Sure, it’s a question I ask all the time. That’s because it’s perhaps the single most important question to answer as it relates to your overall strategy. And your overall strategy will be the single greatest determinant to your financial success.
In my “Getting Pricing Right” course, I spend almost an entire lesson explaining how pricing is a reflection of strategy. I even give 5-6 specific examples of interior designers who are actually in very different businesses.
I even give 5-6 specific examples of interior designers who are actually in very different businesses.
In business school, from Harvard to where I taught at the University of Texas, strategy is taught through case studies. It often leads to more profound breakthroughs to try and figure out what other companies are doing, than to remain obsessed on just your own.
Restoration Hardware, now known as RH makes a good example. This is a company that has had somewhat of a muddled brand as its CEO, Gary Friedman has taken it from the purveyor of the garden gnome named Aqua-Troll that sprinkled water when connected to a garden hose, to the proud owner of 50,000 square feet luxury “Galleries.”
What would it tell you about the strategy of RH if I said that in addition to building more of these enormous, luxury-oriented palaces, that they had also launched a yacht that you can rent? What if I said they were building branded hotels? What if I said they were going into the market of building and selling luxury homes?
What you might say is that even as June orders for furniture were up more than 11% from a year ago (yes, the pandemic is eventually going to lead to an explosive growth in furniture sales!) RH is not content to just sell furniture. After all, the market for home furnishings in the US is “only” $200 billion annually. The North American housing market, by contrast, is a market valued at $1.7 trillion!
Friedman has his critics, such as those pointing out he has changed the story to one of grand future visions without really having executed the one he has in front of him—more furniture sales by RH as it currently exists.
But the man who dropped out of junior college due to his “D” average (and his advisor’s comment that he was a waste of taxpayer dollars) is now worth $1.5 billion personally, and at age 62, highly ambitious. I also think he is visionary as his strategy in many ways fits perfectly with a post-pandemic world.
Online furniture orders, a flight to luxury, yachts (think get-aways), luxury hotels and luxury homes… Yes, he may be getting out over his skis, but everything he’s talking about paints a stronger halo over his basic RH, and maybe at the end of the day, that’s what he really has in mind.