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Lessons From The Dead!
 
ABSTRACT

            The Grateful Dead as a means of expression for understanding key strategic concepts they utilized to make them the most successful and followed rock and roll band.  The interactions of the band within the deadhead community is significant and the essential element of successful marketing and strategic planning.  What strategies they employ, business decisions made and the role that these decisions played is investigated.

            No matter the size or type of business one is in, some form of strategic planning is required and implemented by management to ensure the goals and objectives of the firm are met and exceeded.  There are certain internal and external influences that the firm has some or no control over which allows firms to meet their goals and objectives.  Examples include these variables, which are listed in order of their importance to the band but are not limited to: unique niche market, customer contact, unconventional wisdom and maintain status quo.  To make it to the Promised Land, the golden road to unlimited devotion can be seen as the pathway that deadheads dance to in building a successful business.

Greatest Story Ever Told

Successful firms utilize and develop various avenues to ensure all core competencies are being consistently met and exceeded by implementing the objectives in the firm’s strategic plan through concise implementation of their marketing plan; following their strategic plan to a tee and exceeding their core competencies.  This is exemplified by reinventing themselves through process improvements, maintaining a competitive advantage, knowing their audience, product knowledge, customer service skills, taking risks, loyalty and respect of customer and keeping ahead of the game accentuates the fact that the firms has created a unique market niche (4).  The key to success is effectively implement all objectives, understand the competitive environment and is objective when appraising your resources.   

A band beyond description: The Grateful Dead.

Who are the Grateful Dead?  Truckin’ since 1965, the Dead have endured a long, strange trip from the Haight-Ashbury District of San Francisco to become icons, pioneers and legends in the music industry.  They were Misfits from San Francisco who created their own musical trend, market niche and a millionaire dollar company and didn’t even realize it.  The Grateful Dead symbolize many things to many people.  Some common attributes associated with the band are skeletons and roses.  The skeletons represent death and roses epitomize love and rebirth. As Jerry puts it, “We were a social configuration of some kind before we were a band.  Our roots are in that strictly good-time thing, basic hippies, without any kind of motive or purpose.  It’s one of the things that’s given us a sort of community strength.” (3, p.33)

Let it grow, let it grow, greatly yield

The Grateful Dead function as a multi-business corporation.  In 1976, they became incorporated (9).   Multi-business corporations are organized as multi divisional structures where business level decisions are located at the business level and the corporate center exercises over all coordination and control (4).  In their case, they are a privately held company, highly profitable, relatively debt-free who is still owned and operated by the original members of the band (6).  This is very unusual in today’s fluid business market.

There are four main keys to successful management of multi-business corporations.  The role of the parent company must be defined.  The band knew what their product/service was and who was their audience.  The music was the product/service and the counter-culture/hippies were their audience (6,9).  This directly relates to perceived additional value from the customers viewpoint (10).

Companies should be balanced in economies of scale and synergy between the various business units to add value (4).  The band has accomplished this through various distribution channels like Grateful Dead Merchandising, Liquid Blue Inc., and Grateful Dead Productions (9).

Firms must diversify and differentiate themselves from their competitors.  What set The Dead apart from other bands was their sound.  Jazz, blues and rock mainly influenced them.  The music had no boundaries.  As Bill Graham eloquently states, “They are not the best at what they do, they are the only ones who do it.” (6, p. 42)

Competitive relevance must utilize and implement all steps in the product life cycle (8).  The band capitalizes on their brand name to meet customer demands through concerts, new releases of old shows, merchandise, and new promotions.  They have created a customer value proposition that is truly unique and relevant.  
 
It all rolls into one

            The Resource Based Theory states that a firm is a pool of resources and capabilities and that these resources and capabilities solely determine the strategy of the firm (4).  The band is the pool of resources and their employees/family is the capabilities and their music is the driver and the medium for all their decisions and strategies (6,9). Successful firms utilize strategic planning in determining what they are capable of offering instead of basing it on the needs that the business seeks to satisfy.   This theory emphasizes that in order to achieve and maintain a competitive advantage in your marketplace, exploit the differences between your firm and your competitors (4).  This is proven through their improvisation and interpretation of their music.  Some examples are never playing a song the same way, never play the same show night after night like most bands, their ability to feed off the crowd and their unpredictability.

Between the Dark & Light

To keep up with rapid pace of technology, firms need to adapt to the constant change in both internal and external factors in the environment.  It is imperative that firms base their strategies on developing and exploiting internal capabilities (4).   The Dead were always in the mode of process improvement.  For example, their mission was the unceasing commitment to improve their product and serve their audience.  This was accomplished through their investment in the “wall of sound” the most sophisticated system today.  In 1983, the company set up their own mail-order ticket service to avoid illegal activities like scalping, counterfeits and scams (6,9).  Their elaborate Website is the perfect example of the customer-acquisition strategy (10,11).

Bound to cover just a little more ground

Porters Five Forces Model allows firms to estimate profitability of an industry based on competition in the market by analyzing an industry’s competitive environment. The five forces model only represents the specific industries internal market factors (4).  It fails to bring to light the external factors that exist.  Some examples are changing customer tastes and values, economic instability, government and legislative factors and the global market arena. This is an integral piece of the strategic puzzle.  The Dead utilize Porter’s Five Forces Model very effectively.  Answers to the following questions are crucial.  Do any rivalries exist? Who are the buyers and suppliers in the marketplace? Is there a threat of substitute goods and services in the marketplace?  Are you efficient, effective and a team player?

Easy Answers

In the rock and roll industry the Dead have created their unique market niche.  Truly, there is no other band like them around.  In fact many bands try to emulate them to no avail.   Many bands look to the Dead as a model of success to follow.  No rivalries exist, just jealousy.

The Dead have an entrenched customer base that reaches many levels.  Followers include hippies, college students, professionals, politicians and baby boomers.  Jerry Garcia talks about the importance of audience back in 1979 when he said, “The fact that we still have an audience is incredible.  The fact that we ever had one is incredible.  The fact that we still have one and, further that it’s growing – all these things are very surprising.” (5, p. 19) There are many buyers in the marketplace.  There are many suppliers in the marketplace that try to infiltrate in their many business strategic units.

There is always going to be a threat of substitute goods and services in the marketplace.  This is due to the constant change of both internal and external variables in the environment.   In this industry, it happens when new bands come to light and are marketed.  Since the Dead have been around since 1965, their unique blend of music, atmosphere and culture is considered an institution. 

            The Dead conglomerate is a very efficient and effective business model.  They treat their employees like family members.  The band’s business structure is comparable to the flat organization.  Many employees who have a voice in decision-making share management responsibility.  Company meetings are held regularly and all employees are encouraged to attend (3). The Dead is like a car, it doesn’t run on one part alone.  Here, the band can’t perform without their engineers, sound guys, stagehands, marketing people, electricians and road crew.

Built to Last

Every silver lining has a touch of gray.  In order for any business to survive, firms need to constantly reevaluate their strategies.  The Dead were very successful as they evolved.  Their core competencies included serving a unique market niche, importance of customer contact, use unconventional wisdom and maintain status quo (6,9).  “If we ever had any guiding philosophy, it was just go with it,” As thought by Jerry (7, p. 148).

The sky was yellow and the sun was blue

What sets you apart from your competitors? You need to know your market and how you differentiate from your competitors (4).  This gives you the opportunity to position yourself in the market.  Firms need to create a unique selling proposition, which shows where you are now and where you are going.

Jerry said, “The music business and The Grateful Dead are in two different orbits, two different universes.” (7, p. 124) They have created a very unique market niche.

            In setting yourself apart from your competitors you need to know where you’re going.   Phil explains it best when they are performing when he said, “The part of playing when we get off the best is the part that’s not repetitive.  Some kind of structure is necessary in music if it’s going to be communicative at all.  It just seems that songs don’t go past a certain level.” (3, p. 69)

            The Dead never took advances from concert promoters.  Instead they received more than double the industry average on royalties by taking the up-front risk (6).  Being the savvy businessmen they were, they had excellent working relationships with their promoters and their audience.  This is proven because if a concert was either postponed, canceled or attendance was low they would make it up by booking another date (6,9). 

One last example of being unique was echoed by Brent when he said, “It’s always changing gradually, but sometimes something happens out of the blue.  We’ll play it one way one night, and the next time we play it, it feels a whole lot different.” (3, p. 49) How many other bands can say the same thing?

Don’t Feel like a Stranger

Firms are in business to make a profit.  Without the customer, there is no business.  The importance of customer relationship management needs to be stressed.   Constant customer contact is imperative.

Building relationships with the customer has a long-term effect on loyalty.  Phil said, “The relationship between the band and the Deadheads needs to be nurtured because they are us and we are them.” (6, p. 32).  The Dead realized this through love and respect.

Actions speak louder than words.  When other bands started to accept corporate sponsorships that often raised costs like ticket prices; however the Dead didn’t raise their prices (6).

Every night they perform is a different experience musically.  One never knows what to expect.  One thing is for sure; you are in for four hours of non-stop dancing and smiling.   They never have a pre-determined set list.  They feed off the crowd and then decide what to play.  They rarely interact with their audience as their music is their communication avenue, but when they do you never know what would be said.  For example, one night Bobby said, “I hope you all have been paying pretty close attention out there, on account of we’re going to be passing out a quiz any minute now.  Those of you who have been hollering requests for songs we’ve already done tonight, I know you’re not going to do very well.” (3, p. 159) They enjoyed playing live concerts rather than record albums.  All I can say is … nothing left to do but smile, smile, smile. 
 
It's got no signs or dividing lines - And very few rules to guide
 
When you think of unconventional it is hard not to think about the Dead.  They definitely think outside the box and swim upstream.  How many other bands have performed at the pyramids in Egypt? None.

The Dead were not into mass marketing or advertising.  They focused on their core competencies that were built on loyalty to their community based on their music thus building a long-term relationship with their customers (6,9).

In 1972, they set up their own record label thus it gave them more opportunity to extend their brand name.  The purpose was to maintain quality control over all aspects and to retain the spirit of their music (6,9).

  The Dead were the first band to allow that allowed their fans to record their concerts and allow them to distribute, trade, sell and keep the music.  They were not concerned with lawsuits, royalty payments and copyrights (10).  Jerry explains it best when he said, “If we’re done with the music, you can have it.” (6, p. 44) The reasoning behind this strategy was their revenue model was more dependent on concert sales then album sales (10).  The Dead allowed this policy under an “honor system” where fans could not sell copyrighted material for profit.  Not only did they encourage this, they set up a tapers section right behind the soundboard.  All this from a band that never had a #1 hit and often went years between producing albums (6,9). 

We will Survive

Half the battle is to merely survive.  Companies that maintain status quo will come out ahead.  A good way to maintain balance is to conceptualize the yin-yang effect.  Keeping an even keel is also good.  As Jerry said, “We haven’t come to the end of whatever our growth spurt is.  It’s always been a sow steady curve.” (7, p. 200)

            According to Grateful Dead Merchandising Inc., Total Revenue for 1994 was approximately 95 million dollars.  It is broken down by gross ticket sales, merchandise sales and album/cd sales of 50 million, 35 million and 10 million respectively (9).  This was for the last full year the band was on tour.  Not too shabby, eh?

The future's here, we are it, we are on our own

The importance of diversification is evident for any business to flourish.  Since Jerry’s passing in 1995, the band has diversified.  All living members of the band pioneering their own projects and started their own bands evidence this.   Not very often they played together only at special benefits.  A couple of summers, some of the members highlighted the Further Festival.

            With brand extension, firms look for any opportunity to make a profit.  The Dead are no different.  The band is starting to market a new line of products including Jerry Garcia ties, tie-died towels, footwear and stuffed dancing bears to name a few.  Most firms these days look to go global.  The Dead have performed in several continents and are looking at offshore marketing opportunities.  The Dead utilize a medium known as e-commerce with their database and Website, which offers many goods and services.

Seven years after Jerry’s passing the remaining members and three new members returned to the scene as The Other Ones.  They highlighted the reunion known as Terrapin Station.  It wasn’t the same, but it was close.  The community was still there, alive and kicking.

For this is all a dream we dreamed one afternoon long ago

            Despite their background, the Dead have become a successful business model that firms want to imitate.  The band has reinvented themselves, reached into the future, live in the present, drive their strategy from the business level and stretched out their past.  Here they establish the pace of change in their industry, where their products and services set the standard rather than react to their environment and the forces that are thrust upon them.  They have accomplished this through their undying love and commitment to their customers.  It is quite apparent that their mantra is their love of music, love of their fans and zest of life.   Money doesn’t hurt either.

REFERENCES

1.  Blakesberg, Jay.  Between the Dark and Light: The Grateful Dead Photography of Jay Blakesberg.  San Francisco: Blackbeat Books, 2002.

2.  Brown, Shona L., and Kathleen M. Eisenhardt.  Competing on the Edge: Strategy as Structured Chaos.  Massachusetts: Harvard Business School Press, 2001.

3.  Gans, David, and Peter Simon. An Oral and Visual Portrait of the Grateful Dead: Playing in the Band. New York: St. Martin’s Press, 1985.

4.  Grant, Robert M.  Contemporary Strategy Analysis: Concepts, Techniques, and Applications.  Massachusetts: Blackwell Business, 2002.

5.  Grushkin, Paul, Cynthia Bassett, and Jonas Grushkin.  Grateful Dead: The Official Book of the Deadheads.  New York: Quill, 1983.

6.  Hill, Sam, and Glenn Rifkin.  Radical Marketing: From Harvard To Harley, Lessons From Ten that Broke the Rules and Made it Big.  New York: HarperPerennial, 1999.

7.  Peters, Stephen.  What a Long, Strange Trip: The Stories behind every Grateful Dead Song.  New York: Thunder’s Mouth Press, 1999.

8.  Razeghi, Andrew. “In search for competitive relevance.” Association Forum of Chicagoland (2001): 14-34.

9.  Rifkin, Glenn.  “How to “Truck” the Brand: Lessons from the Grateful Dead.”  Strategy+Business 1st Quarter, (1997)

10.  Wilder, Clinton.  “The Wilder Side: Music Industry’s Long Strange Trip.” InformationWeek, August 21, 2000, opinion page.

11.  www.dead.net



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