The Carrot and The Stick: Leveraging Strategic Control For Growth

Bill's Book on Amazon

https://amzn.to/366B42m

https://www.chestnuthillassociates.com/

https://www.putsis.com/

I have with me today,  Bill Putsis, and Bill is a professor of marketing, economics and business strategy at the University of North Carolina Chapel Hill and teaches executive programs at Yale University.

He's also president and CEO of Chestnut Hill Associates, a strategy consulting firm. His new book is The Carrot and The Stick: Leveraging Strategic Control For Growth. So Bill, we got that intro out of the way. Tell us a little more about your background,

Bill:  Ken, thank you so much. It's a pleasure to be here with you.  I'm an economist by training, so I got my master's undergraduate,  and PHD, all in economics. My graduate degree is from Cornell. I've been all over. I grew up in the New York area, spent 11 years upstate New York in graduate school. And two years on the Cornell faculty. I was out in Michigan for a couple years with General Motors.

I was on the faculty at the London Business School. So I lived in London for six years. I spent a year in Sydney at the University of Sydney. And now I've been full-time at UNC Chapel Hill in addition to the executive programs that I teach at Yale. But I've been at UNC Chapel Hill since 2003, full-time.

. So I understand that the stick and the carrot and stick is something called a strategic control point. What exactly is a strategic control point and why should we care about it? 

Bill: Great, great question.Ken, it is, I argue the most fundamental aspect of business. Whether it be from main street to small startups, to Alphabet and Google and Apple,  Amazon, many of the companies that we know now as household names have built the business around a point of strategic control.

And I'll give you a real quick example is a classic one I've used for a number of years. Now that I start off talking about this in the book, but the best example I can think of, of a point of strategic control is the Softsoap brand.

So, Soft Soap, we all know the liquid soap that we wash our hands with. Back in the day in the 1970s, everyone used bar soap, liquid soap wasn't commonplace. Well, there was a small company, the Minnetonka Corporation up in Minnesota. And they had the idea for a liquid soap, but there were a small startup and wanted to go national.

The problem they had was twofold. One, they didn't have a great name for it. The name of the product originally  was Creme De La Soap on Tap. It doesn't exactly roll off your tongue now does it, right? And the number two is even if they were to be successful in getting it in the Walmart's, the Kroger's of the world, they would simply be spotting a new opportunity for the Colgate's, Unilever's, Johnson and Johnsons of the world, to push them out through advertising and buying shelf space.

 So they would have just had a great category that someone else would have taken over in a matter of time,. But they felt if they had a year's lead on the big players, a year where they get the big players out, in that year, they can build up enough of a brand presence, enough of loyal customer base that even with the big players in a year later, they can keep a reasonable, maybe a third, of  the market.

The question that they had is how do they keep the big players out? Now liquid soap was originally patented back in the 1890s, so they couldn't patent it. So they had to think about how they keep the big players out and what they did was absolutely brilliant. They went up and bought out the world supply of. pumps.

So they went around every business and tried to buy and they pretty much, at that point, since pumps weren't as commonplace as today, wasn't difficult thing to do. So it took some time for the big players to eventually build a factory, which took about a year and gave them that year's lead time that they needed.