Power projection in your company’s strategy

Summary : Power projection must be a fundamental part of your company’s strategy

The term power projection was first defined by the U.S. military.  Once the nuclear age had commenced, they found a new problem had emerged: all the two-bit dictators around the world did what they wanted because they could not see all that power buried in a missile silo or hidden beneath the sea.  Aircraft carriers solved this problem.  While they are relatively insignificant in real power, they have an awesome ability to project power.  Just imagine having one parked off your coast and sending planes into the 50-mile international border.  It will get your attention real fast.  In business strategy R&D provides the nuclear hitting power, while PR and advertising are the aircraft carriers.  But it is not as simple as that, because your carrier must be populated with planes of ideas that can deliver your message. 

Look, for example, at the foundries.  Throughout the nineties, there were repeated articles about how they dominated the world of chip manufacturing and how it did not make sense for any integrated device manufacturer (IDM) to make its own wafers.  The foundries did grow fast, they did buy a lot of equipment, and they were terribly efficient.  But by the end of the nineties, foundries still only accounted for 1% of all chip production as measured in wafers.  Fabless companies accounted for roughly 5% of the total chip market at the time.  But half of their foundry silicon was still supplied by IDMs.  So there was no way the large IDM’s could rely on them for production. 

It was an immense marketing achievement for the foundries to convince the world this is not only possible but also, ultimately, the only viable long-term solution.  This was made possible by the fact the IDMs faced a two-front battle of promoting their chips and their manufacturing prowess.  So most IDMs placed their resources behind chip marketing.  This left the field wide open for companies who wanted to focus on manufacturing.  They found it easy feeding to a media hungry for stories with a manufacturing angle.  Better yet, foundry customers become natural allies, because they wanted to promote their business model as being a successful way to compete against the large IDMs.  Seemingly independent, the fabless and foundries could co-validate each other.  By finding these key leverage points, the foundries successfully projected an image that was much larger than life.  It only subsided, when the IDMs started to promote their manufacturing prowess in the 2000s.

So how do you know when your company can effectively project power?  It is actually quite simple to measure.  When customers, the press, industry analysts, financial analysts, and better yet, people you meet away from the job, can accurately depict your company, it is projecting power.  The closer a company’s picture of itself is matched by outsiders, the better it is at power projection.  The more distant, the greater a communication problem a company has.

Another good example is Intel, whose TMG leadership under Sunlin Chou became frustrated with how competitors were always overshadowing them in R&D and manufacturing leadership. TMG started its own marketing program to demonstrate its technology and manufacturing leadership. This perception remained in place long after Sunlin’s retirement and only started to falter when his marketing team of techies was largely silenced… leaving the battlefield to its competitors. Sunlin is also in the Chip History Center’s Hall of Fame.

Another good example of this is Ultratech Stepper.  Before Art Zafiropoulo took it over, it thought it built a leading-edge 1X stepper that was competitive with a 5X stepper.  Its customers thought it built a cost-of-ownership leader.  The company was languishing, it was up for sale, but nobody wanted to buy it.  Art correctly repositioned the company, projected the right image, and sales instantly took off.  So did the stock price.  Companies who project power will not only sell well, but they also create effective barriers to entry and have higher valuations than those who do not.

By G Dan Hutcheson

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