Locus Focus: What Does It Pick Up Versus Leave Behind?

This is what we call the vacuum cleaner (VC) question. Whether or not we acknowledge it, most mental models are not all encompassing and focus on a limited central notion. Most are seriously limited in what they can account for. For example, customer centricity promotes customer satisfaction or loyalty as the central theme around which strategy should be built. The thrust of this approach is to focus on customers’ responses to the firm’s offerings and reengineer the firm’s strategy in order to optimize the level of satisfaction delivered to the customer. Similarly brand-centric strategies focus on brand equity as a core construct that becomes the locus of constructing strategy and evaluating its effectiveness. The planning process under this strategy is guided by building brand equity or leveraging it within existing and new markets. And the consequence of strategic choices is measured by watching and measuring brand equity and estimating its impact on the value of the firm.

However, as they are successively promoted, adopted, or implemented, these models are often assumed to be able to do more than what they are really capable of. In other words, over time the collateral beliefs that accompany simple models stretch beyond the domain of what the models are supposed to cover. For example, we often run into managers who have a mental model that price discounts from competitors should be met with price discounts in order to preserve market share. The belief is that a price response to a price challenge captures most, if not all, of the dynamics of the interaction between the rival firms. While this may be the appropriate strategy under certain circumstances, it may not be under others. However, in either case, we find that managers often fail to account for the collateral effects of their pricing decisions. They typically fail to map out how price changes might influence brand perceptions, dealer responses, funds for future product development, or employee morale. A focus on the locus of the mental model also pushes alternative sound ideas to the periphery. The locus begins to almost match the mission of the firm, and strategic choices slowly align around it, often at the detriment of alternative options.