MSOs & LPs: Compete With Capabilities Not Brands
My friend Kieve Huffman recently posted on why cannabis companies need a USP, or a Unique Selling Proposition, to brand and compete more effectively. I can’t argue with his expertise or this conventional wisdom.
However, I have another take, rooted in practical considerations.
First, let’s consider 2 key issues with a USP-based cannabis business strategy:
1. Uncovering your USP is really tough
It requires lots of consumer analysis and branding expertise, two things in short supply at many cannabis firms. Then ponder the thousands of cannabis brands you will be competing against. Think about whether you can communicate the USP through a regulatory straitjacket. Finally, consider market velocity and consumer fickleness: can your hard-fought USP be sustained over the long run?
2. Most firms will be unwilling to commit to what it takes to succeed.
For a USP to be fully leveraged, management needs to make strategic choices (around segment targeting, product features etc) and then mobilize capabilities and capital in its pursuit. Sadly, most companies don’t have the patience, courage or financial runway to see this strategy to fruition.
For the majority of weed companies, another approach is called for.
Enter the capabilities-based strategy
Truth be told, there are many ways outside of a USP to compete and win. For example, your business can be the preferred retail/wholesale partner, the leading innovator, or the lowest cost producer.
What these strategies have in common is a reliance on relevant, best in class capability - the alchemy of people, tech, physical assets and data.
When a firm is strong in their capability of choice, they have the ability compete in more novel ways over the long run plus earn industry-leading margins.
While copy-cat peers strive to launch slightly different USPs aimed at fickle consumers you will be competing on the road less traveled.
For example…
> Being the ‘low cost’ producer enables you to be the low-price/high-volume leader in value segments;
> An innovation platform gets you to market first with unique, higher margin products or services;
> A trade-centric operating model can secure you more shelf space, long term contracts and promotional support.
I have seen all three tacks succeed in cannabis, and yes, lead to the creation of powerful brands. The secret is to dispense with knee-jerk strategic assumptions and take a broader view of what long term competitiveness could be.
Don't expect an easy trek. Adopting a capability-based strategy requires a combination of objective internal and market analysis, benchmarking, strategy assessment and resource & organizational planning.
It's well worth it.
Lets talk about how you can begin your journey of discovery, planning and execution.
#strategy #capability #MSOs #LPs #planning #branding #USP