Since the election of President Obama -- and now accelerated by the defection of Senator Arlen Specter, much ink and chattering has been devoted the future of the Republican Party. Like any organization either in politics, sports or business which is currently behind, the GOP is struggling with crafting a game changing strategy. Some advocate embracing a big tent strategy by incorporating a variety of disparate and potentially irreconcilable views. Others argue that the party should go back to set of core conservative principles despite the risk it might appeal to a smaller audience than desired to build a new majority.
While there are merits in both these approaches, principles from the business world, and in particular marketing, can be brought to bear to understand which strategy is better is in the long run. When a business is losing market share to a firm with a better selling product, it only has two true options. It can cede leadership and create a "me too" product. This product is generally a lower priced, and usually of inferior quality, version of the leader's offer. As a result, they continue to cede the market's leadership role, profitability and ultimately their long term destiny to their rival.
The other option is to differentiate from the competition by creating an offering that is a different and better product. This is a harder strategy to execute successfully since it requires one to carefully and honestly consider the organization's strengths, weaknesses, and customer base and to then act boldly. Its advantage is very powerful since it creates an advantage which is harder to match than a "me too" strategy. In the language of marketing, it creates an advantage that is sustainable as opposed to one that is fleeting since it cannot be easily copied.
As an example of how a powerful differentiation strategy can play out in business, consider the wireless phone industry of about two years ago. Each carrier had basically the same offers both in terms of network services and handsets. As industry growth tailed off many analysts predicted, a long and brutal price war since the major carriers had run out of ways to compete other than on price. Looking for a game changer, AT&T and Apple created the iPhone which allowed them to stand out since they had a better and unique offer. Quite clearly, the iPhone has allowed Apple and AT&T to gain market share and increase both of their bottom lines dramatically. Unable to differentiate themselves, competitors have offered a series of lower priced and inferior "me too" products. No doubt there are nervously anticipating the next move from Apple and AT&T partnership.
Rocked by the resignation of President Nixon and the assorted scandals of Watergate, the Republican Party struggled to craft a winning strategy following the bloodletting 1974 mid-term elections. Just as is the case today, some argued that the party should significantly broaden its appeal by dropping many of its conservative principles and adopt a platform that focusing on moderates. In other words, offer a "me too," i.e., "big tent" product to win back market share, voters. Others urged that it should adopt a message of strong fiscal conservative principles tied with limited government which would appeal to voters since it was a different and better offer. This would be Senator Jim DeMint's "big tent with strong poles" approach as he wrote in the Wall Street Journal's Op-Ed page on May 2, 2009.
In March 1975, a former two-term Governor of California, Ronald Reagan, addressed the Conservative Political Action Committee (CPAC) meeting -- just as the GOP and the conservative movement struggling with how to regain its leadership role after the post-Watergate defeats. In a powerful speech which he penned personally, Governor Reagan stated:
I don ‘t know about you, but I am impatient with those Republicans who after the last election rushed into print saying, "We must broaden the base of our party"-when what they meant was to fuzz up and blur even more the differences between ourselves and our opponents.
It was a feeling that there was not a sufficient difference now between the parties that kept a majority of the voters away from the polls. When have we ever advocated a closed-door policy? Who has ever been barred from participating?
Our people look for a cause to believe in. Is it a third party we need, or is it a new and revitalized second party, raising a banner of no pale pastels, but bold colors which make it unmistakably clear where we stand on all of the issues troubling the people?
No doubt sounding as uncompromising as Senator DeMint does today, Reagan no doubt invoked the ire of many as he concluded this speech which referred to as the "pale pastel" speech saying:
A political party cannot be all things to all people. It must represent certain fundamental beliefs which must not be compromised to political expediency, or simply to swell its numbers.
I do not believe I have proposed anything that is contrary to what has been considered Republican principle. It is at the same time the very basis of conservatism. It is time to reassert that principle and raise it to full view. And if there are those who cannot subscribe to these principles, then let them go their way.
Such rhetoric was seen as extremist and uncompromising in 1975, but by creating a political movement based on solid conservative principles allowed the Republican Party rise from the ashes of Watergate. The success of the movement and the success in the 1980 election was due in part to creating a better alternative than a "me too," party. In others, the Republicans built a better mouse trap built on conservative principles and the consumer, the voter, embraced the different and better offer with Reagan and the Republicans resulting in two landslide Presidential elections.
James A. Leggette, Ph.D. is an Adjunct Professor of Economics at Belhaven College and a talk radio host at WMOX in Meridian, MS. His website is www.profjim.com.