Case Study 1: Tough Mudder LLC
Review “Tough Mudder LLC” (page 31 of your text). Prepare a written response to the first three case questions immediately following the case (these appear at the bottom of page 34 in the print version of the 2nd edition). Submit this item by May 17, which is Sunday of week 2 (you are welcome to submit early).
Tough Mudder LLC: Turning mud runs into a global business
Really tough. But really fun. When I got back to the office on Monday morning, I looked at my colleagues and thought: ‘And what did you do over the weekend?’
Tough Mudder participant
Tough Mudder LLC is a New York-based company that hosts endurance obstacle events – a rapidly growing sport also known as ‘mud runs’. During 2014, over one million participants will each pay between $100 and $180 to tackle a 10- to 12-mile Tough Mudder course featuring 15 to 20 challenging obstacles at 60 different locations in nine different countries. The obstacles include wading through a dumpster filled with ice (the Arctic Enema), crawling through a series of pipes part-filled with mud (Boa Constrictor) and dashing through live wires carrying up to 10 000 volts (Electroshock Therapy). Tough Mudder’s website describes the experience as follows:
Tough Mudder events are hardcore obstacle courses designed to test your all around strength, stamina, mental grit and camaraderie. With the most innovative courses, over one million inspiring participants worldwide to date, and more than $5 million raised for the Wounded Warrior Project, Tough Mudder is the premier adventure challenge series in the world. But Tough Mudder is more than an event; it’s a way of thinking. By running a Tough Mudder challenge, you’ll unlock a true sense of accomplishment, have a great time and discover a camaraderie with your fellow participants that’s experienced all too rarely these days.45
Tough Mudder was founded in 2010 by former British school pals Will Dean and Guy Livingston. While a Harvard MBA student, Dean entered Harvard Business School’s annual business plan competition using Tough Guy, a UK obstacle race based on British Special Forces training, as the basis for his plan.46 On graduating from Harvard, Dean and Livingstone launched their first Tough Mudder event on 21st May 2010 at Bear Creek Mountain, Pennsylvania attracting 4500 participants.
Growing the company, building the brand
Tough Mudder was targeting the market for endurance sports which comprised traditional endurance sports such as marathons, triathlons and orienteering and newer activities, including:
Adventure races: off-road, triathlon-based events that typically include trekking/orienteering, mountain biking and paddling.
Obstacle mud runs: cross-country running events with a variety of challenging obstacles.
Novelty events: fun events such as 5 km races in which competitors are doused in paint (Color Run), running with real bulls (Great Bull Run) and food fights (Tomato Royale).
Obstacle mud runs were initiated in the UK in 1986 with the annual Tough Guy race and in the US with Warrior Dash launched in July 2009. Spartan Races began in May 2010 (the same time as Tough Mudder). A flood of new entries followed and by 2013 there were about 350 organizations offering obstacle mud runs. The surging popularity of mud runs pointed to the desire of the young (and not so young) to turn away from video screens and cossetted lifestyles and test their physical and emotional limits. One observer referred to the ‘Walter Mitty weekend-warrior complex’ noting that while the events draw endurance athletes and military veterans, ‘the muddiest, most avid, most agro participants hail from Wall Street’.47
Tough Mudder’s strategic priority was to establish leadership within an increasingly crowded market. How to position Tough Mudder in relation both to other endurance sports and to other obstacle runs was a key issue for Dean and Livingstone. They used several variables to analyse their market: degree of risk, competition vs. collaboration and the potential for brand building. While traditional endurance sports – such as marathons and triathlons – were low risk and highly competitive, they viewed the area of the market characterized by high risk and collaboration as ‘white space’. Hence, Tough Mudder would be high risk (exhaustion, hypothermia, broken bones, electrocution and drowning) and collaborative – it would be untimed and team-based. Tough Mudder also needed to present itself as formidable (‘Probably the Toughest Event on the Planet’) while attracting a wide range of participants. Making it a collaborative event and giving participants the option to bypass individual obstacles helped reconcile these conflicting objectives. Team collaboration was a central theme: Tough Mudder would foster ‘a true sense of camaraderie … We want everyone to compete, but being a Tough Mudder is also about making sure no man is left behind, not worrying about your finish time.’48 This collaborative nature was a major inducement to corporations seeking to build trust, moral and motivation among employee groups.
The spirit of unity and collaboration provided a central element of Tough Mudder’s marketing strategy. Tough Mudder has relied almost exclusively on Facebook for building its profile, encouraging participation and building community among its participants. Its Facebook ads target specific locations, demographics and ‘likes’ such as ice hockey and other physical sports. It also runs sponsored stories in Facebook’s news and uses Facebook Exchange to show ads to people who visited the Tough Mudder website. Most important, Facebook is the ideal medium for Tough Mudder to exploit its greatest appeal to participants: the ability of participants to proclaim their courage, endurance and fighting spirit. As the New York magazine observes: ‘the experience is perfect for bragging about on social media, and from the outset Tough Mudder has marketed to the boastful.’49 By February 2014, Tough Mudder had 3.7 million Facebook ‘likes’.
To reinforce its reputation for toughness, in 2011 Tough Mudder launched an annual competitive run to find ‘The World’s Toughest Mudder’: individuals and teams competed to complete the greatest number of course laps during a 24-hour period. The Financial Times described the event: ‘Le Mans on foot, through a Somme-like landscape with Marquis de Sade-inspired flourishes’.50
Partnering with other organizations has been a central feature of Tough Mudder’s growth. Its partnerships have been important for building market momentum, providing resources and capabilities that Tough Mudder lacked and generating additional sources of revenue.
Since its inaugural run in 2010, Tough Mudder has been an official sponsor of the Wounded Warriors Project, a charity that offers support to wounded veterans. The relationship reinforces Tough Mudder’s military associations and helps legitimize Tough Mudder’s image of toughness, resilience and bravery. Its military connections were further reinforced in September 2013 when the US Army Reserve agreed to sponsor eight Tough Mudder events for promotional and recruiting purposes.
Other sponsorships were primarily to generate revenue. Commercial sponsors include Under Armour, the official outfitter to Tough Mudder; Dos Equis, supplier of beer to refresh Tough Mudder finishers; General Mills, whose Wheaties are the official cereal of Tough Mudder; and several other consumer goods companies.
As CEO of Tough Mudder LLC, Will Dean focuses upon key priorities. ‘There are only two things a leader should worry about,’ he told Inc. magazine, ‘strategy and culture … We aspire to become a household brand name, so mapping out a long-term strategy is crucial. I speak with Cristina DeVito, our chief strategy officer, every day, and I meet with the entire five-person strategy team once a week … We go on retreats every quarter to a house in the Catskill Mountains … There’s no phone coverage, and the Internet connection is slow … We started the retreats to get everyone thinking about the future.’51
At the core of Tough Mudder’s strategy is its sense of identity, which is reinforced through the culture of the company: ‘Since Day 1, we’ve had a clear brand and mission: to create life-changing experiences. That clear focus means that every employee is aligned on the same vision and knows what they’re working toward … We know who we are and what we stand for,’ said Dean.52 To sustain the culture, Tough Mudder has established a list of core values to guide the actions and behaviour of the management team.
The other key responsibility of Will Dean as CEO is hiring. Tough Mudder grew from eight employees in 2010 to over 200 by the end of 2013. ‘A business is only as good as the people who build it,’ observed Dean, who has been meticulous in seeking out the best available talent and ensuring that its new hires share his own passion and values. Hires included executives from ESPN, Diageo, Bain & Company and the London Olympic Committee – typically individuals who combined professional achievement with the quest for adventure.
Tough Mudder in 2014
By 2014, the industry appeared to be consolidating and the market leaders – Tough Mudder, Spartan Races and Warrior Dash – were vying for dominance (Figure 1.9). While Tough Mudder was generally regarded as the market leader, its margin of leadership over Spartan Races and Warrior Run was narrow. Spartan Races, which offered obstacle races of between three and 13 miles, was hosting 34 events in the US and Canada during 2014 as well as events in 11 other countries. In 2013, it signed Reebok as its lead partner. In 2014, Warrior Dash would offer its 5 km mud runs in 35 US locations plus seven in Mexico and two in Denmark.
Tough Mudder’s success was a result of astute strategic positioning, effective brand building, careful product design, meticulous operational planning and obsessive focus on the quality of the customer experience. However, as leading rivals became increasingly sophisticated in design, marketing and operations, CEO Will Dean recognized that sustaining Tough Mudder’s
1. How would you describe Tough Mudder’s strategy?
2. Why has the strategy been successful?
3. What do you think is the role of Tough Mudder’s sense of identity (‘We know who we are and what we stand for’) in influencing the effectiveness with which it implements its strategy?
Please Speak in the tone of a strategic leader. (The course is strategic leadership).
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