The Promotional Product Industry's 2.0 Problem (Scaling a Multi-Million Biz, Part 2)

Of all the yawn-inducing business-speak in the world (”synergy,” “alignment,” “deliverables”), the word “strategy” is up there, hangin’ with the murkiest of them. Like a lot of boring business-speak, it’s an unimaginative word, wholly mystified by its dullness.

Which is a damn shame because creating an original, market-shattering strategy requires more than a feat of statistical maneuvering; it’s a —surprisingly— creative endeavor that requires imagination.

But some of us love it because we like planning. We like strategizing. We prefer strategizing over strategy because strategizing —as a verb— denotes action, doing. Plus, we loooovvve our four-hour meetings where we strategize like four-star generals.

But for some reason, for all our strategizing, very few of us can share our strategy as a differentiating, revolutionary, defining idea.

Which is why Roger Martin calls strategy making “the lost art of business.”

ART because strategy is more imaginative than analytical, LOST because we’ve lost the ability to do it.

But first, because “strategy” is freighted with misunderstanding, let’s do a quick unpack:

What Strategy Is Not

Books about strategy (good books) abound: Blue Ocean Strategy. Playing to Win. Good to Great. Pumpkin Plan. There are hundreds of books, thousands of articles. To cut through the noise, let’s chip away some stone to reveal what strategy is not.

• Strategy is not: Planning

• Strategy is not: A math problem

• Strategy is not: A mission statement

• Strategy is not: A vision statement

• Strategy is not: An analytic handspring

What Strategy Is

Strategy is a creative act that shapes a future world that does not now exist (Roger Martin).

Sound lofty?

It is. And that’s the point. It’s supposed to be.

The world’s most differentiated and successful businesses have a non-conforming, unique, definable strategy. We only have to drop a few names and you’ll get it: Airbnb and Uber. Uber’s strategy wasn’t to become a better taxi service, a best-in-class option, as if you are going out tonight with friends and must decide whether to take an Uber or a yellow cab. Uber didn’t want to give you a better option, it wanted to transform transportation, rendering any other option irrelevant. Uber created a winning strategy and ultimately became the only option. Its strategy didn’t create a better version and carve out more market share, its strategy changed the game.

Strategy is not a slightly better version of an old idea, strategy taps into aspiration, bringing forth a completely different world that exists than now, an exercise that imagines forward.

Strategy “imagines a desirable future and makes a set of choices with the best chance of bringing it about. It is fundamentally not analytical, which causes it to conflict with the analytical bent encouraged in and supported by business.”*

Strategy + Aspiration = Ideal Future

Permit an example from the two worlds we know best.

First, our business, and second, the promotional products industry:

Before commonsku was created, before a single line of code was ever typed, it was built, first, on imagination. Mark and Catherine Graham imagined a world that did not then exist. They asked the question, “What if we could create a world where a connected workflow would eradicate all noise and friction from a distributor’s daily workflow, liberating entrepreneurs from the burden of ‘processing orders’ to free them (and their teams) up to do what they do best: creative selling.”

commonsku wasn’t meant to replace someone’s ordering system with a slightly better version (an Uber over a yellow cab), it was meant to completely transform how we —as an industry— work, connecting suppliers + distributors + teams in a way that makes the process automagical and invisible, making loud and cranky systems go silent in the background, so customers could focus on the opportunity ahead of them (and not blinded by the process in front of them).

Not a slightly better version, but a revolutionary way to run a business.

Second, an example from our industry that we can all understand:

When the pandemic hit, virtually every distributor was forced to get into kitting and fulfillment. But think, pre-pandemic: Very few distributors (probably less than 10%) were equipped to do “kitting and fulfillment,” it was a very narrow field. Worse: It was a field no one wanted to work in, much less transform.

As a former distributor, I loved it. We had a few clients that drove the demand for it, they challenged us, pushed our boundaries, and this created a new opportunity. Through their gradual requests, we began to see a better world. We wanted to take what was difficult, messy, and complicated for our clients and streamline it. We asked the question: What if we created a supply chain for virtually every type of branded product a company could want? What if we could completely streamline a brand’s marketing operation, thus eliminating the need for anyone else?

It was a vision that didn’t then exist, or at least, a vision that wasn’t seen, or embraced, or wanted, by most.

It was also a strategy that cut through the competitive noise like a knife. When I cold-called the Vice President of a prestigious bank, he asked me, “Why do I want to work with another swag company? I’ve got a dozen of your type lined up at my door.”

I replied, “I’ll bet you have at least four people dedicated to managing your branded products, and multiple vendors complicating your process and compromising your brand. What if you had your team’s expertise freed up to actually do what they are supposed to do: market your bank?”

He said, “you’ve earned the right to talk to me again.”

As Roger Martin wrote, aspirations are not about the here and now, but about an ideal future.

The Promotional Product Industry’s 2.0 Problem

At the time, it was a fairly revolutionary idea, to simplify all branded materials into one cohesive operating system. Fast forward to today: everyone’s in on the kitting and fulfillment game.

What was once a strategic advantage is now a common service offered by the best distributors in any market. Jump to five different distributor websites (good websites) and you’ll see variations on the same theme: A better kitting and fulfillment option. Not a different option altogether, but a better one.

And, you’ll notice, our industry has a 2.0 problem, we struggle with strategy because we think a strategy is becoming a slightly better version of an existing competitive model. A better agency. A better shop provider. A better creative merchandiser.

Which begs the question: If we’re all simply competing as better versions of each other, doesn’t this further commodify our market? And if so, is this part of the reason for marginal (industry) growth?

If having a strategy is something more than Promo 2.0, how do you find the right strategy that is unique to you?

Reading the tea leaves — Correctly (Or, How to find your strategy)

Strategy, according to Martin, is obsessively client-centric. Planning is resource management, it’s focused on us. But strategy combines a hyper-focus on clients while looking for patterns. It combines customer insight with your intuition and experience.

So, to discover our own differentiated strategy, it’s to clients we should go. In ancient divination, there was once a practice of “reading tea leaves.” What looked like a completely superstitious practice (and it was), the practical take-away is that it was also a practice of looking for patterns.

A practical exercise of imagination (how to find your strategy) in four steps:

1. Why do your best clients love you (beyond “service and creativity”)? List your five best clients. And by best clients, we mean, clients who keep giving you projects (i.e., money) over and over. BTW: You can have a tenuous relationship with any client at any time, so don’t drop your emotional plumb line in on each client relationship. Shelve that plumb line and look at the numbers. List your clients in declining order by gross sales volume, what does the data reveal? What industries are they in? What types of buyers are they? (Marketing or Purchasing?) Are they B2B? Consumer? Define them as best you can by category or industry, or market.

2. Find the common thread that binds them to you. What similar patterns do you find between these clients? What is it these top clients have in common with each other? You might not map all five clients to one particular service you offer, but you might map three of your best clients. Who are they? What is the service or product they buy from you that seems similar? Note, we didn’t ask you to list your strengths. This is not about having the best team, or fulfillment capability, or in-house decoration. This is not about resource planning, it’s about creating a different client experience based on future client needs.

3. What problem —exactly— are these common customers trying to solve? When commonsku was first built, we imagined a world that didn’t then exist, but it was solving a problem (that in time would prove to be) a similar problem facing multiple clients: helping teams work better together, eradicating friction, eliminating precious time-wasting tasks from the workflow. For those that don’t know, commonsku was incubated inside a distributorship (now sold) so it was intimately in tune with the client-problem to be solved. This is the future forward question: What world can you create for your clients that doesn’t now exist, but will ultimately make their lives infinitely better/easier/radically more effective? Is there a common problem they all face?

4. What if? Now, imagine a better world (for these clients) that doesn’t now exist. If you can imagine a different experience, in a way that will solve this problem for that specific subset of clients, you’re close to defining a strategy. This part of the exercise begins with the words: What if? What if we could make invisible all the messy parts of ordering? What if our clients could _______. The “what if we” or “what if our clients could” is a key phrase to unlocking your strategy.

By going through this exercise, you’ve done a few things: you’ve defined your market (what Roger Martin calls “where to play”), whether that’s for a specific customer persona, a geographic area, or an industry, and you’ve found the common thread (problem) your best customers face.

Now, what’s missing: Your intuition and imagination: What does their world look like three years from now based on how you would solve their problem?

Think Promo Can’t Be That Creative with Strategy? Just a Few Examples:

Maybe the pattern you discover is that you work with financial institutions or highly regulated industries, helping manage their branded merch in ways that are completely different than any other client type. These clients all have security issues, data issues, privacy issues, and you’re shipping to homes, but you’ve learned how to solve (some) of these security problems in multiple ways. You’ve solved them for one client and now need to expand on it and then cross-pollinate that idea to another client (the common thread).

Moreover, you’re beginning to imagine a world where these pesky issues are eradicated in the future. You’re starting to carve a solid, differentiating strategy by imagining a world that doesn’t now exist. And one completely different from your competitors and laser-focused on the client.

Or, perhaps you have multiple clients who are interested in the trackability and provability of ROI related to branded merch (there are a few distributors working on this problem now). In other words, your clients want you to prove -definitively- how many times, over the course of a year, that branded t-shirt was seen and viewed by a prospective audience. You’ve sourced a few products that will enable tech to allow for this, and you think this might be a unique enough idea to warrant further pursuit. Your strategy would then lean into proving the ROI of branded merch for clients who demand it, creating a world in the future that doesn’t now exist.

Strategy Ain’t easy, in fact, it should make you angsty

If you’re feeling a bit angsty about this topic of strategy, you’re on the right track. It’s not planning. Planning is comfortable because you control the inputs and outcomes. Resource planning is limited to you and your ability.

Strategy is focused on your clients. An effective strategy will make you nervous because it’s not a slightly better version of your competitor (which is more about resource planning than differentiation), and strategy is highly dependent on the market response.

Roger Martin said, “Strategy will have angst. It will make you nervous. As a manager, you’re taught to do things that will prove you will succeed. You can’t prove, in advance, that your strategy will succeed. Strategy says, ‘If our theory is right about what we can do and how the market will react, this will position us in an excellent way,’”. Except that you can’t know for sure.

Before almost every talk at skucon or skucamp, right before a speaker hops on stage, I often get the same question: “Do you still get nervous before speaking?” My answer: I’m always nervous because we’re here together, risking something, and we don’t really know the outcome, which makes it (in the words of Michael Bungay Stanier): thrilling, daunting, daring, and … worth doing.

Pulse-check:

• Do you have a clearly defined, differentiating strategy?

• Does your strategy make you angsty? Does it involve risk?

• Or is your strategy simply a 2.0 version of the current market?

• Are you nervously excited about being right? About the world you imagine tomorrow?

Our VP of sales, Karim Kuperhause, was playing around with ChatGPT and typed in this question: “What assumptions are keeping a promotional products business from growing?”

ChatGPT: Not understanding the needs of the customers and not having a clear value proposition, which makes it difficult to differentiate from competitors.

Roger Martin calls strategy the lost art of business because we don’t take time from firefighting (order taking + problem solving), and from resource planning, to stop and study, craft, and conceptualize a distinct, market-shattering strategy.

And strategy, ultimately, is about leadership, because, in Martin’s words, you’re giving your organization —and you— a chance … to do something great.

This post is Part Two of a multi-part series on Scaling a Multi-Million Dollar Distributorship, for our previous installment, check out Why Promo Makes You Feel Everything Everywhere All at Once and How to Fix It. Stay tuned for our next installment that highlights the #1 secret trait required to master the promotional products business … and it’s the same trait that’s a killer of dreams. Join us!

BTW: We love to take concepts and understand them through the lens of our industry. For this article and this series, we’ve consulted with multiple books, authors, and individuals to try and metabolize what makes the most sense for our business. All quotes from this article are from Roger Martin’s excellent book, Playing to Win, or his popular video, “A Plan is Not a Strategy.”