Strategy and Values

This week in strategy we learned all we ever need to know about Starbucks. I would be hard-pressed to find 10 companies that experienced similar growth in the time they did. Starbucks became an very prolific company, and that very attribute led to many of the struggles that they experienced after 1997.

As a class we considered the actions and activities they took and involved themselves in. We reviewed their value chain and noticed that they began to become everything to everyone. With all of the other decisions they made, I'm not sure why they didn't just partner up with McDonalds and ice this cake.

The one take away from this case and the discussion that surrounded it is:

Make strategic decisions that fit your competency or are directly in line with your vision, mission, and strategy.

I wanted, in this case, to find an example of a similar situation. Possibly one that hasn't completely evolved. I found just that while watching the Grammys.

http://youtu.be/-rvZyvpSt0s

If you clicked on the link you should have just watched the acceptance of this year's Best New Artist Gramaphone (Grammy) Award. If you have ever witnessed one of these awards ceremonies you should have also noticed that this wasn't a typical acceptance speech. I want to give you a little background to this scenario:

http://www.washingtonpost.com/lifestyle/style/bon-iver-uncomfortable-with-grammy-best-new-artist-win-confuses-viewers/2012/02/13/gIQAhLxnBR_story.html?tid=pm_lifestyle_pop

By now you should now know a little bit more about the man who accepted this award. If you're anything like 90% of Tweeters you also asked "Who is Bon Iver?"

As far as it applies to this case lets go over some information:

Band: Bon Iver

Accolades: 2 Grammy awards

Is there anything else we need to know? We've read his bio we know who he is, why he makes music, where he is when he makes it, and we know that he's a whole lot more famous now than on February 11th.

But really, who is he?

Bon Iver is a revenue channel for a record label (Jagjaguwar)

So the question now is, Where do we go from here? Lets talk history (a very important strategic model).

Best New Artist (Winners):

1963 - Robert Goulet

1965 - The Beatles

1966 - Tom Jones

1970 - Crosby, Stills & Nash

1971 - The Carpenters

1974 - Bette Midler

And Recently

1996 - Hootie & the Blowfish

2000 - Christina Aquilera

2002 - Alicia Keys

2003 - Norah Jones

2004 - Evanescence

2005 - Maroon 5

2007 - Carrie Underwood

2009 - Adele

2010 - Zac Brown Band

So We ask ourselves. Where should he go from here? If we've learned anything from history we can say that Bon Iver should be very successful. But how? We learned a nifty trick in strategy that I would like to apply here.

	New Market	Existing Market
New Product	Different music w/ other labels/studios.	New styles w/ Jagjaguwar
Existing Product	Similar style with compilations or new labels/studios.	More of the Same. New albums in the same style w/ Jagjaguwar

What we've seen Bon Iver do up to now is a lot of an existing product in new and existing markets. Justin Vernon has performed solo and with his band bon iver, also with Mount Vernon, The Shouting Matches, Megafaun, Volcano Choir, GAYNGS, James Blake, and even Kanye West.

NOW! With all of that out of the way. What should he do? To answer that question we really need to understand the values and mission of Bon Iver including Justin Vernon, Sean Carey, and the Jagjaguwar label. The answer seems to be "More of the Same". The most recent news on Bon Iver will bring up a 25 min production by the label Jagjaguwar featuring Justin Vernon and Sean Carey on pianos. The sound is more raw and less produced. It has a feel like the leaked Taylor Swift & The Civil Wars compilation from the upcoming Hunger Games movie soundtrack.

http://youtu.be/A9Tp5fl18Ho

But is this what he should do? Absolutely. If Justin is as passionate about the music as he has emphatically stated during and even after these awards, he cannot compromise his artistic integrity and tailor his sound to a growing fan base. He plays for Jagjaguwar because they wont impose opinion on him regarding lyrics, direction, and markets. They just let him play. And play he will.

Redbox Streams, "Thanks Verizon"

http://www.usatoday.com/tech/news/story/2012-02-06/verizon-redbox-coinstar-streaming-video/52986864/1

This is such an interesting partnership. When Blockbuster and Hollywood Videos started charging rediculous amounts of money to rent a move for 3-5 days when you really only wanted it that night, who was there to fill the void? Redbox. When you had a late night craving for McDonalds and a chickflick, who was there to hold the tissue box? Redbox. When Netflix decided to separate their streaming and dvd businesses and charge a different price for each, who was there to cushion your fall? Redbox.

And now, when you want to watch the latest rental release but 7/11 on the corner is just 8 too many steps away, who is there to bring the movie to you? That right, Redbox.

From the people that brought you the machine that counts your change for a small fee (Coinstar) comes a partnership that will have us all reveling in digital media fantasy. Verizon is using its cable network and partnering with the digital media licensing of Redbox to bring streaming one night rentals to you. This product offering solves a number of pain points. Let me elaborate.

1) Netflix charges $8 to stream movies and tv shows directly to your favorite devices. This means that in a month if you watch one movie per week (just over the average family in america), you are paying $2 per movie. Redbox, on the other had, would allow you better media selection at a cheaper price $1.27 per movie.

2) What's the problem with Redbox today? You rent a movie for Saturday night, and when you get back from your busy Sunday you realize you forgot to return it. You've now paid for 2 days. Streaming digitally would allow users to control the return dates for their favorite films.

3) Selection. Everyone knows that Redbox offers much better selection than Netflix. This is why as Netflix users we also rent a Redbox at least once a month.

These are the obvious reasons to believe that this partnership is a good strategy for both companies. But lets take another look at the offerings of the major players in the industry.

If we analyse the major players in this industry by this Strategy Canvas (Value Curve) we can see where Redbox can plan to beat the other major players. The 4 most important are recency (current movie selection), relevancy (best movie selection), price, and possibly the most undervalued attribute in this value curve, commercials.

So as this deal moves forward, lets hope that Verizon and Coinstar (Redbox for all we care) are taking a good look at this value curve to understand their niche and strengths competing against the giants in this space.