Then early this morning, I get this thing, and it's like, what's this shit? [laughs]
Blair: Oh, weren't you referring to that stuff I sent you when you sent me that text?
David: Yes, I was.
Blair: Okay, got you. What's this shit? It's material. It's raw resources for a fantastic conversation that you and I are going to have, and the audience is really going to enjoy. They're going to go on LinkedIn and just talk about, "This is the best 2Bobs ever."
David: Yes, right.
Blair: They're going to give us five stars on whatever platform that they listen to 2Bobs.
David: There you slipped a little thing in.
Blair: Yes.
David: Yes, and before we started recording, you said, "Bring your skepticism to the table and I could talk for 40 minutes about this," and I said, "Do I have to be here for that?"
[laughter]
David: Oh, God.
Blair: This is already the best episode ever.
David: Yes. Okay, but this actually brought back some memories because you and I did an event in Atlanta quite a while ago where we used this business model canvas. It was a really interesting event, so it was nice to look at that, but we'll get to that in a minute. You've been hearing all kinds of people talking about how their positioning needs adjustment because of AI. Is that right, what I just said?
Blair: Yes, roughly. Are you not hearing this?
David: Yes, I am hearing it too, but I'm interviewing you.
[laughter]
David: I'm asking the questions today.
Blair: Yes, Your Honor.
David: You have heard that?
Blair: Yes.
David: Okay. You think this is brought on by AI. What is it about AI that's making them rethink their positioning? We're going to talk about how you don't think they should be rethinking their positioning, but what do you think it is about AI that's making them be introspective?
Blair: It's like a hand grenade that's been thrown into your business and the entire ecosystem. Everything's being disrupted, so everything's changing. It might be a bias on my point. I feel like I spent the first 15 years of my business talking about positioning, and then at some point it's like, "You know what? I don't want to have the positioning conversation anymore." I feel like we, all of us together, have had this conversation a million times, and maybe the hiatus is over, but I've just noticed agency owners revisiting their positioning and I'm like, "People, this isn't a positioning problem."
We've touched on this, so I looked it up, and I don't know how many episodes we've done on positioning, but positioning comes up in a lot of them.
David: A lot, yes.
Blair: We've probably done seven or eight directly on positioning. I wanted to make sure we didn't cover the topic directly. I don't mean the topic of AI's impact on positioning, but the topic of positioning versus strategy, because I know I have talked about it a couple of times before, but I think it's worth going into this.
David: Yes. You're saying it's not a positioning issue. There is an issue, but it's not positioning. It's about strategy.
Blair: Yes. Let's define the terms. What is positioning? Where did positioning come from? The book came out in 1981, Positioning the Battle for Your Mind by Trout and Ries. They had written, I think in Ad Age, a series of articles for like a decade, since 1969. These two, were they professors? One was a consultant.
David: Yes.
Blair: Eventually they were both consultants. They were observers of the marketing and in particular, the ad agency space. I don't even think they coined the term, but they popularized the term. Positioning, according to Trout and Ries, is the act of placing your brand on a ladder in the mind of your customer. You choose what's the ladder, and I haven't read the books in years, but it's like Volvo. It's not on the car ladder. We want to be positioned on the safety ladder, and we want to be number one in safety. This is your idea, your construct of how you want your customers, prospective customers, to think about your brand.
When the customer hears your name, you want them to associate it with a benefit of some kind. Then there's this implicit ranking. Are you the best in this category? Are you the second best? Are you the third best? There's a saying from back in the era, and I read all these books, Trout and Ries's books, including their other one, The 22 Immutable Laws of Marketing when I started in advertising. I don't know if it was their saying or somebody else's, but one is wonderful, two can be terrific, three is threatened. This idea that there's really only ever room for two in a category.
You would have to decide, is there room in this category? Can we be number one or number two? The number two is really the idea of a challenger brand, or I guess three or lower might even be a challenger brand. You have to pick the latter. Then you're in this messaging battle with your competitors to try to occupy a place on that ladder. Positioning is the domain of those who do not have the ability to affect the product. You're handed this baby shampoo or whatever, and it's like, "Go find somebody to buy this." You look at the marketplace, you look at the needs and the demands, and you think about, "What's the messaging? Where are we going to try to position this relative to the competitors?"
My thesis is because people of my age in this business who grew up using that language and those constructs from Trout and Ries, we often think about positioning the brand of our agency when, as a business owner, we have complete agency over the products. Therefore, we shouldn't be thinking about positioning at all, or positioning should be downstream of the more fundamental thing. The more fundamental thing is business strategy.
David: Are you saying that business strategy should be an interchangeable concept with positioning?
Blair: I'm saying it's conflated in the independent creative firm space. A lot of times these agency owners and other leaders are thinking and talking about positioning the brand when really, they should be revisiting the strategy. We define positioning. Now, what is strategy? One of my hobbies is collecting answers to this question. I've received hundreds of responses, three, four, five, maybe good ones. I've had a recent revelation about good strategy and bad strategy. Somebody wrote a book called Good Strategy and Bad Strategy, but let me take a good definition of strategy. I think it's Roger L Martin, who wrote a book called Playing to Win.
Strategy is deciding where you're going to play and how you're going to win. What's implied in that? Everything is implied in that. You don't have to be an ad agency or a video production company or a marketing agency and decide where is this thing that's in a box that I call an agency or a service provider going to play and win. You can re-imagine the box. You can re-imagine everything. I wanted to have a conversation about instead of revisiting the positioning, the language that we will use to place our brand in the mind of our competitor and maybe shift that language so we can shift the position, I want to have a conversation about rethinking everything about the business, everything.
David: The way you just described positioning isn't the way I've used the word positioning, and I'm not saying I'm using it the correct way. I might very well not be. Using your definition of strategy, where we're going to play and how we're going to win, so that first part of that, where we're going to play, we would narrow that field so that we have fewer suitable substitutes for what we do. Then how we're going to win would often be how we deliver those services, what sort of service offerings, how we start, how we weave them together, and so on. That would be how I would understand positioning.
Your definition of strategy is how I would understand positioning. Back to this question about AI. Has AI been so disruptive that people are afraid that their business model will be disrupted? Because of that, because they see AI as such a disruptive force, they feel like they need to be first in the potential client's mind around how AI will be delivered in the services. Is that also a part of it?
Blair: I see that going on. I see two things, like almost a fully bifurcated market here. Tell me if you're seeing this. It's mostly on the consultant side, the independent side. Are you seeing like a herd of lemmings running to the AI space?
[laughter]
David: Yes. Just like they've run to lots of other spaces, yes.
Blair: Yes, and if they were running a business in 2000, they changed the name from whatever it was to whatever it is dot com. It's like there's a parade, so everybody's trying to get ahead of it. Some people have gotten ahead of the parade, and I've watched with admiration as some of the early movers in the marketing space really saw the parade and gotten ahead of it. Now everybody else is just joining the parade. You look at it and go, "Yes, I understand why you're doing that, because it's the big new thing, but how long is that value proposition going to last?"
You think of all the big consulting firms. How much of their business today, and I have no idea what the answer is, but I'm going to assume it's a significant and quickly growing percentage of their business, has to do with helping their clients adapt to AI. Would you imagine that's a sizable and growing percentage of their business?
David: Oh, yes, absolutely. In fact, I just finished listening to the Lords of Strategy, and it didn't even mention AI, but it's still 100% applicable to the consulting field without even mentioning AI.
Blair: Yes, and so are McKinsey and Deloitte and all these other, are they--
David: Punctuation. You forgot to mention Punctuation as one of the leading consulting firms.
[laughter]
Blair: Are they changing their value proposition to be AI-specific? No, they're not changing how they want to be positioned. They're not. All of a sudden now we're all AI. Even if internally they're saying we're all AI, whatever language they're taking to the marketplace, whatever message they're transmitting to their customers, it hasn't fundamentally changed. The shift in technology, the disruptive thing, whether it's a macroeconomic thing, a socioeconomic thing, a technology as it is, doesn't really matter. It's not causing them to shift. On one hand, I would say it's mostly people in small firms rushing to the AI thing.
Look at the people who comment on your LinkedIn feed. Not necessarily the people that you follow or are connected to, but the ones who comment. It's like every third or fourth person has AI in their bio. I think that's largely a mistake, not universally a mistake. I think it's largely a mistake, and maybe we've talked about this all before. What are you going to do after AI is so mainstream that it's just the water we're swimming in?
David: I was thinking about that the other day. I went to the, I think it was called the Sign Museum or something in Cincinnati.
Blair: Oh, I saw your pictures. Pictures of signs. A museum for signs.
David: Yes, and they had a lot of hotel signs. I was talking with the friends that we were there with, and I said, "Do you remember in the early days out on Route 66, it's like we have air conditioning. Then it was we have cable. Then it was we have Wi-Fi." That was to differentiate all of these hotels from all the other ones that didn't quite have it yet. You see the same thing with agencies saying, "We have AI." Okay, well, that might work for the next 47 hours, but after that-- This is an important question I want to ask you. You may not have seen this.
I don't know, you'll be able to tell right away when I ask it. When you notice this happening, is it happening from firms that are already tightly positioned and they're revisiting things, or is it happening from firms that are not tightly positioned, and they think this is the answer to it?
Blair: I'm not going to give an answer that suggests that I have done any research or even have a solid point of view on it. I think anecdotally--
David: Can we stop and talk about that for a minute?
[laughter]
Blair: Is what keeps this lighted, real, and interesting, isn't it?
David: Yes.
Blair: Anecdotally, as I already said, I think it's largely consultants and really small firms. They're just trying to find their footing like they were trying to find their footing with the last cycle of whatever the hot new thing was. There's just a lot of good, honest people trying to find their footing, and looking for the next thing and maybe not thinking through. Maybe they don't need to think in this day and age. I actually want to come back to this. What is strategy? Is it planning or is it action? Increasingly, I'm in this camp that strategy really is this thing that you determine by looking backwards. It's a set of actions that you took in the past.
I think we've probably, and I maybe fueled this, at least in my own mind, is that we've probably gotten too theoretical about strategy. I've been searching for the definition that describes a model for how you think about and plan for the future, but I'm not a great planner. I'm a big fan of that saying, I think it was Eisenhower or one of the US generals who said, "Plans are useless, planning is priceless." I think in the category of strategy, strategy is really, and I could read you a whole bunch of quotes on this that I have in front of me, the world's most famous, most successful entrepreneurs almost universally are dismissive of strategy or more correctly, will state it as an action.
Here's Jensen Huang, founder of Nvidia, "Strategy is not words. Strategy is action." We don't do a periodic planning system. The reason for that is because the world is a living, breathing thing. We just plan continuously. There is no five-year plan. Herb Kelleher, Southwest Airlines, "We do have a plan. It's called doing things."
David: I like that one.
Blair: I could read more and more of these. These ideas of strategy is action, it's so important right now. I'll push back on what I just said a little bit earlier, some of these people just rushing to the AI thing, I think you want to modify your business so that you can be really relevant, create value, make money in this time of AI, but just simply slapping the AI label on what you do, I don't think that's the right thing to do. Now, I still think that's true, but at the same time, how are these quick pivots going to pan out over the long term? I don't know how long-term anybody's thinking or even should be thinking right now.
I'm trying to imagine my business as an AI-native, agent-friendly business where my client's agents can come to us and get what they need. For the life of me, I have no idea what this business might look like in three years.
David: You mean your own business?
Blair: Yes, my own business, and I imagine there's a lot of that going on. The world we're living in three years, it's probably going to be quite different from today. I'm not in a doomer camp. We could talk about how many jobs are really going to be displaced and are humans all going to be sitting around earning universal basic? I think that's all nonsense, but I do think things are changing quickly and our businesses are going to look a lot different. On one hand, I look at these people just slapping the AI label on their business, and I chuckle about it.
On the other hand, I think, "What are you going to do? A five-year plan?" Fuck that. Sorry for the language. The idea of a five-year plan today is absolutely ludicrous.
David: Yes. I used to say that your positioning should last at least 10 years. That was a long time ago.
Blair: It was a different era.
David: Then I went to five, and now it's three. Maybe it's even less. You've talked a lot about positioning and strategy. Can you lay over this stuff and tell us what value prop means in this world?
Blair: To me, strategy is, if we take the backward-looking definition, strategy is basically action. It's the series of actions that you took that allowed you to get to a place. Therefore, it can only be determined in hindsight. You start to break that down. If I'm saying strategy is on the table, your fundamental business strategy is on the table, I was asking myself, "What do I really mean by that? What are the components of strategy if it's really just the actions that you take?" I thought the best framework that I could think of for looking at your fundamental business strategy is really just any framework for looking at your business model.
Therefore, the business model canvas is a pretty good model to look at. The business model canvas has nine different sections. It's got key partners, key activities, key resources, value propositions, customer relationships, customer segments, channels, cost structure, and revenue streams. We're not going to go through all of them. I just went through these, and I thought, "What is a typical creative firm, ad agency, design firm, digital firm, et cetera? What are the activities that it's probably most likely that they should be revisiting, and what are the ones that are least likely?" I just wanted to talk about the top two or three.
I think value proposition is at the top, customer relationships and key activities, and then your cost structure and revenue stream. That's one, two, three, four, five. Five different areas of your business, all somewhat related in some ways. I think almost everybody should be revisiting these. I need to make the distinction here. I'm a salesperson. I'm a new business person. I think of your firm, dear listener, in terms of the firm that you are creating in the future by the next new client that you bring in and the way you work with them, the way you charge, et cetera.
This idea that you reinvent your firm one new client at a time, I'm largely thinking of this through the lens of what is the message you're taking to the marketplace, who do you want to work with, how do you want to work with them? At the same time, however, I recognize that there's a whole bunch of people listening to this who are pivoting their current offering to their current clients too, so you're actually doing both. There's a lot going on here. One end of the spectrum of the mistake is just slap the AI label on everything that you do.
At the other end of the spectrum, the problem is thinking that this is a positioning problem, a problem of language rather than a problem of strategy or business model. For those people and the rest of this conversation, I want to talk about what's on the table. What should you be rethinking?
David: I'd like to draw an inference from what you just said because if you're talking about what the marketplace wants that hasn't bought from you before, then that experimentation needs to happen mainly in new business conversations, and I think you need to be listening way more carefully than you ever have. You need a lot of at-bats too. At-bats are really important nowadays so that you can test some of these theories with new clients. In terms of who's actually going to be willing to trust you with something that you haven't done before, that's going to be your existing clients.
The front line, your new business people and your account people who should be responsible for growing your accounts, there just needs to be a lot more listening than there typically is and a lot more experimentation, probably less planning, which may sound strange given all the planning we've talked about, but if planning is really action, there needs to be more action. You need to be willing to spin up more experiments and kill them quickly if they don't work. You need to have a team that, by God, they cannot have their feet in cement. Your team needs to be very willing to pivot and listen and experiment.
When we talk about how you have to recreate yourself before somebody else does, your people are going to need to be willing to job themselves out of a job, in a way. Your very best people are going to have to have that openness to all of this stuff. I don't think AI is all that different from some of the other things that have happened, except that it's just happened so much faster and it's spread so much more widely. There's more fear about this. Some of this is just not going to come to pass, but it's true. You can't just ignore it because your clients are talking about it all the time. I keynoted a conference about AI recently. I said these three things. I want to know if you agree with them.
Blair: Sure.
David: The size of your firm will be less relevant. That's the first. Second, your positioning will be more relevant. By positioning, I meant how I use that term, not how we've described it here. Third, your collaboration with clients will need to be even tighter. Do those three make you itch?
Blair: You said your positioning is more relevant or less relevant?
David: More relevant.
Blair: More relevant. Yes, size for sure.
David: You're not sure about that positioning one?
Blair: I want to go back to something you said a few minutes ago. You said your clients are the ones who are going to allow you to experiment. That's so vital here. Your clients are going to bring you in because you have this relationship and you're creative. You probably have some technical chops and you're going to get in there and you're going to create a solution to their challenge. Then you're going to have this thing, and that solution is going to look like a product, and we've already done an episode on this. It's going to look like a product or productizable.
You'll be tempted to launch a product business, and you probably shouldn't, but you can go back and listen to that episode, but you want to close New Business now. For firms who are doing good work for their clients and coming up with some really innovative, interesting things, winning New Business is as simple as demoing what you just did for your client to somebody who's not as far along ahead of the curve as your client. Somebody who's a little bit behind you. Take what you just did for a client. Go find somebody who doesn't move as fast, is not as innovative, and show them what you did for that client.
I just keep hearing stories of people who are just like, yes, we just build this stuff, and then we show it to somebody. Some of the biggest companies in the world, and they just go, "Oh, we can't. Can you just do that for us?" Then doing that for us, there's obviously customization, back to that earlier episode, a lot of customization. Then you get in there and you do the cool thing for them. Then you go to somebody else, "Do you want to see the cool thing that we just built?" We don't like to do timely podcasts. This is a timely podcast. I don't know how long this will be valid because it's a gold rush out there.
Everything's moving so fast. At some point, everybody's just going to be inundated with pitches, messages, but right now, if you just take the cool thing that you built, go show it to two other businesses, you will close one of those two businesses.
David: The reason I say that your positioning will be more relevant is because you're not selling a product that will be used by all of your clients. You are customizing processes for each client.
Blair: Yes.
David: That requires deep specialization, deep knowledge of a particular type of client, whether that's vertical or horizontal. That's what I meant by your positioning will be more relevant because you're not selling SaaS, which is the same solution to everybody. You're selling a very customized solution to everybody.
Blair: Yes, so I agree with you. I think positioning is more relevant, but at the same time, I think today relationships are a pretty good substitute for positioning because, again, it's so easy if you've built something cool and you have somebody you can ring up and say, "Hey, can I show you this thing that I built?" Somebody who has the ability to hire you. Pretty good times right now.
David: How long do you think this podcast episode will be relevant?
Blair: We're recording this on June 1st. It's going to come out in probably August.
David: August, yes.
Blair: It might already be still started.
[laughter]
David: We'll say September 2026.
Blair: Yes. I think it's good for the rest of the year. Maybe it's good for 18 months. I don't know. I want to say it's so different, but to your point, it's not different at all. It's just so much faster.
David: Yes, right. All right, I think I need to go rewrite a lot of the taglines that I've written for my clients because I don't think they have resembled a value prop as well as they should have. We need to do it opposite.
Blair: Amen, brother. We used to define positioning as discipline for market, and now, I think it's helpful to be able to say we do X for Y. We do this discipline for this market.
David: Here's an example of a weak one that I probably would have written in the past. We provide strategic operational consulting to help healthcare organizations improve efficiency and patient satisfaction. Okay, that's the weak one. The stronger one. We help regional hospital systems cut emergency room wait times by 30% within six months without adding staff by redesigning the patient flow. Unlike large generalist firms, we only do ED throughput, and we've done it 40-plus times.
Blair: That's great.
David: Too long, but yes, that's a whole lot more compelling.
Blair: Yes, but it's getting better, though.
David: All right. Anything else to add here, Blair?
Blair: No, I think that's the conversation I wanted to have, so thank you for bringing your healthy skepticism.
David: [laughs] Thank you, Blair.
Blair: Thanks David.