Written on July 29, 2009
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Submit your favorite sports business issue and how you solved it and we'll put it up online. Send to buffy@teamworkonline.com, and give us rights to publish it online with your email address. Michael Chernoffmchernof@hotmail.comHow to improve the long-term thinking of the companySituation: In the late 1990's, NASCAR's phenomenal growth boom was just beginning its aggressive ramp-up. I worked in Marketing at International Speedway Corporation (ISC), a publicly traded-company controlled by NASCAR's France family. ISC is a leader in the field of motorsports marketing, and one of America's premier promoters of motorsports activities. As context, ISC now owns/operates 13 of the nation's most prestigious motorsports entertainment facilities (ie- Daytona, Talladega, Michigan, Phoenix, Darlington, etc.), promotes more than 100 racing events annually, and owns a variety of class-leading, complementary businesses (ie- MRN Radio, Americrown, Motorsports Authentics, etc.). It was a heady time, with a massive, transformational facility boom underway:
Around this time, the Daytona International Speedway (DIS) expanded (what is now referred to as) the Sprint Tower. This investment in the property doubled the suite inventory available at DIS. A new competitive facility dynamic was emerging, however, as every property built or upgraded set a new standard of luxury in the sport. With this industry sea change came two insidious forces that coalesced to work against property owners being able to maintain their suite-related value propositions and pricing power:
Clearly the game had changed, and a new approach was needed. What had worked so successfully in the past would not work in the bold new future. And, ready or not, the future had arrived. Thus, the challenge for DIS: How could DIS, a facility that opened back in 1959, compete effectively against a plethora of immaculate, brand new temples of speed in the sale of its suite inventory? Task: The task at hand was to:
The mission-critical link in this chain is the development and implementation of an effective strategy. Too often in business, and especially in our industry, a compelling strategic vision is subjugated to the need to meet near-term sales goals. While the short-term "fix" of meeting an immediate sales quota undoubtedly feels good, this is an unhealthy approach to building a successful long-term business and meaningful brand. Setting a strategic, long-term course requires you to invest in your business, elevate yourself, and stand for something more. Otherwise, al l you are is a set of discrete, unconnected short-term tactics, with no larger vision of who you are, what you stand for, what you want to be, or how you're going to get there. If you can't articulate this to customers (if all you have to offer is a rate card), then why should they care about you? Without it, you're doomed to an infinite loop of careening from tactic to tactic. To build something meaningful and long-term, you need a holistic, over-arching umbrella-strategy that links discrete, short-term tactics into a larger/greater whole. In a world of infinite entertainment choices, if you don't stand for anything, then you stand for nothing. It is your strategy that elevates you. Action: DIS, a facility built in the 1950's, may not have been able to compete amenity-wise with the immaculate luxury on offer at all the brand new facilities under construction. Rather than pretend otherwise, we played to our strengths: those attributes that made us unique, special, and different versus the competition. Every business worth its salt has them, or at least they better if the intention is to build a viable long-term business. It's a matter of explicitly articulating those attributes, committing to them, and living/reinforcing them over the long-haul. Admittedly, only a select group of facilities are fortunate enough to host a prestigious event featuring one of NASCAR's premier series. DIS was already a prominent member of this select group (a competitive point of parity). DIS, however, uniquely had what no other facility had -- something that even all the money in the world could not buy: History. Heritage. Tradition. Legacy. Legend. Spectacle. Pageantry. Prestige. Exclusivity. These strong, favorable, and unique associations would be our ace in the hole. Thus, the strategy would be two-fold:
The relevant, memorable, and lasting points of differentiation would be the cornerstone of our strategy. A deliberate and methodical strategy to elevate DIS above the competition. The new suites would combine the raw energy, excitement, visceral exhilaration of NASCAR (points of parity) with the unique heritage, tradition, prestige, and exclusivity that only Daytona could deliver (points of differentiation). Attention now turned to developing the positioning that would allow us to execute tactically -- and on-strategy. Digging into Daytona's rich history, we crafted a unique thematic that no other speedway – no matter how new, no matter how expensive -- could touch: In 1903, Daytona firmly grabbed the world's attention as the place to push the limits of man and machine. A dispute over who had the fastest horseless carriage sparked an unforgettable 30 years of land speed record runs. The world's best began journeying to Daytona Beach, the "Birthplace of Speed", to prove themselves champions. Inheriting this legacy of speed, stock car racing debuted on the sands of Daytona Beach in 1936. "Big" Bill France drove in this first historic race, and over the next 10 years established himself as a true racer with a unique, innovative vision for the sport. Only a first-class, well-regarded race promoter could carry stock car racing into the future. "Big" Bill stepped out of race cars for good in 1946, and founded NASCAR in 1948. Daytona International Speedway began construction shortly thereafter, hosting its first Daytona 500 in 1959. A marvel of engineering and the result of Bill France's vision, DIS inherited the rich legacy of racing at Daytona Beach. The Speedway quickly found its place in history. As a monument to racing champions past and present, it shined as a beacon of the future. A place where heroes would be established, champions crowned, and legends created. As one of an elite group of iconic global sporting facilities, Daytona occupies that rarest of air: a facility that transcends the sport itself. The rich heritage of racing at Daytona is unrivalled, creating an excitement around the Daytona 500 that is unequaled in all of motorsports. Reaching Victory Lane is a pinnacle achievement in motorsports, for the Daytona 500 makes its winners into legends. The battlefield is revered as sacred ground: two and a half miles of legendary asphalt. The warriors stretch the limits of man and machine. These gladiators battle fiercely to snatch victory from their competitors. In the end, there can be only one. One man who will join the legendary cadre of racing heroes. Forever introduced as "Daytona 500 Champion". DIS is known the world over as "The World Center of Racing". As a facility, it is one of the crown jewels in international motorsport. It is home to the Daytona 500, NASCAR's biggest, richest and most prestigious event. "The Great American Race", as it is known, headlines the unique 2-week "Festival of Fast" known worldwide as Speedweeks. No other experience in motorsports comes close to a February at the Daytona International Speedway. We actively positioned Daytona as the unique heart and soul of NASCAR stock car auto racing…of non-stop, heart-pounding, pedal-to-the-metal action. Instead of merely hosting events, the world's most famous speedway hosts experiences. It is where legends are made, memories created. Already proud to offer the most spectacular seats for the biggest race in the world, through its new suite offering, DIS would invite a select few to take advantage of a rare opportunity to be a part of history in the making. Result: By delivering tactically on the strategy of leveraging the unique heritage, tradition, prestige, and exclusivity that only Daytona could offer, we meaningfully differentiated DIS in an increasingly cluttered marketplace. That unique, relevant, and highly differentiated positioning certainly resonated: we sold-out the new suites in record time, for terms longer than forecast, at rates higher than budgeted. As an added benefit of our demand generation, we were also successful in staggering the terms, such that the expiration/renewal process would not happen simultaneously. This helped confer multiple benefits: smoothing business peaks and valleys, balancing organizational resource requirements, and enhancing our overall negotiating position. This virtuous circle allowed us to renew at materially higher levels than had historically been the case. In lieu of investing the time and energy to develop a unique strategy, we could have just tactically raced to market in a rush to sell suite inventory. But if we hadn't articulated Daytona's unique positioning to customers (if all we had to offer was a rate card), then why should they care about us? I'm sure we would've eventually sold the inventory, but would we have created the long-term, virtuous circle referenced above? By taking a rigorous, disciplined, methodical, and deliberate approach -- by leading with strategy, and then executing tactically on-strategy -- we were able to elevate DIS, to stand for something more, to actively reinforce the unique and special legend that is Daytona. Lessons Learned: My efforts on in developing this program were successful largely due to the foresight of the France family, and the strategic approach they take to managing their business. Their stewardship of Daytona, and their empowerment of all the talented people who've worked for them over the years, has facilitated the long-term elevation of Daytona International Speedway. The France's have astutely provided the framework and the opportunity for their team to do great things. I can already hear those out there who would minimize strategy to focus solely and simply on tactics saying something to the effect of "Daytona can behave like this because it's special". As someone who leads with strategy, I would contend exactly the opposite: "Daytona is special because it behaves like this". Consistency is key. Daytona is successful because it constantly executes tactics that are on-strategy, that actively reinforce the values that make it special, and that deliberately cultivate Daytona's uniqueness. Uniquely, leading with strategy also empowers you with the freedom to say "no" to things that are not on-strategy...while simultaneously making your enterprise more valuable. Let me provide a real-world example. There's a reason why Daytona's walls are unpainted, and why the Daytona 500 is not entitled. Tactically, could Daytona make more short-term money by reversing these policies? Absolutely. But then ask yourself, would Daytona still be Daytona? Would it still be special, unique, and different...or would it become the same as all the other speedways out there? In this instance, by committing to and remaining on-strategy, Daytona most certainly forgoes short-term tactical revenue. But by having the strength and courage of conviction to say "no", Daytona deliberately reinforces its strategy of being special/unique/different. It's hard to say "no": short-term revenue is a tempting, feel-good high that's awfully hard to pass up (be honest: would your business have turned-down the incremental revenue in this example?). Which bring us back to -- and dramatically illustrates -- the point above: "Daytona is special because it behaves like this". Daytona lives its strategy: it won't squander its hard-earned, long-term "specialness" for short-term tactical reward. By tactically staying on-strategy, Daytona elevates itself. A positioning that is not only unique and differentiated, but also an invaluable source of competitive advantage. Daytona commits to living its strategy. It is this conscious, deliberate choice that frees to the organization to invest in building something bigger (and more special) over the long-haul. Ask yourself: does your business behave in a similar manner? In closing, let me proffer the following: Fans and sponsors go to other facilities 100% for the race. However, fans and sponsors go to Daytona 50% for the race, and 50% because it's Daytona. Because Daytona is special, unique, and different. That's compelling -- well above and beyond your rate card. How much value is that brand/positioning worth? [back to My Sports Business Problem and How I Solved It...] |
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