I was born in 1957. That year, a 3 bedroom track home in Wichita, KS sold for the same price as that very same track home in Palo Alto, CA – about $10,000. Of course, things have changed hugely since then. Agriculture value had declined markedly, and automation has allowed for dramatic productivity improvements, robbing the heartland states of hundreds of thousands of agricultural jobs. Without people on the farms, the need for agricultural cities supporting the farms declined. No growth, and values decline. Today that home in Wichita is worth something like $50,000.
The land where the track home once sat in Palo Alto is worth $500,000. Because the explosion of technology jobs in Silicon Valley made demand for housing much greater, and as the value of technology soared those employed in the industry saw their incomes rise, allowing for higher home values.
It all comes down to growth. Geographic areas are like businesses in that growth leads to all kinds of good things – including higher home values. People go where the jobs are. Especially good paying jobs. And that comes from investing in innovation, and the companies that develop new solutions aligned with market needs.
According to Forbes magazine in "Houston: Model City" Illinois has lost 260,000 jobs in the last decade. No wonder home values in Chicago never soared like San Jose. But it's also no mystery why the 15-20% decline in Chicago real estate seems never to be improving. When a city stops growing – well – look at Detroit.
Today Crain's Chicago Business reported "Chicago Economy Sees Signs of Life, But Rocky Recovery is Forecast." Why? Little has been done to improve job growth. Once an agricultural center (the famous stockyards of The Jungle fame) Chicago became a powerhouse manufacturing center. But over the last 15 years the city and state have done almost nothing to drive more jobs related to information or the coming biological growth wave.
Few realize that the University of Illinois is ranked as the 4th best engineering school in the world. Yet, most graduates end up "going coastal" in order to find high paying jobs. Worse, innovators who want seed money or venture capital find none from the state, as it continues struggling to support the costs of jobs and pensions related to the now-gone manufacturing economy! Spending money trying to Defend & Extend the old manufacturing base. And there is almost no angel or venture private financing, which has grown considerably on both coasts, because that is targeted largely in non-manufacturing industries. And the large companies in Chicago – from Kraft to Sara Lee to Motorola to Lucent – to even Boeing – invest nearly nothing in spin-off companies and innovators in their own back yard. Many start-ups report they have to move either west or east in order to obtain financing for their ideas and rapid growth.
For cities and states, growth is the key. It is OK that once all the cowboys ended their cattle drives in Wichita. And that the world's largest grain elevator is just southeast of town. When agriculture was the center of the universe that was a good thing. But because the leaders did not transition toward new job growth as the economy shifted, Wichita is now a backwater. It is so hard to recruit talent to Wichita that Pepsi moved the headquarters of Pizza Hut to Dallas, and most of the decisions for Beech aircraft are made at Raytheon Headquarters in suburban Boston. Face it, do you want to live in Wichita?
How quickly will people say the same thing about Chicago? Already, nobody wants to live in Detroit. If Chicago city leaders, and Illinois state leaders, can't get out of old Lock-ins to manufacturing mind sets we all may be surprised how quickly Chicago follows its sister cities into unattractive outcomes. For politicians, and corporate leaders, a focus on growth is extremely important if they want to keep their city vibrant.
For residents of Chicago, there is ample reason to be worried about the future of their infrastructure and home values.
According to Crain's Chicago Business, "Walgreen's Same Store Sales Nearly Flat." Walgreen's has been Locked-in for 3 decades. Build more stores. Simple. Just like WalMart did for many years. Demand seemed insatiable, until there was a store on almost every corner. Build stores, turn the product fast and keep people coming in for prescriptions or something on sale. Their Success Formula worked, and it helped them grow and grow.
But then about 3 years ago growth slowed. A lot. Raising capital got a lot harder to build these stores, and the apparent need for more stores was a lot less obvious. But Walgreen's didn't attack it's Lock-ins to the old Success Formula. Management kept defending it, and trying to extend by acquiring other chains they could convert into Walgreen's. But as we've seen in same-store results, Walgreen's has stalled. And we know that less than 7% of stalled companies ever consistently grow more than 2% ever again. Walgreen's just refuses to realize that health care programs are forcing more people to drugs over the web, and that retailing is fast moving to on-line sales for both convenience and price. So the Success Formula keeps struggling a bit more every year, with hope that things will somehow return to the "good old days."
A much better management team is in place at Netflix. Netflix has clobbered Blockbuster with their on-line model for movie rentals. You'd expect them to keep pushing hard for on-line rentals, in order to Defend & Extend the Success Formula – just like Walgreen's management has done. In spite of the fact that everyone knows DVD rental growth is threatened by more people simply downloading movies. Thus, I was delighted to see Netflix publish this chart:
Netflix has admitted that its "core" business will peak in 2013! How great. And what's even better is that they are rapidly changing their model by investing heavily into streaming downloads. Where most management would say "we have to stop that transition, it will cannibalize our very profitable existing revenues" Netflix is planning for the change – and preparing to help the market move in that direction!
Only by allowing a streaming download White Space team to be formed 3 years ago is Netflix able to make this transition. It attacked its Lock-in to the traditional – and wildly successful model – in order to allow a team to have the permission and resources to figure out how to move into the new business profitably. That means Netflix has a really decent chance of keeping the company growing as the market shifts! Great news for investors, suppliers, employees and customers!
You don't want to be like Walgreen's management. They may have a chart showing the maximum number of stores needed in the USA – but they won't publish it. Because they have no idea how they'll migrate away from the old Success Formula. They have no Disruptions or White Space. They are fighting market transitions, and slowly seeing results falter. But the growth stall is a big sign that Walgreen's has a lot of heavy problems ahead.
You do want to be like Netflix. Be honest about where markets are headed. Quit trying to protect an old Success Formula with arguments like cannibalization. Instead, attack the old Success Formula with Disruptions and launch White Space teams designed to figure out how you can grow with the market shift – even if price points are destined to deteriorate. Long-term its the only way to survive – and thrive.
The leadership of Microsoft's entertainment division are leaving, as reported at TechFlash.com "Bach, Allard leaving Microsoft in Big Shift for Consumer Businesses." Whether by their own choice or by request, the issue is simply that Microsoft has not driven the XBox to a dominant position versus the Sony Playstation or the Ninendo Wii. It is competitive, but not a big winner. The entertainment division has only recently moved beyond break-even, after years of losing billions of dollars. In the high-growth gaming business, Microsoft has simply not performed, despite its vast resources. And mobile devices developed in this division have lost over half their market share in under 2 years to Apple and Google.
Some of the weakness may have been that the leaders were long-term Microsoft veterans, comfortable to Mr. Ballmer and other leaders, rather than executives committed to their markets. Messrs. Bach and Allard were not they type of leaders to challenge the Microsoft Success Formula, instead willing to accept mediocre results rather than violate Microsoft Lock-ins that would have jeopardized their careers. Microsoft was willing to lose money, and not be a big winner, as long as the division leadership didn't challenge Lock-ins or the company focus on desktop computing products.
I'm not optimistic now that the division is reporting directly to CEO Steve Ballmer. He had an enormous role in the company decision to commit vast resources to Defending the old Success Formula by massing hundreds of billions of dollars behind development and rollout of Office 2007, now office 2010, Vista and now System 7. Yet, these projects have done nothing to grow Microsoft; instead only helping the company hold onto old customers. Worse, Mr. Ballmer himself recently informed the world in his CEO Summit (as reported in Computerworld "Microsoft's Ballmer admits 'Window's Vista was just not executed well") that he's not a good leader of product development – costing the company thousands of man-years in wasted development when admittedly mismanaging Vista!
Now, largely due to the ongoing Defend & Extend management practices of Mr. Ballmer, Microsoft and Apple's valuations are in a dead heat. Growth at Microsoft is poor, while Apple with its multiple new products is growing much faster – causing Apple's value to catch up to what has historically been the world's largest software company.
As I commented on the recent interview for bnet.com (available as a podcast) Microsoft's Defend & Extend management practices are deeply rooted in the industrial economy. But they are insufficient for success in today's rapidly shifting marketplace. I discussed this in more depth for my keynote address at the Western Michigan Innovation & Energy Summit last week, and a second article was published in the local newspaper on Saturday "Customer is Always Right? Columnist says not for Innovative Businesses." Specifically, Microsoft's total commitment to maintaining old operating system and Office customers has created an inability to re-focus resources on high growth markets like gaming and mobile devices.
Although Microsoft has solutions – including tablet technology – it's management is Locked-in to Defending what it always did and not committing to new growth markets. Anyone who thinks Microsoft will be the major player in cloud computing, just because it has demonstrated some new products, must look closely at how poorly the company has developed these other growth markets. Technology and products are not enough when management is Locked in to protecting past markets. Microsoft is far behind Google, and has practically no catch of being a major player with so much resource dedicated to Office 2010 and System 7.
Thus investors as well as customers and employees are not doing so well at Microsoft. In the rapidly shifting technology and gaming markets, this inability to commit to new markets is deadly. For Microsoft, replacing the heads of the entertainment division is most likely analogous to rearranging the deck chairs on ocean liner Titanic. The pending outcome is rapidly becoming inevitable. Time to look for lifeboats!
I get the most heat when I talk about spending less time listening customers. But I'm not joking. To grow revenues and profits you have to go far beyond asking your customers – who are more likely to hold you back from growth than accelerate it.
BusinessInsider.com makes this point loudly in an Henry Blodgett article "Ignore the Scream's — Facebook's Aggressive Approach is Why It Will Soon Become the Most Popular Site in the World." Given how many people use Facebook, it's hard to remember that the site is only 6 years old. What we've also mostly forgotten is that Facebook wasn't even first. It followed the popular, and well financed after acquisition by News Corp, MySpace.com. Lots of companies got into social networking. But now the marketplace is dominated by Facebook – which will soon be the web's most popular site (as it closes in on Google.)
Facebook did not win by asking users/customers what they wanted. To the contrary, Facebook's leaders took the approach of offering what they perceived would be steps forward – and then letting the market react. Frequently a VERY loud contingent would be VERY upset. Screaming loudly they hated the change. But with each advancement, Facebook grew users and the site's success. Facebook didn't ask users what they wanted, nor did they ask users for permission to do new things. Facebook went into the market, and using its scenarios about the future Facebook's leaders drove toward what they expected to be a more popular site. They did it, and learned from their experience.
Too many businesses spend way too much time trying to make small advances, and miss the big shifts. Microsoft is a great example. As it launches Office 2010, Microsoft isn't trying to bring in new users to grow its base – like Facebook is doing. Instead it is trying to preserve its installed base. Nonetheless, some "loss" is a given. You can't preserve forever. If you don't bring in new customers, you can't grow because you have to replace lost ones and find incremental new ones. But what do we see in Microsoft's offerings (such as Office 2010 and System 7) that is designed to bring in new users?
Meanwhile, Google is offering more powerful and cheaper Cloud-based solutions, as Apple and Google grow the demand for mobile devices (like iPhone and iPad) that don't use Microsoft products. The big shifts are all away from Microsoft, while Microsoft's efforts at preservation are leaving these alternatives with limited competition.
Today Bnet Australia posted a podcast interview I did with Phil Dobbie, sponsored by CBS, last week. In "Disrupt To Win" we discuss the big difference between Apple and Google as compared to Microsoft. The growing companies use scenarios to develop new solutions which will appeal to new users. They keep expanding the marketplace. As new users adopt new solutions, eventually it becomes mainstream – further accelerating growth. Growth doesn't come from trying to Defend the old platform or user base, but from launching new solutions which grow the market leading to conversion and even greater growth.
Facebook is now a phenomenon, growing in 6 years from obscurity to the second largest global user base. Because, like Apple and Google, the leadership did not ask customers what they wanted (which was what MySpace.com did). Rather, they studied competitors and emerging markets to create new solutions – without worrying about cannibalization or moving faster than customers would recommend. And the leadership has been willing to overlook vocal user minorities in order to appeal to new users, thus driving more growth. You can't expect customers to deliver great growth, that has to come from aggressive scenario planning, deep competitive analysis and a willingness to Disrupt your organization and the marketplace.
Being an entrepreneur is not a part-time job. People who try starting businesses "between jobs" rarely succeed. It takes time, resources, careful listening to the marketplace and adroit adaptability to emerging needs to be a successful entrepreneur. But, as Harvard Business Review points out in "The Danger of Part Time Business Builders" too often existing companies relegate new business development to a part-time activity.
That's why creating and maintaining White Space is the 4th step of The Phoenix Principle. When you have a scenario plan, and you know how you will effectively compete you attack Lock-in to open doors for doing something new – and then you dedicate resources to doing the new thing. Growth requiresdedicated resources. One of the biggest reasons new projects fail is we expect them to get done using 15% of Frank in finance, 20% of Rebecca in real estate, 30% of Michelle in marketing, etc. Even if Larry is a dedicated leader for the growth project, how can he hope to succeed when most of the time the people on his project have their heads into doing more to manage or improve the existing Success Formula!
The majority of innovation at Proctor & Gamble is variations and derivatives, designed to Defend & Extend an old brand. Sustaining innovations meant to maintain revenues, or grow them slightly. A traditional, large organization is usually pretty good at that activity – as exemplified at places like Kraft and P&G. But these same organizations usually fail when it comes to entering new businesses because they try to "matrix" the resources for start-up; "leveraging" existing staff. These ad hoc teams, even as a task force, aren't able to really listen to new, emerging customers or challenge old Success Formula Lock-ins – so they almost always spend money, produce mediocre (at best) results and simply drift into oblivion.
Harvard Business Review discusses how P&G succeeded by using White Space in "How P&G Quietly Launched a Disruptive Innovation." By dedicating people to the project, and allowing them to violate previous Lock-ins, the Align Probiotic product team was able to identify new customers, cater to their needs, and build a solid business. Initially P&G used a traditional approach, and almost killed the product. But when a far-sighted leader decided to give a dedicated team the resources, and Permission to do what they needed to do without holding closely to P&G Lock-ins, the product became a big success.
If you'd like to hear more about how you can create and use White Space to help your organization succeed, I invite you to 2 upcoming events where I'm the keynote speaker. Next week, on May 18th, I'll be kicking off theInnovation Summit in Grand Rapids, MI. Click on the link to register for this event. On June 9 I'll be the keynote speaker at the CIO Magazine Perspectives event in Chicago. Click on the link to register for that event. All organizations, and functions within organizations, benefit from understanding how White Space is important to growth – so come along and listen to how you can apply these concepts in 2010!
Did you ever carve into a tree, then return to look at the carving years later? If you did, you would have seen that the carving is the same distance from the ground. The tree grew from the outside, from its branches, not from the bottom. The roots and trunk feed the growth, which occurs where the tree meets the environment – growing toward the sun for photosynthetic feeding.
Too many organizations, however, try to grow from the bottom rather than from the branches. Instead of looking to the environment for growth, they look inside. Instead of seeing the roots and trunk as sources of water and minerals (resources for growth) the strategists and leaders spend most of their time thinking about how to protect, or even grow, the "core" source of the tree. Far too little time is spent thinking about the environment and how to push resources where greatest growth can occur.
In a recent Harvard Business Review web posting "The Strategic Imperative Not to Hire Anybody" the author points out that many CEOs are now desirous of growth. But their approach is very flawed. They are enamored with all the headcount reductions of the last few years, and want to grow revenues without adding any additional resources. They are impressed that they grew profits by cutting employees, and now want to grow revenues and profits without any new ones. They "saved the core" by pruning branches, and expect the growth to rematerialize easily.
Discussing how these CEOs came to such a surprising position, that they should be able to grow without adding new resources, the author Walter Kiechel points out that most strategy in corporations has little to do with understanding new markets, new needs – new sunlight. Instead, strategists have been trained in how to improve the efficiency of the root system and trunk supply chain. Their focus has been on optimizing what exists, cutting resources, improving efficiency. What passes for strategy today has little to do with finding new sunlight, and competing effectively with other plants to get it. Instead, strategy is almost all internal analysis to improve how the existing tree maximizes its use of the dirt. How the tree will re-bark the old carving, and sustain its old position. Even ignoring other ground plants that are leaching away minerals and moisture, and other rapidly growing trees that are interfering with sunlight – each year coming closer to the original tree and making it impossible to find sun where it used to be plentiful.
Bloomberg-BusinessWeek makes note of this phenomenon discussing the problems at Goldman Sachs in "Goldman Sachs: Failure of Innovation." Author Rick Wartzman points out that within Goldman, and almost all other banks, the very smart MBAs from Harvard, Stanford, Columbia, Wharton and elsewhere really weren't developing products which would help the banks grow. They weren't developing new financing or investing opportunities that would generate economic growth. Instead, an internal focus led them to develop collateralized debt obligations (CDOs) which had only the intent of reducing risk and increasing return for the existing business. These were defensive, protective products intended to Defend & Extend the old products – not create anything new. Goldman wasn't creating economic growth for its clients, or itself, with CDOs. They were implementing classic D&E behavior – trying to protect the trunk.
Growth happens from the branches. On the edge of the business, where it meets the environment. Growth happens when we focus on how to competitively acquire more sunlight, and use that to maximize the value of our resources. An efficient resource delivery system is helpful, but continued optimizing of that system does not create growth. Unless there is a robust method of identifying new markets, and pushing resources toward those, you simply cannot grow. What strategists need to do is spend a lot more time thinking about markets and competitors if they want to create growth – and a lot less time thinking about how to optimize the "core." If the bankers at Goldman, Bank of America, Merrill Lynch, Citibank, etc. had done that we would have a far more robust economy now. And if leaders want to start growing in 2010 and 2011 they need to change the focus of their strategy group – and figure out how to put new resources into growth areas of the environment!
The “White Space” approach to innovation helps
to cut the time and cost of deploying new technologies.
That's the title of my first column, published yesterday, for CIOMagazine. The four steps of The Phoenix Principle are as valuable inside a function as they are for running an entire business. And for IT shops, the value of using White Space to implement new technologies and solutions is extremely valuable.
This article overviews how world class IT shops avoid getting stuck with most of their budget tied up supporting legacy (and aging) solutions by using White Space to keep their technology base, and user support, ahead of competition. And the more they use White Space, the better they get at leading their companies to faster market reaction and superior rates of return.
Give it a read, you'll find it valuable for any function hoping to be an industry leader.
Here's a one minute video on the value of White Space – and how leading companies like Google master this capability:
"CraigsList is for hookers." That's what the General Manager at the Los Angeles Times told me in 2005. In a meeting to discuss the newspaper's future profitability I pointed out that 1/3 of his newspaper's revenues came from Classified ads, and I had asked him if he was concerned about CraigsList.com. As you can tell, he was not.
At the same time, I asked him if he was concerned about on-line ads and the Google placement engine undermining his display ad business. He assured me that the internet was all for bloggers and no reputable news reader would pay much attention to on-line news. So no, he wasn't worried about internet competition to the newspaper sucking away this advertiser base. He just needed to keep old customers focused on the value of newspaper ads. In less than 6 months GM removed 70% of its newspaper ads – shifting all the money to on-line advertising – leading the auto pack on-line. And movie companies moved nearly 75% of their newspaper ad budget to on-line, while more than half of real-estate ads went on-line. Those happen to be the top 3 sources of display ad revenue for newspapers.
Today Tribune Corporation is in bankruptcy, and classified ads have dropped to a trickle for all major newspapers. Meanwhile, things are going pretty well at CraigsList and Google:
As can be seen, revenues per employee are phenomenal at CraigsList, and extremely good at Google. Much better than at the Tribune Company newspapers such as the Los Angeles Times and Chicago Tribune – despite them shedding a high percentage of employees over the last 7 years!
According to Gavin O'Malley, at OnlineMediaDaily of MediaPost.com in "CraigsList Revenues Soar: But Problems Loom" revenues at CraigsList may exceed $4M/employee/year! Margins he asserts are in the range of 75-80%! And revenues, while still small at about $125M, are growing at 25%/year (for what everyone thinks of as "free.") Albeit, this is a small business. But what if Tribune Company had paid attention back 5 years ago and invested hard in creating the world's best CraigsList – rather than ignoring it? What would the possible revenues be today? And margins? And impact on Tribune Company growth in revenues and profits?
Most companies do only a surface analysis of competition. They are so busy listening to, and reacting to, big customers it's all they can do to keep operations going and make the marginal changes to keep big customers happy. As a result, maybe they look at 2 or 3 of their most similar competitors (like other newspapers in the local market for our example.) And that will be cursory, examining total revenues, perhaps margins (if public and data is available) and a quick glimpse at impact on existing customers and any new products recently launched. But overall, very little attention is paid to competition.
And practically none is paid to "fringe" competitors. Those with different business models. Polaroid ignored digital camera manufacturers (despite licensing them technology) until Polaroid went bankrupt. Digital Equipment(DEC) ignored AutoCad – calling their CAD/CAM products "toys." Wang and Lanier said no big company would use a PC, rather than an integrated centralized system, for corporate word processing so they discounted Apple and Microsoft. Motorola largely ignored Apple in mobile phones, even after doing a joint venture with them to create and launch the RoKR. Failure lists are strewn with companies that simply ignored "fringe" competitors – saying they didn't understand the industry, the customers and how "the business works."
Large or small size is not important when studying competition, it's the ability to change how customers buy that is important. As we've seen in the case of companies like Google, Apple, eBay and Amazon we can see that fringe competitors can grow extremely fast. They can alter the competitive landscape quicker than almost any traditional corporate planning group will give them credit. Just ask the folks at Sears or Home Depot about he impact of Amazon and other on-line retailers (do you think either of those traditional retailers have anywhere near $1M revenue/employee like Amazon?) Or ask Merrill Lynch about the impact of Schwab, eTrade and ScotTrade.
The second step in The Phoenix Principle is to obsess about competition. When you're "the big gun" in the industry it can be incredibly easy to ignore fringe competitors. But do so at your risk. When profits are something like $2M to $3M per employee (as in the case of CraigsList) there is a lot of resource to invest in growth. And strong indications that the business is able to very profitably grow! Ignoring "fringe" competition – especially because you are focused on existing large customers who are Locked-In to your Success Formula – leaves you remarkably vulnerable to rapid market shifts and a really fast demise.
News Corp. executives (and shareholders) need to be worried. Really worried. While they are busy trying to Defend their newspaper approach, including the planned move to charge everyone a subscription fee to access the Wall Street Journal on-line, there is a competitor ready to eliminate them. Of course, if you've read the WSJ for years you may think this sounds ridiculous. This competitor is vying to do the same to the Financial Times, a newspaper much more popular in Europe than the USA, which already charges for on-line access. But this competitor is serious, and just might pull it off.
According to BusinessInsider.com, "Bloomberg Redesigns Web Site as it Tries to Kill Journal." Hiring an executive from Yahoo, Bloomberg News is "pulling the gloves off" and preparing to take on old-line competitors as it steers a course to being #1. And the odds are looking good for its success.
The market for business news has been shifting for years. Once this market was dominated by two delivery mechanisms. One was very expensive, costing thousands or hundreds of dollars per month, driving information to terminals sitting at desks of traders and brokers. The other was a daily reporting of business news through the traditional business newspapers mentioned above. Both businesses were very profitable.
But today, almost everyone can get almost everything the expensive terminals had simply by scanning the web. And if you can get news real-time, why wait until tomorrow? News Corp. bought Dow Jones and has been trying to Defend the terminal business, in the face of intense Bloomberg competition for traders desks and much lower cost competition for everyone else. In an effort to shore up the P&L at Wall Street Journal the company has announced it will reverse all industry trends and start charging for WSJ content on-line. They still haven't figured out how to effectively take advantage of Marketwatch.com as a viable delivery mechanism for WSJ content. An admission they don't know how to develop a robust advertising model on the web and mobile devices that will support the publication.
Don't forget, News Corp. was early to the on-line world with its acquisition of MySpace.com. But instead of letting the people who run MySpace.com do what they needed to do to become Facebook – or possibly to become the next Marketwatch.com – News Corp. leaders interceded. They helped "manage" MySpace and applied News Corp. Success Formula parameters to it. MySpace was not allowed to operate as a White Space project. Now MySpace is a narrow site mostly for musicians and artists – missing the big opportunities in social media, business/financial news or even traditional news dissemination. Had it been given permission to do whatever it needed to succeed, permission to create a new Success Formula, who knows what MySpace might have become?
Today's marketplace will not produce acceptable returns for the old Success Formula. But the value of good business news is growing, as all investors want to know what traders know as fast as they know it. And that is where Bloomberg.com is headed. It is squarely directed at building a new business that is advertiser supported which will deliver the right news to the right place fast enough to capture those who want business news.
Bloomberg is now running 2 separate businesses. They continue to allow the terminal business to work hard as possible at defending its turf. Simultaneously they have established a White Space project that is designed to eventually obsolete the old business. In the process they will cannibalize the terminal business. But they also will very likely drive less agile competitors Dow Jones and Financial Times out of business. In the process they could capture significant ad dollars while learning how to dominate the mobile device market as well as the traditional web.
When markets shift, nobody can win by trying to Defend the old. Customers move on, and they abandon old solutions. Returns decline. The winner has to use Disruptions to overcome old Lock-ins to do whatever is necessary to profitably grow! (like having a web site that looked like an old terminal screen with amber text on a black background) and establish White Space with permission to do what is necessary to succeed! Even recognizing this may create cannibalization – but in the process learning how to earn high rates of return while crushing competitors.
Kudos to the management at Bloomberg. They are going for the jugular in the business news marketplace, and doing so by moving where the market is headed – while other competitors are trying to Defend & Extend old ways of doing business. It may not take Bloomberg long to create serious damage to the old institutions in business and financial news.
Nancy Munro of Knowledgeshift.com posted a great blog "Technology was Blago's Enemy Again." Although many people watch The Apprentice, I'm not one. Apparently the former governor of Illinois was a contestant, and when he was challenged to lead a project team his lack of technology skills got in the way of effectively doing the job. Although he's a smart lawyer and politician, his tool set had become outdated. A competitive team leader who was very good at texting and other state-of-the-art technologies was able to best Governor Blagojevich's team, and the ex-governor was "fired" by Donald Trump from the show.
On the surface, this is a funny story. But Nancy points out how it reflects the very real issues of using technology when competing. All businesses compete every day. Those that learn to use new technologies are able to get more done, faster and more effectively. Those who fall into a routine of doing things the same way, and don't advance their tool set, run the risk of being knocked out of the competition. Mr. Blagojevich's inability to use modern technology killed his chances of winning the competition.
Will you, or your business, go to any trade shows or conferences this year? Probably. But you'll limit attendance because you're still worried about financial performance. How will you select where you go? Probably by attending the ones most closely associated with your industry or business. But think about it, are those the ones that will be most valuable? You'll probably mostly hear what you already know, and reinforce your existing beliefs about the business. Is that really an effective spend?
Instead, shouldn't you use the funds to learn about what you don't know?Like how to be a world-class social marketer? This is an amazingly fast growing area where early adopters are gaining new sales. For example, Guy Kawasaki and the world's leaders in social marketing will be talking about how to get sales and profits from Twitter and Facebook at something called "The Smartbrief Social Media Success Summit." I'm not a shill for the conference (I'm not even speaking there), but this kind of event offers the very real opportunity of learning something you don't know – rather than reinforcing old Lock-ins and keeping you doing what you've always done.
Have you purchased a Kindle or iPad yet? If not, how do you know what they can or can't do? At SeekingAlpha.com "Thoughts on the iPad" offers one person's reflection on what the iPad does well, and doesn't, and where it might evolve – as well as how it compares to the Kindle. These devices are selling in the millions – so are you and your business thinking about how to use one to help sell more products or make more money? Yahoo and Google are both launching ad models for iPad (see Mediapost.com "Yahoo Readies Launch of Online Advertising Model"). Are you considering using this media to reach new customers? Have you considered how one of these products embedded in what you sell might offer you a competitive advantage? If you and your colleagues haven't tried one, experimented, how would you know?
Our businesses rarely get into trouble from something we know well. It's what we don't know, what we ignore, that gets us in trouble. Like Craigslist.com wiping out newspaper classified ads. The newspapers didn't even see it coming. On the other hand, if they had investigated and used Craigslist they could have prepared, and maybe even developed a competitive on-line product to grow new revenues!
It's incumbent upon us to constantly expand into new markets. We have to constantly keep White Space alive where we use resources to experiment in areas outside traditional permission. It's easy to keep throwing all our resources into what we know, but in the end, it's what we don't know that will knock us out of the game – like poor Blago.
