What is Your Strategy’s Big Idea?

Every great strategy stands on the shoulders of a big idea. History is littered with once-extraordinary companies that became mediocre when their strategies drifted away from the big ideas that made them great, or when their once-big ideas lost their commercial punch.

Consider Walt Disney Company. In 1957, founder Walt Disney had the idea that family-friendly characters brought to life through animation and live-action films could power a broad constellation of entertainment businesses. Disney animated his idea with a hand-written diagram still held in the archives at his namesake company. It has Theatrical Films in the middle of a giant network of other businesses including books, comics, merchandise licensing, music, TV, and Disneyland (the original resort park in Anaheim, California). He drew connections between every node of the network and annotated them to describe how each business supported and gained support from every other.

For example, he wrote “feed material to” on the line between theatrical films and comics, and “promote films” on another line between comics and theatrical films. He had a line labelled “provides characters” pointing from theatrical films to merchandise licensing, and another with “exploits films” pointing in the opposite direction. Disney’s idea was to put together a portfolio of different businesses that operated as its own internal ecosystem. His idea was as creative as the characters he invented and films he made. And with it, he built a beloved company of world renown.

Yet, by 1984, 15 years after Walt Disney passed away, the company was in the sights of corporate raiders. The once-proud enterprise had become a chronic underperformer, no longer relevant to a generation of baby boomers who had been raised on The Mickey Mouse Club, Davy Crockett, and The Wonderful World of Disney. The company’s box office share had fallen to 4%, the result of years of underinvestment in animated film-making, the very antithesis of Walt Disney’s big idea. (Fortunately for the employees of Walt Disney Company — and for legions of future Timon and Pumbaa fans — the Disney board hired Michael Eisner in 1984 to stave off ruin. And he did so brilliantly — by returning to, and building on, the big idea that made Disney a great company. More on this below.)

Big ideas loom every bit as large in successful B2B strategies. Take Crown Cork Seal, once the most profitable and innovative company in an industry — metal containers — dominated by much larger companies. In the early 1960s, Crown’s CEO, John F. Connelly, had the big idea of retooling the company to focus on filling special orders for smaller customers. Instead of going head to head with larger competitors for national customers — such as Miller Brewing Company — with huge orders enabling long, low-cost production runs, Crown became a “short run” specialist.

Connelly crafted a coherent strategy to bring his idea to economic life that included rapid-response rush orders, high levels of technical assistance, holding inventory for customers, and carrying excess production capacity — all of which went against the grain of accepted wisdom in an industry where success depended on minimizing costs. He bet on being able to charge higher prices by serving smaller customers with far less bargaining power, and, as Richard Rumelt describes in Good Strategy, Bad Strategy, it worked. Within a decade, Crown was generating more profit than any other company in its industry, even without having the most revenue. But the big idea lasted only as long as the CEO’s tenure, which ended in 1990. Connelly’s successor shifted to a “strategy” of growth through acquisition. Seven years later, after completing 20 acquisitions, Crown was the world’s largest container manufacturer. But it had lost its distinctive approach and had not found a new one. By 2006, it was one of the industry’s least-profitable players.

Crown and Disney are examples of what occurs when a company’s strategy drifts away from the big idea that made it a great one. Something similar happens when the big idea that once powered a great strategy is no longer “big.”

Ford Motor Company was just one of many auto companies in 1910 when it developed a novel idea — the moving assembly line — and adopted a strategy — single product (the Model T), offered in a single color (black) — to capitalize on it. By 1921, Ford had captured over 60% of the U.S. automobile market. In April of that same year, Pierre du Pont, president of General Motors, asked Alfred P. Sloan, vice-president of operations, to develop a product strategy for its 10 vehicle brands that collectively shared 12% of the market. Sloan came up with his own big idea: “quality competition against cars below a certain price tag and price competition against cars above that price tag.” Each vehicle brand was given a unique price range within which to compete, with Chevrolet taking the lowest price range, Cadillac taking the highest, and other brands such as Buick and Oldsmobile falling in between. Within 10 years, GM had swamped Ford and everyone else to become the world’s most profitable car company, a crown it wore for several decades thereafter.

Ford and GM became great companies on the back of very big ideas. But, over time, those ideas were widely copied. For example, Toyota uses its company name to brand a line of lower-priced cars while using the Lexus brand for its higher-quality products. Volkswagen does the same thing with the Audi brand. And, of course, virtually every auto manufacturer uses moving assembly lines.

Though Ford and GM remain enormous players, each long ago ceded their market and economic leadership because their big ideas lost steam and they were unable to replace or reinvigorate them. And when that happens, companies and their strategies are prone to wander.

For example, just recently, Mark Fields, Ford’s chief executive, announced his new strategy of “diversifying into transportation services” and “becoming a mobility company.” In other words, his big idea is to (a) copy what a previous chief executive, Jacques Nasser, was fired for and (b) chase the new big thing in driving: ride-sharing and driver-free cars. GM is doing the same thing with its recent $500 million investment in Lyft. Both companies have “strategies” that are nothing more than “make some money here, spend it there, and by all means, keep up with whatever is hot at the moment.” There’s no “there” there — no big idea that’s unique to their companies and provides a novel solution to a problem the world really needs or wants solved.

This brings us back to Disney, which — except for a 15-year hiatus between 1969 and 1984 — managed to maintain, refresh, and grow the powerful big idea behind its strategy even while competitive conditions, consumer habits, and the media landscape have gone through dramatic upheaval. First, Eisner reignited investment in films and created wildly popular new characters, such as The Little Mermaid, The Beauty and the Beast, and The Lion King. By 1994, Disney’s box office share had risen to 19%. Character licensing had risen by eight times. Theme park attendance and margins soared. Eisner also invested heavily in adding new businesses to its internal ecosystem, including retail stores, Broadway shows, cruise ships, and Saturday morning cartoons — all featuring its characters brought to life through those films.

After Eisner retired, his successor, Bob Iger, brought his own new twist. Indeed, his strategy for building corporate franchises has not only maintained the relevance of Walt Disney’s original idea but has significantly increased its economic potential. Under Iger’s direction, for example, the long-standing, but not truly distinctive, Norway attraction at Epcot Center is being rebuilt as “Frozen Ever After,” based on the smash musical animation Frozen and its fictional world of Arendelle. Frozen Ever After will attract a new generation of visitors to Epcot while also stimulating merchandise and movie sales.

Next year, Disney will open “Iron Man Experience,” its first attraction based on a Marvel character, at Hong Kong Disneyland. Disney’s new theme park in Shanghai will include a large Pirates of the Caribbean feature based on the movie franchise that was originally inspired by a ride at Disneyland. And The Wall Street Journal recently reported that the California Adventure park saw its attendance surge 40% after it installed the Cars-inspired “Cars Land” attraction in 2012.

Further, under Iger’s strategy, the consumer products group organizes its employees into franchise teams, one for Toy Story, another for Mickey Mouse, a third for Marvel and so on, which promises to extend the value of its marquee properties even deeper into consumers lives and pocket books.

Disney’s leaders not only recognize the importance of a big idea to the power of a strategy, they understand they must continually stoke the fires of their company’s big idea — not simply draw heat from it — thus making Disney’s edge that much harder to imitate.

Not every big idea will be as big and lasting as Walt Disney’s, but a strategy without a big idea is like a marriage without true love. Some companies are lucky enough to find true love that can last a lifetime, others may have to discover love several times. But without it, there’s nothing to build a strategy on. No amount of acquisitions, execution, dedication, motivation, or even innovation can compensate for having a strategy that lacks a truly novel, scalable idea.

So what’s the big idea that powers your strategy?