How To Avoid The Taco Strategy

In 1995 in Cancun Mexico, an enterprising cook opened a roadside taco stand called – Aca Los Tacos.  Translated, this means – “here are the tacos”.  Obviously he didn’t use a high end marketing company to pick a name, logo, or advertising campaign.  He simply wanted the public to know where, he sold, the tacos. 

He put out some old tables with condiments in the middle.  He used a cooler for self-serve drinks.  He was generous with the portions of beef he placed in each taco, and you paid him when you finished by reminding him how many you ate. 

It was an overnight success.  Rich, poor, Gringos, and Mexicans all flocked to the dirt floor restaurant on the side of the road.  The secret – great meat!  It was delicious.  You ate standing in the dirt and you did not care.  The food was fantastic!

Strategy is more about the discipline of saying 'no.'

Soon another “Aca los Tacos” opened in Cozumel and Playa Carmen.  They were also successful.  Rumors grew that this would be the next great food chain. 

All great stories have their villains.  In business, many of the villains are overly smart MBAs (like myself) who try to outthink everyone.  Rumor had it that the founder was bought out by a group of businessmen with MBAs from Northern Mexico.  And then the changes began….

The Cancun restaurant (if you could call it that) was moved to another part of the city where nice restaurants resided. I remember arriving to be welcomed by a ma?tre-D who  escorted me to my white linen covered table.  They now had a “vision statement” clearly posted for the world.  They had a strategy and also posted “their mission.”  Where was my favorite taco stand?  The ambiance had changed…

With all the costs of the ma?tre-D, mission statement, table clothes, and higher rent, they obviously needed to better manage their bottom line.  And here it comes – yes – they purchased poorer quality beef and the cook counted out each piece one by one (so no one received too many). 

A month later – the restaurant was empty.  So what is the moral?

1. Great strategy starts with the customer. What is most important to them (ambiance vs quality)?
2. Leverage your core competencies and make it a differentiator – (in this case, high quality meat with generous portions).
3. Make decisions about where to support your core competencies/differentiation and where you will not focus. The discipline of where you will not focus is 100x harder than the prior.  You need to guard your core competencies like a bank account. 

I was reminded of my Aca Los Taco experience while studying strategy for two months at Harvard Business School.  The cautionary tale resonated deeply.  I have always been a firm believer that the “enemy of great – is good.” We seldom do “the great” because we are trying to do good things. Slowly and surely we try more and more to match our competition at the expense of our core strengths.  Strategy is more about the discipline of saying “no.”

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