FedEx's strategy is to be a tech company. Should you do the same?
Why choosing the right strategic identity is critical for future success.
Hello everyone 👋
This week we are discussing strategic identity and why FedEx claiming to be a tech company matters. Along the way, we get to discuss NVIDIA and the new Tesla Cybertruck.
I. FedEx claims to be a tech company
You have likely heard of NVIDIA and its astonishing stock run. Here’s the last 12 months of performance.
NVIDIA makes chips, especially the AI chips needed to power all those viral ChatGPT threads. The non-stop bull run of NVIDIA has captured the imagination of other companies.
It’s not just NVIDIA. Tech companies like Google, Apple, Meta (Facebook) and others have continued to dominate the public markets. While they all do different things, they have one common characteristic. They are tech companies.
Being a tech company is in vogue. So much that even historically non-tech companies now want to be considered a part of the book club.
The latest example is FedEx, who has argued for their tech stripes. Their argument rests on their huge physical network of package deliveries. They want to capture the insights from these deliveries and offer them back to clients, helping them reduce their shipping costs.
I’m not sure I buy FedEx’s logic but I am intrigued by what companies claim as their identity. I spoke about the role of identity in strategy in the most popular post in this newsletter, the one covering Sears throughout the years.
Should all companies do the same as FedEx?
II. The strategic identity you claim matters
FedEx is not the only company to claim tech status. Kroger, the grocery chain, JPMorgan, the investment banker and even WeWork, the now bankrupt office space owner, all made the same claims.
I am skeptical about the obsession to be tech-driven. Technology plays a role in nearly every organization but I don’t think it is a panacea for growth. Public companies may strive to position themselves as tech companies in the hopes of getting a higher stock valuation, which leads to higher salaries for everyone. It may have nothing to do with the underlying business model or the value customers receive.
I am convinced of the importance of choosing the right strategic identity. A nonprofit could see itself as a volunteer-run organization—and face all the challenges associated with volunteers—or it could see itself as a professional organization where key staff members are paid for their contributions.
A pet store may see itself as a provider of pet food and treats or it could be a pet lifestyle brand. A coffee shop may see itself as a place where people get their coffee or as a nexus of the community.
The small shift in identity leads to a cascade in different decisions.
Identity also helps us see why some individuals are seen as “visionaries” and others are not. Howard Schultz has come back to the helm of Starbucks three times(!), often re-energizing the company into a new future. His biggest impact comes from communicating an exciting new identity that everyone can get behind.
A company doesn't need to be a tech company to be successful but it does need a distinct identity. Here’s how to start searching for one.
III. Searching for an identity
When I run strategic sessions, we always spend some time thinking about the things that are shifting in their world. I got the exercise from Andrew Hollo, who writes a fantastic weekly newsletter here in Substack.
Some of the shifts are obvious. Remote work, AI, political polarization, declining birth rates, climate change and others. Once you get the obvious out of the way, the non-obvious ones start to come out.
I helped an organization recently that focused on mental health campaigns, typically delivered in digital channels. The non-obvious shift is that digital channels, like TikTok and Instagram, are now often publicly associated with a worsening mental health. Their mission was in conflict with their tactics.
These non-obvious shifts can be the seed for a new identity. The mental health organization had always used digital channels as a way to reach the largest number of individuals but their new identity could be focused on reaching a small number of individuals through non-digital channels i.e. “We help people with their mental health by reducing their digital usage and increasing their real life interactions.”
A great identity is polarizing. It reminds of Tesla’s Cybertruck, which is now out in the wild. If you haven’t seen this car, here’s what it looks like.
You will either hate or love the design. You will think it is dumb or the coolest car design in recent history. This car is polarizing.
Finding a great identity is similar. You will find people who are for it and those who are against it. You can use it to find your people, the ideal customers and supporters while repelling those who are lukewarm to your mission.
FedEx’s campaign to be a tech company may fail but it is better than trying not to offend anyone. What’s your organization’s identity?
That’s all for this week! Enjoy the rest of your week and keep thinking about your organization’s distinct identity.
Cheers,
Ruben
P.S. If you’re interested in diving deeper into the strategic direction of your organization, the identity and how to make it all a reality, check out my strategy work.
In a day or less, we can work through these questions and more, while helping your team accelerate your growth plans. More information here: https://www.rubenugarte.com/strategy