The one notion that’s been carried through this blog is the concept of the TAC Loop. As a refresher, TAC stands for Transparency, Authenticity, & Community. When a consumer is able to gain transparency into your company and your company’s activities align with your messages, you create community. Community ensures continued loyalty to your company, it’s goods, services, and is the most effective and efficient brand creation mechanism a marketeer can have. While it can be a double edged sword – see Whole Foods & stupid CEO comments – your consumers create your brand for you which in turn gives them a stake in the success of your company. They have internalized your brand and made it a part of their personal identity. The reason why Apple, Nike, Peets Coffee, and countless other major brands enjoy the popularity they do is because they’ve created a powerful TAC loop and their consumers associate their affiliation with the brand as part of their self image. Many of these brands have stumbled – Nike and the sweatshop scandal comes to mind. But, by and large, once a powerful loop is established it can be repaired if broken – once. The buying public is generally forgiving but you only have so many chances to make it right.
It would seem that creating your loop would be simple. Flood the market with insight into your company, provide plenty of comment areas, gauge the reactions to create your message, then provide ways for your fans to connect with each other and build out the community. It is simple – in a vacuum. The one problem: competitors. While you’re busy trying to entice consumers to read your content, you’ve got competitors out there – sometimes with bigger budgets, larger staffs, and better established market positions doing exactly the same thing. The mind of a consumer is fundamentally limited real-estate. There’s only so much space dedicated to absorbing information pertaining to products, goods, services, etc,. This problem is compounded by the volume of data out in the market and the number of media vehicles in which to present that information. As we’ve been saying – the power rests with the consumer to change the channel, click the mouse, turn off the radio, plug in the ear-buds, etc. It has never been easier and harder all at the same time to make contact with the consumer while fending off the competition.
So what’s a marketeer to do?
The key is another kind of loop – a loop that runs parallel to the TAC loop and is called the OODA loop (Observe, Orient, Decide, Act). First developed by the great modern military strategist John Boyd in his seminal briefing document “Patterns of Conflict”, this concept was initially formulated to win aerial dog fights with high performance jet fighters in the early 1960s. In an arena where milliseconds count, speed and accuracy of thought and action is everything! The OODA loop at first glance is a simple diagram of how people make decisions. But dig deeper and it’s a brilliant construct for creating competitive advantage. Thinking and acting quickly and boldly to outthink and outmaneuver rivals — will, Boyd wrote, “make us appear ambiguous, and generate confusion and disorder.” You effectively change your competitors’ strategy from focusing on consumer acquisition and mindshare to defending against you and your tactics. It’s a bold strategy – one that requires a high tolerance for risk, but if executed properly means victory in the end.
Perhaps one of the best examples of a company using the combination of a TAC Loop with the OODA Loop was Microsoft in the late 1980’s-early ’90’s. At that time, it was far from a foregone conclusion that Microsoft would become the powerhouse it is today. It had real and viable competition across every one of it’s core technology businesses. Novell, IBM, Lotus, Borland, WordPerfect – all these companies had dominance in their particular areas: Novell for networking, IBM for OS’s (OS2 & DOS), Lotus in spreadsheets, Borland in PC databases and programming languages, and WordPerfect for word processing. How did Microsoft beat them? They used the exact same strategy every time they entered a new market: they let them all beat themselves.
The first thing they did was create a TAC Loop. They invested millions in creating a loyal coterie of developers, systems managers, IT professionals, and 3rd party consultants/add-on product developers by giving away tools and eval software (at a time when the price for an average seat license of DOS software was close to $700!), creating a professional certification program, and providing wide distribution of beta software. This created incredible loyalty in the market – people owed their increasingly advancing skills and careers to Microsoft. With a strong community behind them, Microsoft would then announce their intention to enter a new market. They would create a huge media event – fancy venue, lights, videos, flashy demos featuring Bill Gates (they were the first to create the Super Star Geek CEO!) and announce a comprehensive roadmap. They would then undercut their competitors with upgrade pricing – practically giving it all away. These actions ran contrary to the software industry’s best practices of the day. Though many competitors would use some of these tactics; Borland the competitive upgrade, Novell the professional certification programs, no one used them all together and with such agility and laser focus. They would literally freeze the market until they released their product – as much as 4 – 6 months sometimes. Even if the product didn’t work as well as the competitor’s upon release, it usually worked well enough, was cheaper, and they had a loyal community who trusted that they would get it right – eventually. Time and again competitors were caught flat-footed! They could not believe that they would be hit with a frontal assault in their core markets by a company with no track record in their market. They would consistently underestimate Microsoft and would then have to respond – after they received a crushing blow. Now, instead of playing their game according to their own rules, they would focus on Microsoft. In fact, beating Microsoft became more central to the culture of these companies than doing right for their customers, i.e. reenforcing their TAC Loop. It became personal and it became obsessive. All Microsoft had to do was play it’s own game and not worry about what their competitors did; they just continued to build trust with their community and propagate their software – everywhere. They could then roll up multiple divisions in large companies that were using their products and the next thing you know they had extremely valuable site licenses sewed up. They owned the PC IT infrastructure – from networks to operating systems to the productivity applications in every major corporation in the world. The speed with which these once powerful companies fell was astonishing and literally changed the complexion of the entire PC computing industry in less then 5 years.
This is perhaps the most striking example of how using concurrent TAC & OODA Loops can help you formulate and run your most effective campaigns. In short – make your consumers love you, your competitors fear you and thereby taking themselves out for you. In the next post we’re going to deconstruct the OODA Loop and show how you can utilize it to frame your next campaign!
David Appelbaum is an award-winning marketing professional and accomplished musician specializing in pre-IPO companies who is fascinated by the nexus between commerce, art, and psychology and how technology impacts them all.
