How to Build Game-Changing Strategy by Choosing Your Customers and Competition

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1:02Hello and welcome to another episode of the Duct Tape Marketing Podcast. This is John Chance and my guest today is Seth Goat. He's a teacher, author, and entrepreneur with over three decades of experience, inspiring people to level up and make a difference. He's published 20 bestselling books translated into nearly 40 languages, including most recently, The Song of Significance, The Practice, and This Is Marketing. Today, we're going to talk about a new book called This Is Strategy. Make better plans. It comes out depending upon when you're listening to this. It's mid-October of 2024, October 22nd to be specific.

1:42He is inducted into the Guerrilla Marketing Hall of Fame, Direct Marketing Hall of Fame, the Marketing Hall of Fame. And today, I'm going to officially induct him into the Duct Tape Marketing Podcast Hall of Fame as well. So, Seth, welcome to the show. John, like the actual duct tape, your podcast is really useful and it lasts and lasts. Thank you for having me once again. You've been doing this for a while and I think that I've lost track, but this is at least your sixth appearance and I always enjoy it, always look forward to it. Me too. So if I were to gather a panel of 10 people to put them in a room and ask them, what is strategy?

2:25I know for experience, I would get 10 different answers. Maybe 12. Well, maybe 12. You're right. And some of them would be nuanced. Some of them would just be flat wrong. So I wonder if you could, at least for a baseline, what is your definition? Right. So that's why I had to write a book and why it's called This is Strategy, because I want to answer that question. It's not tactics. It's not follow all the steps in the plan and then you will get your result. We need that, but that's not strategy. Strategy is a philosophy of becoming. It is our awareness of the systems around us and our decisions that we make to use those systems to help us cause the change we seek to make.

3:09It is an assertion about the future and it gets better if we talk about it. So, you know, sometimes I, you know, I talk about how everybody has different notions of it. And, you know, a lot of the confusion, I think people come by, honestly, I mean, Google the term marketing strategy, and you will get said list of tactics, you know, from what is supposed to be an authority. So, you know, I really get it. But your definition of philosophy of becoming, do you find that while I think that is an amazing definition, do you find that people struggle with like, can't get my arms around that idea? I need something more tangible.

3:49For sure. That's why it's a book and not a blog post that people who have a strategy that is working look like they're smarter than everybody else. The same way good waves make a surfer seem better than they are. And our blindness to the available strategies is the main reason why we get stuck. And so, you know, there are countless examples and questions that we can go through to help us see what we couldn't see before. And that once we learn to bring empathy to our work, everything about it gets easier. yeah so you jumped ahead of me i was going to challenge you on the empathy word because quite frankly i think a lot of times when people think about strategy all they think about is how we're going to compete um and sometimes that doesn't have a whole lot of empathy um in it so how would how should we be thinking rather than that limited view okay so there is kindness and empathy, but I'm not making a kindness argument here.

4:58What I am saying is you might want to be the king of the world in charge of everything, but you are not. Yes. That other individuals and organizations have agency. They can make a choice. And so when you wrote your breakthrough book about marketing, you wrote it in English. That showed empathy for the reader you were seeking to serve. Because if you had written it in Czech, they wouldn't have been able to read it no matter how much you insisted they do so. So what we have to do is acknowledge that the people we are seeking to do business with, we are here to serve them and they don't know what we know.

5:37They don't see what we see. And that's okay. If we don't go to where they are, they are definitely not going to come to where we are. And that has to be built into our understanding of the choices and the systems and the decisions and the time as we compete. Because you don't have to have pity for your competitors, but it really helps to have empathy for anyone who has agency. So again, in my world, probably to some extent in your world, although yours is a little broader, more diverse, maybe in some cases, audiences, I talked to a lot of marketers. And so when they think strategy, it's a business strategy for gaining more customers or something along those lines.

6:20Would you also say, well, no, this is something every individual needs to be thinking about? I mean, we all need people strategies. Well, you know, from a very practical point of view, let's start with the 17-year-old who lived down the street who I helped get into college. And he just made the most expensive financial decision of his life. it's going to put a quarter of a million dollars in debt. And he did it without a strategy. He decided to go to a place that isn't worth the money and isn't going to pay off because he was judging it on what did it feel like to visit the college campus and how will that window sticker make him feel?

7:02Well, if he had said out loud before he started, that was his goal, it would be coherent, but he didn't say it out loud. It was intuitive. He didn't really have a strategy. He was just stumbling in the dark. So we easily become the victim of a credit card company, the victim of someone in our life, in our family, who isn't engaging with us in a way that's productive with our boss, if we don't have a strategy. So like when I got out of business school, my strategy was super simple. I want to get a job at the fastest growing company that will hire me. I don't care what they make. Because if it's a fast growing company, I'm more likely to find a smart boss and I'm more likely to get exposed to interesting problems.

7:48And that two years will set me up for the next thing I want to do. And the person sitting next to me in class, their strategy was business school is really expensive. I'm going to go work for the most prestigious, highest paying job I can get. And time demonstrated that I probably had a better strategy because the trajectory of my career over time was different. And so when we invest in time, as we make these choices, whether it's understanding what the admissions office wants, or understanding what our partner wants, or understanding what the customers for our locksmith company want. It's all the same thing.

8:31It's, do we see the game? Do we see time? Do we see systems? And what moves are we going to make? So you mentioned system. So I was definitely going to go there as well. You talk about systems delivering value. I've gone as far as saying the system for many business is the strategy. So you're using system, I think, a little differently than me. Tell me what you mean by system. So when I created duct tape marketing, I actually decided people needed a marketing system. And that if I could at least come in and say, look, here's something we can do. And we can repeat for a lot of folks. We're going to install a system, you know, which people were like, why didn't I think of a system for marketing?

9:13That's how I'm using it. Right. And that's been my body of work. Yes. And that's super important. But the reason you need one is you are trying to make a change in a system outside of your company. And having a persistent tool inside your company is the only way to do it. So what are the systems we're talking about? An example I'd like to share, how much should a wedding cost? And the answer is exactly what my best friend spent plus$20. And that's why weddings cost$100 ,000 now. The wedding industrial complex is a system. All these people in the system making decisions that if the system didn't exist would seem absurd, right?

9:57But they're not absurd because they are part of something. The healthcare system in the United States does not make health. It makes treatments. And there are all these well-meaning people in the system, but they make decisions that don't make any sense outside the system, but inside the system make perfect sense. So if we're going to dance with any existing system, we need an internal system so we can repeatedly do our work, but we better be able to see what the system in the outside world does in order to be able to make a change there. you make what i you know still i have i've actually said this in various ways for many years the reports that you actually as a business get to choose your customers and you have said that and i think a lot of people are like that's completely wrong that's not how it works the customer is always right i just have to like find enough people to give me money and whatever they want i need to create and this notion of choosing your own customers to some people seems a little elitist almost, you know, is when it comes to business.

11:03But boy, is it a much more enjoyable way to do business. Yeah. Well, this is a breakthrough. And of course it's elitist. Don't you deserve that? Don't you deserve to spend your days offering this thing you're offering to the people who will appreciate it and engage with you in a way that's helpful? When you take anyone off the street, you have sacrificed your agency and vision for randomness. So David Chang is a famous chef and he's been in the news for many years. Before he was famous, he had a tiny restaurant in New York City called Momofuku and it hadn't been reviewed yet. It only had 40 seats and you could sit at the counter.

11:48I don't know how I stumbled on it. It's when my kids were younger. The four of us, my wife and kids, would get in the electric car, drive to Manhattan and go there for lunch on Saturday. And we would sit at the counter and I haven't had meat in 40 years. And I would say, I would like the Brussels sprouts. Please leave out the bacon. That benefits both of us because you don't have to waste the bacon and I can eat them. And the first three weeks we went, I loved it. And the fourth week, the guy behind the counter, I'm pretty sure it was David, said, you know, there's a vegetarian restaurant a few doors down.

12:24I think going forward, you guys would be happier there. We put this on the menu because we like bacon. Thanks for coming, but don't come back. And that was the day in my book, he became David Chang because he said, I'm going to build a restaurant, not for people who are hungry. There are countless restaurants for people who are hungry. I'm going to build a restaurant for people who want to see what David Chang wants to make. And you can do that in any line of work, or you can be a commodity. Those are your two choices. If you want to be a commodity, you got to put up with whoever's going to give you the money.

13:00But if you pick your customers, you can pick your future. I'm not sure if there's a flip side or if this is actually, to me, an advancement of that same idea. You also talk about choosing your competition. And I think that one is in some ways even more brilliant because I don't think anybody thinks about that idea. It's like, no, this is who I compete with as opposed to, no, this is the category I'm going to actually claim. Yeah, right? Right. So a lot of your customers, John, actually want a job without a boss.

13:34There's nothing shameful in that. They're freelancers at scale. They're not entrepreneurs who are claiming an unfolding future. And so they find a category where they can put out a sign and wait for the customers to come. They've already determined who their competitors are because they intuitively picked. But if you decide that you're going to compete with scammers and spammers and people who are always fast talking and racing to the bottom, you're either going to do that or you're going to fail. Right. You pick them. that when you decide to be a plastic surgeon in Columbus, Ohio, and there's only one other plastic surgeon, your practice is going to be different than if you're a plastic surgeon in Park Avenue in New York.

14:22You pick your competitors and then you pick the standards that your customers are going to measure you by. AI might be the most important new computer technology ever. It's storming every industry and literally billions of dollars are being invested. So buckle up. The problem is that AI needs a lot of speed and processing power, so how do you compete without cost spiraling out of control? It's time to upgrade to the next generation of the cloud, Oracle Cloud Infrastructure, or OCI. OCI is a single platform for your infrastructure, database, application development, and AI needs. OCI has four to eight times the bandwidth of other clouds, offers one consistent price instead of a variable regional pricing, And of course, nobody does data better than Oracle.

15:09So now you can train your AI models at twice the speed and less than half of the cost of other clouds. If you want to do more and spend less like Uber 8x8 and Databricks Mosaic, take a free test drive at OCI at Oracle.com slash duct tape. That's Oracle.com slash duct tape. Oracle.com slash duct tape. You know, immediately what I thought of when I read that was, you know, even in the same business, marketing consultants, choosing what you're going to charge is a way to pick your competitors. There's so much competition in like this bucket. Let's go over here. Exactly. That's exactly right. Positioning is a generous model.

15:56It is not differentiation. It is saying to your customers, if you're looking for this is what I have. If you're looking for that, let me give you the fun number of those people. And there's a story, it may be apocryphal, I don't think it is, of several of companies were trying to build big financial institutions, people like Fidelity, et cetera. And one of them did some research and discovered that 80 % of their customer service calls were coming from 5 % of their customers. And that these customers tended to have low balances. So they decided to write all of these people a very respectful letter saying, we don't think we're the place for you.

16:36We're having trouble serving this. Here are the phone numbers of three of our competitors. Please find someone who's a better fit. Well, when you move those customers away, you freed up your entire customer service team and you've established your position in the marketplace, which is we're here for people of a certain kind of resource and a certain kind of question. And those people over there, that's where you should go if you're a different kind of customer. So when it really comes down to it, people who read books love tools. They love like, oh, this philosophy of becoming is great. But what are the 40 questions that I need to ask in order to develop my own strategy?

17:15You happen to actually have that for us. So how did you decide on what that very curated list should be? well it's not that curated because i could have had 40 different questions it's designed to prompt you down the path and the way i did it was after i wrote the first draft of the book i made 45 videos to become a udemy course which is in the world now and then i had 350 people inside the purple.space community, I gave them access to the course for free and watched them do the course. And it was very cool to be able to watch other people have interactions about it because I could see where they were getting stuck.

18:01And instead of me diving in and clarifying, I just clarified it in the book. And what I have found is it asking simple questions. Who's it for? What's it for? What is the change I seek to make? Who else has done this before me? What assets do I need? What do I need to learn? These are very straightforward questions that we avoid every day. And I know this because I spend time talking to friends about their projects. And when I bring up any of these questions, they get very, they get slightly anxious because left unsaid, you're off the hook. Left unsaid, it's whoever needs it. But if you have to say it, then if it doesn't come true, you've made a claim that you're responsible for.

18:49But if you're going to spend your limited days on this project, please say it to just two or three people. Say it to claw.ai, own it, and see what other people say back. It's funny. I work with a lot of organizations, and I'm sure you have as well. You take one look at me, you're like, well, it's obvious what you need to do. And yet they have really brilliant people inside the organization that, you know, we're like, oh my God, that's brilliant. Why didn't somebody tell us that? Why is it so hard for people that are in it, you know, every day to, to see a strategy or to even, you know, rather than just like, here's what we do.

19:27Phone's still ringing, you know, keep churning. Yeah. Well, so there are many differences between you and me. You are way more patient than I am. And that's one of the reasons why I have never done a day of consulting in my life. Because in person, when someone hires a consultant, they often want them to solve their problem. And what you have the patience to understand is only they can solve their problem. And your job is to create the conditions for them to see how to do that. But I have sat with people running for president. I have sat with people who are billionaires, people who are giant organizations, friends, and they have no clue what their strategy is.

20:07And if you point out what a possible strategy might be, you can watch their eyes light up and they realize someone just showed them a path when they thought they had to go through the woods. And then inevitably, they get off the path and they go back to the woods. Because it's hard to say no in the short run, so you can say yes in the long run. It's easier to say yes to the urgency of right now and then have to dig your way out of a hole later because you have no choice. And so strategy is this affirmative action, this decision-making to say, I have the internal discipline to turn that down so I can do that instead.

20:50Yeah. That's one of the brilliant things about having a clear view of what your strategy is. It actually helps tell you what not to do, doesn't it? Yeah, that's actually the hardest part. Yeah. And I think that's what people are struggling, especially entrepreneurs are struggling with the most. There's so many things they can do and there's no filter for what they should do. Right. So they end up doing mediocre this, mediocre this, but at least they did everything. Right. So in my case, when Twitter showed up, I was early, could have had quite a big following on Twitter. And I said, but if I say yes to that, what am I going to do less of?

21:27Am I willing to become a mediocre blogger to become a pretty good Twitterer? And I was like, no, that's not my choice to be there. It's my choice to be here. Let me focus on the thing that fuels my strategy as opposed to serving somebody who's decided I would make them happier if I did that instead. Yeah. And as it turns out, you were so good, you ended up having a big following on Twitter anyway. Without even participating there, it was amazing. No, brilliant. So would you say that one of the things that holds people back, call it a mistake, call it a choice, is that generally speaking, especially a going entity, there is going to be some pain before there is gain to actually adopt a clear strategy because you're going to have to invest and it's not a short-term effect.

22:21I think there's already pain. And you've justified the pain because you're doing your work. Yeah. And there's going to be a shift for sure. There's going to be taking a deep breath and saying, we're not going to do that anymore. So, you know, there's a lot of things to criticize about Jack Welch. But one of the smart things that Jack Welch did was their strategy is, if we can't be number one or number two in a category, we're not going to do it anymore. So that's why General Electric stopped making toasters because they said, we can make a pretty good toaster and an okay return, but let's just sell this toaster division and focus on the someplace where we can win.

23:03That was painful, but it ended up, at least for a while, being a really smart move because being a meaningful specific is better than being a wandering generality that can fuel many strategy choices. so the last i'll end up here uh with a timing question the last decade at least i mean i've been doing this 30 years we didn't have the internet in marketing when i started right i mean so we can talk about like how much has changed right but the last decade i feel like you know as every coming decade it just feels like the speed of change accelerates so how big is like a lot of times when people make a great strategic decision it was just good time so you Is there an element of luck to this?

23:48Because who knows what the next quarter is going to bring. There's a huge amount of luck. What we're trying to figure out is how can you make the deck as stacked as you can before you have to pick a card? And the thing about change is this. Systems change when they have to, not when they want to. And what forces a system to change is a shift in communications, information, or technology. Because systems depend on those things to maintain their status quo. Well, guess what? The biggest systems change in history is happening right this second. And when systems confront the combination of climate and AI, they are going to be transformed.

24:37If you show up when a system is in flux and embrace what the system is about to become, it's like being a surfer who gets a perfect wave. That learning to use the systems when they're shifting to help the system get what it's wanted all along, that two hours of work will pay off in 2 ,000 hours of benefit. And this is the moment to do that. I said that was my last question, but then you opened up the whole box on what you're doing on climate. We could do a whole show. I'm sure you have done entire shows. Can you give a one-minute invitation to people to find out more about the work you're doing?

25:20So I volunteered for a year and a half full time and built the Carbon Almanac with 1900 other people. It's at thecarbonalmanac.org. And it is a judgment-free book, 97 ,000 words, footnoted, fact-checked, illustrated with cartoons. And you can look up anything that's in it if you don't agree. But you need to know. You need to see and understand what is actually going on. Carbon in the air is invisible, but easily measured. And it doesn't match the way we grew up in the world. To imagine that the weather is just something that shifts back and forth. The climate is not the weather. And the climate is changing in a way that's going to create 15 million refugees without homes in the next five years.

26:09It's going to put American cities completely underwater. You don't have to like it, but it's happening. So the question is, what will we all do about it? And it's going to be really hard to make that decision in 20 years. But if you know now what's coming, it represents not just an urgency, but an enormous opportunity. Well, and if you think the wars over oil have been bad, which we see the wars over water. Yeah. We actually need water. We don't really need oil. That's going to be, that's going to be, I'm not sure what it's going to be. Anyway, Seth, as always, I appreciate you taking a moment to stop on the Duct Tape Marketing podcast.

26:50podcast and I know people can find your books anywhere, but is there any particular place you'd want to invite people to find out more about this is Stretch? I built a page at Seths.blog.tis and there's some videos and links and other things there. We made this really fun deck that has 5 million combinations of prompts in it and a collectible chocolate bar, my first one ever, with a trading card and everything inside. Very fun. Well, again, appreciate you taking a moment to stop by and hopefully we'll run into you one of these days again out there on the road