Or is it?
Whenever a person or a company succeeds there is no shortage of post analysis on why the strategy was so clever. Why what they did worked, and how clever the people behind it were. And I’d say most time the people behind it are clever. But what I’m wondering is how much of it was planned, on strategy and predictable before any of it happened.
If we look at the history of science, very few of our discoveries started on paper, or in the lab. What was far more common was something actually happened which surprised and delighted. The people behind the discovery, or even those around it, then re-tested what happened to build a theory to describe it – or in business terms, a story that described what happened in the form of a strategy.
I’m pretty sure this is most often the case in business. For every new company, or game changing innovation there are probably a thousand or more failures of others trying to do the same thing. But these failures rarely get written about, only the success stories. And these success stories are always told post success – who wants to hear about failures anyway?
This tells us much about startup strategy. And what it tells us is that strategy is often an illusion. It’s a post rationalisation of what happened – the reverse engineering of business enlightenment. Where the real value is unlocked in business, is entering a realm where value needs to be created, and implementing a set of behaviours that lead to momentum and serendipity. This is a more accurate description of how a “pre success” strategy is landed upon.
In a world of rapid change we are better off letting events shape the opportunity, rather than trying to shoe horn our idea into a perceived market trajectory.
There’s a lot of talk in Australia about what makes a good Fish & Chip shop. It just so happens I know the answer to this question, and based upon this tweet by Heath, it has become clear I must share my rules right here.
Fish & Chip Shop rules:
- Cannot sell other food items which traditionally live outside of the Fish & Chip ecosystem. Namely pizza and kababs.
- Cannot be attached to another retail outlet such as a Milk bar. Must operate single business operation.
- Must have fish tiles on the wall.
- Must have wall poster of local fish population.
- Must wrap Fish & Chips in paper. Boxes are an unacceptable packaging material.
- Must not provide tomato sauce. Only salt and vinegar. Tomato sauce you have at home or go without. It’s just the way it is.
- Must sell pickled onions in a plastic tub on the counter, with the price written in a marker pen on the side.
- Must have traditional retro cans of beverage for sale in the drinks fridge such as Creamy Soda and Passiona.
- Drinks fridge must have a sign which says: “Please make selection before opening door”.
- Must make hamburgers and include a hamburger with the lot which has the options of beetroot, egg and pineapple.
- Hamburgers must be built on the grill while they cook by an expert burger cook.
- Must be run by hard working immigrant Greek family – the inventors & stalwarts of the local Australian fish & chip shop tradition.
- Must have home made chips from own potatoes. Frozen chips from bag are unacceptable.
- Must make potato cakes in house and dip in batter, just prior to dropping in deep fryer.
- Must provide both fired and steamed dim sims. These of course, must come from the frozen bag variety.
- Pricing board must be above the cooking fryers with prices written in chalk to allow for inevitable price inflation.
- Must have retro 1980′s arcade machine with a single game such as Galaga or Pacman.
- Must claim to be ‘local fish supplier’ of some random restaurant or pub in the local area.
- Must be located in working class area, preferably in the Western Suburbs.
- Should not be in obvious seaside location and counter intuitively be far away from waterway or estuary.
- Must be closed on Mondays.
- Must only be staffed by family members.
- Must have wide multi coloured plastic strip at door entry – to keep flies out.
- Must have cabinet at the front of the store window to display the ‘fresh’ fish.
- Must have semi inappropriate Chiko Roll poster on wall.
- Must sell ‘apple turnover’ oily apple pie with thick pastry.
- Must sell banana and pineapple fritters.
- Must wrap non-fried items in separate paper.
- Must use metallic industrial sized salt shaker to deeply cover chips in salt.
- Insert your rule here….
So why am I telling you this here on Startup Blog? Because sometimes the real innovation is about having the presence of mind to maintain a tradition in the face of change. While fish & chips might not be a thing where you live, I’m sure there is some kind of equivalent food or retail outlet. When change is the order of the day we can become worth talking about when we don’t change, or even bring back things of value which got lost along the way.
Leadership ironically, is sometimes about being a stalwart of the past.
The pace of change is overwhelming. Many established companies have finally realised that this change isn’t just a little blip in the way things are done, but an entire business eco system reorganisation. It’s fair to say that the level of corporate anxiety is at an all time high, and with good reason. Only 57 companies still remain on the inaugural Fortune 500 list from 1955, while more than half of the Fortune 500 companies were not in it just 10 years ago. And while the cost of not adapting to the digital era is likely to be extinction, it seems as though every day I see yet another story of a large legacy market leader who is, to put it bluntly, Kodaking.
Kodaking is the term I now use to explain a company implementing strategies which are fundamentally flawed in the new business infrastructure. But before I go through the signs of a firm who is Kodaking, I’ll recap some of the terrible decisions made by the once revered imaging company.
Kodak’s Digital Camera from 1975:
- – -
Kodak had over $16B in revenue in the late 1990’s – yet is bankrupt today. In fact they recently sold 1,100 of their remaining valuable digital imagery patents to a consortium of Apple, Samsung, Google and others for the sum of $527 million in a bid to restructure and salvage something. They ironically invented the digital camera in 1975, but had little incentive to facilitate its mass marketing as it disrupted their highly profitable film sale and processing business. As late as 2004 Kodak in their
wisdom stupidity attempted to sell digital cameras which plugged onto home based printers so they could continue with their old model of selling chemical film for profit. Here’s the kicker though…. What they did do, share memories, ‘Kodak moments’, has never been in stronger demand than it is today. Twice as many photos have been shared in the first half of this year as were shared in all of last year. What is facebook other than a Kodak moment 2.0? Facebook’s market capitalisation is (as of today) $122b while Kodak had a market value of only $28b at its peak. In fact there is no limit of new and large brands who took what Kodak resisted – Flickr, Instagram, Smartphones, GoPro, parts of Google, elements of Apple…. the list is long. Kodak could obviously see the future, because they invented most of it. But they were greedy. What they really failed to do was connect people, the way the people wanted to connect. They tried to dictate the methods of visual connection with people. As we know technology has no respect for the past, and our strategy must always be defined by our audience’s desires. They recognised the technology, but failed to open their mind to the revenue possibilities of it, and play the long game.
So how do we avoid Kodaking? Here are some things to look out for:
- Shelving technology which is less profitable, but highly probable to redefine a market.
- Defining the company by product portfolio instead of human needs underneath them (see the Marketing Myopia).
- Trying to find new ways to keep old revenue models alive.
- Not asking these core questions often enough: What business are we in? What business do we need to be in?
- Internal talk about the advantages of scale and infrastructure, when the opposite is true.
- Ignoring the potential of disruptive startups in adjacent industries.
- Trying to charge a fee for what can now be found elsewhere for free.
- Competing for market share in an existential pie (Kodak vs Fuji vs Agfa). The future is often in baking a new market share pie.
- Not entirely embracing technology as a mandatory company focus.
Startup blog says: Don’t be Kodaking.
No, we shouldn’t do that. It’s such a big thing with no clear way to start, and no clear way to end. There’s a really big chance we could waste a significant amount of financial, temporal and emotional resources on it. It’s too uncertain and adds a whole lot of life complications to it, it takes a lot of organising, registrations, financing, commitment to something for which a future which is unproven.
Here’ a better idea. We should do a project instead. Projects are superior to businesses. Superior because they tell us more about the future. It can sample our predicted future reality and test it for truth. In addition to that it has a number of micro benefits which add up to something significant.
- A project helps us get over our inertia. It’s only a project.
- A project can be bootstrapped more heavily, as we don’t need to build in any scale.
- A project allows us to do a minimum viable product, but actually mean it, and actually do it.
- A project is not a life long commitment. We can close it off any time for any reason we choose.
- A project tells our circle and the market that this is temporary, but worth trying.
- A project doesn’t need huge resources, only enough to cover one cycle.
- A project is likely maintain momentum and energy as the finish line is in sight from the start.
- A project let’s us test our assumptions, but in the real world – the market place.
- A project can lead to a better conceived project.
- A project can lead to important collaborations and discoveries.
- A project can lead to something bigger… maybe even a business.
- A project….
In fact, when we really think about it, business is simply a project which worked well and got bigger. Or we could say that a business is a number of separate yet continuous projects linked together in perpetuity, performed by the same people and infrastructure.
And so, it’s pretty clear if we just start with a project or tow, we might be lucky enough to end up with a business.
If we ask any well know brand who their major competitors are the answers are reasonably predictable. It’s those brands who have that other part of the market share pie. This is what we all got taught during marketing class, and it made sense in the AC Nielsen TV ratings market share industrial era. The problem is that it makes a lot less sense as we transition to the digital age. An age where incumbents are constantly being exposed on the flanks, rather than by direct competitors. If we went back and asked a number of industrial world businesses who their main competitors were, the story becomes much clearer:
Kodak: At first it was Fuji & Agfa, closely followed by Cannon and Nikon…. but really in the end their nemesis came from a different planet. The planet of Apple, Google, Instagram and Facebook. What is Facebook really other than a Kodak moment 2.0?
Encyclopedia Britannica: Clearly World Book and later Encarta, the CD ROM based delivery by Microsoft. But in the end it was you and me who provided more accurate data on the subject of ‘everything’ as we populated both Google and Wikipedia. We turned out to be more accurate, more timely and we came at everyone’s favourite price – free!
Free to Air Television: First became very worried about movie rental stores (VHS, DVD) followed by cable TV. While now their real worry is the other screens in the home as Netflix, Youtube and Pirate Bay eat their lunch.
There are of course an unlimited number of examples with the same story.
But the lessons in a period of technological transition are two fold.
Incumbents: If your company or brand is in a battle defending revenue and market share from industry players, you’re focusing on the wrong area.
Entrepreneurs: If you’re aiming to disrupt an industry that has intense and focused market share battles, you’re focusing on the right area.
Startup Blog says: In times of transition, it pays to look to the sides instead of straight ahead.
While it is clear that the birth of the omnipresent web has changed our business infrastructure, it’s not clear that most people understand the truth about digital as it pertains to business, brand or startup strategy. Here’s a simple phrase to help remind us:
There is no digital.
There is only ‘life’. We seamlessly move between a variety of technologies in our day. As we have done since the beginning of time with all forms of technology. We don’t have a digital life and an analogue life as much as we don’t have a sitting on a chair life or a sitting on the floor life. A chair is just a piece of technology like the latest shinny thing in our pockets is. And it’s about time we started recognizing that a digital strategy is a flawed one by definition. All that exists is a strategy that makes sense – one which is technology agnostic. One that achieves objectives by considering all of the methods and tools at our disposal.
The days of digital strategy are over. Anyone who doesn’t get digital, doesn’t get strategy. We need start to think again in terms of utility for the audience – it’s only when we focus on their needs that we can ever hope to be a solution in their day.
I’m a strong believer in the importance of setting written goals. However, it does seem as though for every person I meet that agrees with their ability to influence life outcomes, there are an equal number of people who dismiss the concept of goal setting as having an impact on achievement.
So here is the simplest explanation I can provide for how goals work: Setting a written goal creates selective perception. Written goals subconsciously program our mind to be aware of opportunities relating to the goal as they cross our path. All of sudden we see how things might work. This does two things: Firstly, it reminds us of the task we’ve set. Secondly, it helps us find ways to make it actually happen. After that, it’s just a question of effort and tenacity.
It’s kind of like your car: Have you ever wanted a new car, or just bought a car only to notice how many of them are driving around on the roads? This is selective perception at work. It’s a beacon for stuff that matters to us – for what is relevant in our world. We only see what is out there once we purposely place ‘it’ into our life or desire it.
One of the most powerful things we can do is set our brain to work in the background – and if we know it works on simple things like noticing cars, imagine what it can do once we set it to notice opportunities.
We can can choose to invent demand for what we make, or or fill supply for what is desirable. The former takes a certain type of creativity and endeavour, it’s been the bellwether of many large industrial stalwarts. Sure they incrementally change the offer – but only to justify making noise as part of the demand generation process.
The alternative is to make something people really want. To anticipate genuine needs and fill them, no matter how difficult it seems for our supply chain. While this has the benefit of a natural peer to peer sharing, it also ensures we are serving others, and not just the short term needs our organisation.
There’s a lot of talk in startup circles about finding business models and the idea of making a ‘pivot’ to an alternative idea, model or technology. The pivot being taking part of what’s working and moving more pointedly in that direction. In the old school pre-tech startup days we used to call it a related diversification or a simple direction change. In many ways it’s far easier to do when we are in the information sector as we are only moving ones and zeros as opposed to factories, retail outlets and customer segments.
Recently I’ve embarked on a new project (a passion play with no intended financial outcome). The project is to build the BMX bike I wished I had when I was a kid. I did have one, but not the mac daddy version… So now that I can afford it, I’m going to find all the parts I need and build it piece by piece. My research on the topic currently lives here.
One of the parts I
need want is a pair of Oakley 3 handle bar grips (seen below) Which as far as I can tell have been out of production for 20+ years.
It sent me on a bit of a search around the web, which gave me some nice insights into Oakley Inc - the company. They are a classic example of how to pivot. They seamlessly moved into new product arenas which spoke to the same type of consumer, using their core competency. While you probably know that they went onto make sport equipment including sunglasses, sports visors, and ski goggles , watches, clothing, shoes and even prescription eye wear…. they started with a mad scientist in his garage (James Jannard) trying to invent a better rubber / plastic to make better motorcycle and BMX grips with. He ended up developing a material known as ‘Unobtanium‘. Their first ever grip was made of it… as are the Oakley 3′s above. It is still used today in many of their products and eye wear.
The really cool part is that James could see 3 important things:
- How else the material could be used in his categories of interest (Motorcross & BMX)
- Which other sports (many had consumer cross over) had a cultural & product usage fit for brand extension (Skiing, cycling surfing)
- How to cross fertilise design ethic and brand cache by focusing on multiple niche markets.
It really is a modern example of entering passion categories, entrepreneurial endeavor, elbow grease and marketing smarts that resulted in a 40 years of innovation. I happened upon this video that explains a little more on the history of Oakley (and the pivots it took) which I think is worth a few minutes of your time.
Thanks for the lessons Jim!
This was just so brilliant I had to re-post it here in its entirety. The 12 most powerful words in business from Ragans PR daily.
Office conference rooms, cubicles, corner offices, and common areas are crammed with business jargon that dulls imaginations and saps creativity.
Many powerful words for business have nary a thing to do, directly, with industry.
Polite push back can temper groupthink. Ask why “things have always been done that way.” Or ask why it didn’t work the last time you tried it.
People like proof. They want to see things with their own eyes. It’s human nature. In trying to reach and win customers, clients, colleagues, or management, show your ideas with examples. Draw an analogy, give an anecdote, paint a picture. Help them see what you see. Show them, and they’ll be more likely to get it and get on board.
Trying something that didn’t work, as long as it wasn’t impulsively foolish, dangerous, or illegal, can be regarded as the trial run or first draft.
Breathe, pause and collect yourself before you send an email while angry, take criticism too personally, or speak when emotion is clouding your judgment. The repair work required after you lash out is wasteful, unproductive, and inefficient.
Sure, market testing and focus groups have their place. But business success takes action and plenty of doing.
Hearing is a function. Listening is a skill. It takes practice. But it yields immeasurable dividends. Extra points if you listen, consider alternative options and critical feedback, and adjust course because of it.
The staggering pace of growth in social media shows how essential it is to learn all through life. Learning can mean formal training, of course. But learning also happens by staying nimble enough to act when opportunities appear.
Being open-minded—open to change, open to being wrong, and open to new possibilities—can lead to new products, new clients, new markets, and entirely new ways of doing business.
Civility eases differences among humans. When I was an editorial writer, my colleagues and I would gather each morning to discuss the official position the Cleveland Plain Dealer would take on the most controversial topics of the day.
Politics, religion, social issues—you name it. It worked well largely because the group was civil and respectful. And our boss was an awesome leader who made sure the discussions stayed that way.
Leading is much more powerful than managing. Think about it: You manage problems. You manage bills. Or you manage just to cope. Leading, on the other hand, is nuanced, customized, and inspired.
Fear of failing keeps people from doing all sorts of things: Piping up at a meeting with an idea, starting a business, or taking other risks. Failing is really an inevitable part of taking risks. And taking risks is an inevitable part of a strong business.
After failing, it’s important to learn what when wrong and how to do it better next time. This is the true secret of missteps. Through the lessons learned in the aftermath, greatness can emerge.