by Adam Hartung | Jan 12, 2010 | Defend & Extend, In the Swamp, Innovation, Leadership, Lock-in
Do all good ideas originate outside the organization? Of course not. Motorola understood all the critical technologies for smart phones, and taught Apple how to use them in a joint development project that created the ROKR. That's just one example of a company that had the idea for growth, but didn't move forward effectively. In this case Apple captured the value of new technology and a market shift.
On the Harvard Business Review blog site one of consulting firm Innosight's leaders, Mark Johnson, covers two stories of companies that had all the technology and capability to lead their markets, but got Locked-in to old practices. In "Have You Already Killed Your Next Big Thing" Mr. Johnson talks about Xerox and Kodak – two stories profiled in my 2008 book "Create Marketplace Disruption." Both companies developed the technology that replaced their early products (Xerox developed desktop publishing and Kodak developed the amateur digital camera.) But Lock-in kept them doing what they did rather than exploiting their own innovation.
One of the causes is a fascination with metrics. Again on the Harvard Business Review blog site Roger Martin, Dean of the Rotman School of Management at the University of Toronto, tells us in "Why Good Spreadsheets Make Bad Strategies" that you can't measure everything. And often the most important information about markets and what you must do to succeed is beyond measuring – at least in the short term.
Measurements are good control tools. Measurements can help force a focus on short term improvements. But measurements, and the concomitant focus, reduces an organization's ability to look laterally. They lose sight of information from lost customers, from small customers, from fringe customers and fringe competitors. Measurement often leads to obsession, and a deepening of Defend & Extend behavior. It's not accidental that doctors often find anorexia patients measure everything in (liquids and solids) and everything out (liquids and solids).
Measurements are created when a business is doing well. In the Rapids. Like Kodak during the 1960s and Xerox in the 1970s. Measurements are structural Lock-ins that help "institutionalize" the behavior which makes the Success Formula operate most effectively. And they help growth. But they do nothing for recognizing a market shift, and when new technology comes along, they stand in the way. That's why a powerful Six Sigma or Total Quality Management (TQM) or Lean Manufacturing project can help reduce costs short term, but become an enormous barrier to innovation over time when markets shift. These institutionalized efforts keep people doing what they measure, even if it doesn't really add much incremental value any longer.
To overcome measurement Lock-ins we all have to use scenario planning. Scenarios can help us see that in a future marketplace, a changed marketplace, measuring what we've been doing won't aid success. And because we don't yet know what the future market will really look like, we can't just swap out existing metrics for something different. As we proceed to do new things, in White Space, it's about learning what the right metrics are – about getting into the growth Rapids – before we tie ourselves up in metrics.
Note: To all readers of my Forbes article last week – there has been an update. The very professional and polite leadership at Tribune Corporation took the time to educate me about the LBO transition. As a result I learned that what I previously read, and reported in my column as well as on this blog, as being an investment of employee retirement funds into the LBO was inaccurate. Although Tribune is in hard times right now, the very good news is that the employee retirement funds were NOT wiped out by the bankruptcy. The Forbes article has been corrected, and I am thankful to the Tribune Corporation for helping me report accurately on that issue.
by Adam Hartung | Jan 8, 2010 | Current Affairs, Disruptions, In the Rapids, Lock-in, Web/Tech
So out of the blue I got called by a reporter asking me what I thought of Google posting an advertisement for the new Nexus One on its homepage. It was an easy question – the Google homepage isn't sacrosanct. Like everything, it needs to be used in a way that's most valuable for customers and suppliers. Times change, and it should change. So I answered that the Google home page wasn't a sacred cow, and it's smart for Google to try things.
So OnlineMediaDaily.com quotes me on Thursday in "Google Runs Multimillion-dollar ad for Nexus One."
- "Has Google changed its stance on using the
home page as a promotional platform? Adam Hartung, an analyst with
Spark Partners, refers to Google's home page as a "sacred cow." The
company has something that almost seems like a religious idol. This ad
demonstrates that Google is willing to change that and "attack a sacred
cow to step the company forward," he says. "And that's a very good sign
for investors."
I didn't record myself, but it sounds like me. Sacred cows get you into trouble. You have to constantly test, try new things.
But the CEO of Burst Media didn't agree with me. Picking up on my quote, in the HuffingtonPost.com "Google Should Not Give Up the Sanctity of Its Homepage" Mr. Coffin takes me to task for violating what he considers a sacred public trust. He fears that anything added to the Google homepage creates cracks in Google's foundation putting the company at risk.
How does anyone in web marketing get so Locked-in? It just goes to show that you don't have to be old, or a big company, or have a lot of money to be Locked-in to something. Google's homepage isn't even a decade old. Nor is Burst Media, an on-line marketing company, I don't think. But here a reputation leader in on-line marketing is working, working hard actually, to defend a sacred cow. "Sanctity" of a web page??? Give me a break.
Google has excelled, grown and made more money, because it has been willing to Disrupt its Success Formula and use White Space to test new things. That's why it's become a household name – and in the process almost singlehandedly destroyed the newspaper industry. And now is threatening to change how we do personal computing (with Chrome) and enterprise applications (with Google Wave) and even mobile computing (with Android and Nexus One). Google should consider nothing sacred, because that's the kind of Lock-in which kills tech companies. Sun Microsystems was busy protecting its sanctity while the market shifted right out from under it
Lock-in is inevitable. But winners – those who grow and make above average rates of return – learn how to manage Lock-in. They are willing to Disrupt and use White Space. Good for Google. I would have expected nothing less!
by Adam Hartung | Jan 6, 2010 | Current Affairs, General, In the Rapids, Innovation, Leadership, Openness, Web/Tech
Leadership
Listen To Competitors–Not Customers
01.06.10, 03:10 PM EST
The accepted wisdom that the customer is king is all wrong.
That's the start to my latest Forbes column (Read here.) Think about it. What would Apple be if it had listened to its customers? An out of business niche PC company by now. What about Google? A narrow search engine company – anyone remember Alta Vista or Ask Jeeves or the other early search engine companies? No customer was telling Apple or Google to get into all the businesses they are in now – and making impressive rates of return while others languish.
But today Google launched Nexus One (read about it on Mobile Marketing Daily here) – a product the company developed by watching its competitors – Apple and Microsoft – rather than asking its customers. In the last year "smartphones" went to 17% of the market – from only 7% in 2007 according to Forrester Research. There's nothing any more "natural" about Google – ostensibly a search engine company – making smartphones (or even operating systems for phones like Android) than for GE to get into this business. But Google did because it's paying attention to competitors, not what customers tell it to do.
No customers told Google to develop a new browser – or operating system – which is what Chrome is about. In fact, IT departments wanted Microsoft to develop a better operating system and largely never thought of Google in the space. And no IT department asked Google to develop Google Wave – a new enterprise application which will connect users to their applications and data across the "cloud" allowing for more capability at a fraction of the cost. But Google is watching competitors, and letting them tell Google where the market is heading. Long before customers ask for these products, Google is entering the market with new solutions – the output of White Space that is disrupting existing markets.
Far too many companies spend too much time asking customers what to do. In an earlier era, IBM almost went bankrupt by listening to customers tell them to abandon PCs and stay in the mainframe business —– but that's taking the thunder away from the Forbes article. Give it a read, there's lots of good stuff about how people who listen to customers jam themselves up – and how smarter ones listen to competitors instead. (Ford, Tribune Corporation, eBay, Cisco, Dell, Salesforce.com, CSC, EDS, PWC, Dell, Sun Microsystems, Silicon Graphics and HP.)
by Adam Hartung | Jan 5, 2010 | Current Affairs, Defend & Extend, eBooks, In the Rapids, In the Swamp, Innovation, Leadership, Web/Tech
Happy New Year!
As we start 2010 the plan, according to The Financial Times, "WalMart aims to cut supply chain costs." Imagine that. Cost cutting has been the biggest Success Formula component for WalMart for its entire career. And now, the company that is already the low cost retailer – and famous for beating its suppliers down on price to almost no profitability – is planning to focus on purchasing for the next 5 years in order to hopefully take another 5% out of purchased product cost. How'd you like to hear that if Wal-Mart is one of your big customers? What do you suppose the discussion will be like when you go to Target or KMart (match WalMart pricing?)
Will this make WalMart more admired, or more successful? This is the epitome of "more of the same." Even though WalMart is huge, it has done nothing for shareholders for years. And employees have been filing lawsuits due to unpaid overtime. And some markets have no WalMart stores because the company refuses to allow any employees to be unionized. This announcement will not make WalMart a more valuable company, because it simply is an attempt to Defend the Success Formula.
On the other hand according to Newsweek, in "The Customer is Always Right," Amazon intends to keep moving harder into new products and markets in 2010. Amazon has added enormous value to its shareholders, including gains in 2009, as it has moved from bookselling to general merchandise retailing to link retailing to consumer electronics with the Kindle and revolutionizing publishing with the Kindle store. Amazon isn't trying to do more of the same, it's using innovation to drive growth.
And the CEO, Jeff Bezos freely admits that his success today is due to scenario development and plans laid 4 years ago – as Amazon keeps its planning focused on the future. With the advent of many new products coming out in 2010 – including the Apple Tablet – Amazon will have to keep up its focus on new products and markets to maintain growth. Good thing the company is headed that direction.
So which company would you rather work for? Invest in? Supply?
Which will you emulate?
PS – "Create Marketplace Disruption: How To Stay Ahead of the Competition" was selected last week to be on the list of "Top 25 Books to read in 2010" by PCWorld and InfoWorld. Don't miss getting your copy soon if you haven't yet read the book.
by Adam Hartung | Dec 28, 2009 | Current Affairs, In the Rapids, Innovation, Leadership
I was intrigued when I read on the Harvard Business Review web site “Do we celebrate the wrong CEOs?” The article quickly pointed out that many of the best known CEOs – and often named as most respected – didn’t come close to making the list of the top 100 best performing CEOs. Some of those on Barron’s list of top 30 most respected that did not make the cut as best performing include Immelt of GE, Dimon of JPMorganChase, Palmesano of IBM and Tillerson of ExxonMobil. It did seem striking that often business people admire those who are at the top of organizations, regardless of their performance.
I was delighted when HBR put out the full article “The Best Performing CEOs in the World.” And it is indeed an academic exercise of great value. The authors looked at CEOs who came into their jobs either just before 2000, or during the decade, and the results they obtained for shareholders. There were 1,999 leaders who fit the timeframe. As has held true for a long time in the marketplace, the top 100 accounted for the vast majority of wealth creation – meaning if you were invested with them you captured most of the decade’s return – while the bulk of CEOs added little value and a great chunk created negative returns. (It does beg the question – why do Boards of Directors keep on CEOs who destroy shareholder value – like Barnes of Sara Lee, for example? It would seem something is demonstrably wrong when CEOs remain in their jobs, usually with multi-million dollar compensation packages, when year after year performance is so bad.)
The list of “Top 50 CEOs” is available on the HBR website. This group created 32% average gains every year! They created over $48.2B of value for investors. Comparatively, the bottom 50 had negative 20% annual returns, and lost over $18.3B. As an investor, or employee, it is much, much better to be with the top 5% than to be anywhere else on the list. However, only 5 of the top best performers were on the list of top 50 highest paid — demonstrating again that CEO pay is not really tied to performance (and perhaps at least part of the explanation for why business leaders are less admired now than the previous decade.)
Consistent among the top 50 was the ability to adapt. Especially the top 10. Steve Jobs of Apple was #1, a leader and company I’ve blogged about several times. As readers know, Apple went from a niche producer of PCs to a leader in several markets completely unrelated to PCs under Mr. Jobs leadership. His ability to keep moving his company back into the growth Rapids by rejecting “focus on the core” and instead using White Space to develop new products for growth markets has been a model well worth following. And in which to be invested.
Similarly, the leaders of Cisco, Amazon, eBay and Google have been listed here largely due to their willingness to keep moving into new markets. Cisco was profiled in my book Create Marketplace Disruption for its model of Disruption that keeps the company constantly opening White Space. Amazon went from an obscure promoter of non-inventoried books to the leader in changing how books are sold, to the premier on-line retailer of all kinds of products, to the leader in digitizing books and periodicals with its Kindle launch. eBay has to be given credit for doing much more than creating a garage sale – they are now the leader in independent retailing with eBay stores. And their growth of PayPal is on the vanguard of changing how we spend money – eliminating checks and making digital transactions commonplace. Of course Google has moved from a search engine to a leader in advertising (displacing Yahoo!) as well as offering enterprise software (such as Google Wave), cloud applications to displace the desktop applications, and emerging into the mobile data/telephony marketplace with Android. All of these company leaders were willing to Disrupt their company’s “core” in order to use White Space that kept the company constantly moving into new markets and GROWTH.
We can see the same behavior among other leaders in the top 10 not previously profiled here. Samsung has moved from a second rate radio/TV manufacturer to a leader in multiple electronics marketplaces and the premier company in rapid product development and innovation implementation. Gilead Sciences is a biopharmaceutical company that has returned almost 2,000% to investors – while the leaders of Merck and Pfizer have taken their companies the opposite direction. By taking on market challenges with new approaches Gilead has used flexibility and adaptation to dramatically outperform companies with much greater resources — but an unwillingness to overcome their Lock-ins.
Three names not on the list are worth noting. Jack Welch was a great Disruptor and advocate of White Space (again, profiled in my book). But his work was in the 1990s. His replacement (Mr. Immelt) has fared considerably more poorly – as have investors – as the rate of Disruption and White Space has fallen off a proverbial cliff. Even though much of what made GE great is still in place, the willingness to Defend & Extend, as happened in financial services, has increased under Mr. Immelt to the detriment of investors.
Bill Gates and Warren Buffett are now good friends, and also not on the list. Firstly, they created their investor fortunes in previous decades as well. But in their cases, they remained as leaders who moved into the D&E world. Microsoft has become totally Locked-in to its Gates-era Success Formula, and under Steve Ballmer the company has done nothing for investors, employees — or even customers. And Berkshire Hathaway has spent the last decade providing very little return to shareholders, despite all the great press for Mr. Buffett and his success in previous eras. Each year Mr. Buffett tells investors that what worked for him in previous years doesn’t work any more, and they should not expect previous high rates of return. And he keeps proving himself right. Until both Microsoft and Berkshire Hathaway undertake significant Disruptions and implement considerably more White Space we should not expect much for investors.
This has been a tough decade for far too many investors and employees. As we end the year, the list of television programs bemoaning how badly the decade has gone is long. Show after show laments the poor performance of the stock market, as well as employers. We end the year with official unemployment north of 10%, and unofficial unemployment some say near 20%. But what this HBR report us is that it is possible to have a good decade. We need leaders who are willing to look to the future for their planning (not the past), obsess about competitors to discover market shifts, be willing to Disrupt old Success Formulas by attacking Lock-in, and using White Space to keep the company in the growth Rapids. When businesses overcome old notions of “best practice” that keeps them trying to Defend & Extend then business performs marvelously well. It’s just too bad so few leaders and companies are willing to follow The Phoenix Principle.
by Adam Hartung | Dec 26, 2009 | Current Affairs, Defend & Extend, In the Swamp, Leadership, Web/Tech
The business media get really excited about acquisitions. And it is clear that many executives still think acquisitions are a good way to grow – especially when wanting to enter new markets. Even though all the academic research says that acquirers inevitably overpay, and that almost all acquisitions don't really have "synergy." In fact, most acquisitions significantly reduce shareholder value. While this doesn't keep execs from going forward, if we understand why acquisitions go badly better performance can be obtained.
As reported at Financial Times in "The Rise and Fall of MySpace" the problem with acquisitions is very tied to the "owner and acquired" thinking that emerges. NewsCorp wanted to get into social media, so it moved early. And the investment looked brilliant when a quick deal with Google appeared to make payback a year from new ad revenues. MySpace was an early social media winner, and it looked to be potentially transformative for NewsCorp.
Until NewsCorp decided that things were too undisciplined at MySpace. NewsCorp thought, like almost all acquirers, that it was more "disciplined" and "structured" and could apply its "better management" to the growth at MySpace. Of course, all of this is code for pushing the NewsCorp Success Formula onto MySpace. What was acquired as White Space was quickly turned into another NewsCorp division – with the decision-making processes and overhead costs that NewsCorp had. Quickly Behavioral and Structural Lock-ins that were prevalent in NewsCorp were applied to MySpace in management's effort to "improve" the acquisition.
But applying the acquirer's Success Formula to an acquisition soon removes it from White Space. Even though NewsCorp felt sure that it's higher caliber IT staff, big budgets and strong management team would "help" MySpace, it was robbing MySpace of its tight link to a rapidly shifting/evolving marketplace and replacing that with "NewsCorp think." Quickly, competitors started to take advantage of market shifts. Facebook took advantage of the now weighted-down MySpace to rapidly bring on more users, while the additional ads on MySpace simply frustrated formerly happy customers more than willing to trade platforms.
Scott Anthony on the Harvard Business Review blog "MySpace's Disruption, Disrupted" points out how in just 4years MySpace went from market leader to almost irrelevant. MySpace lost its position as market disruptor as it increasingly conformed to demands of NewsCorp. As the NewsCorp Success Formula overwhelmed MySpace it stopped being a market sensing project that could lead NewsCorp forward, and instead became a now money-losing division of a newspaper and TV company. NewsCorp started trying to make MySpace into a traditional media company – rather than MySpace turning NewsCorp into the next Amazon, Apple or Google.
If a company wants to acquire a company for new market entry, that acquisition has to be kept in White Space. It has to be given permission to remain outside the acquirer's Lock-ins and separate from the Success Formula. It has to be allowed to use its resources to develop a new Success Formula toward which the acquirer with migrate – not "brought into the fold."
Unfortunately, acquirers tend to think like previous century conquerers. In Gengis Khan fashion they almost always end up moving to change the acquired. Often in the name of "discipline" or "good management practices." And that's too bad, because the result is a loss of shareholder value as the investment premium is dissipated when the acquisition fails to reach objectives. Acquisitions can be good, but they have to be kept in White Space — like we see Google doing with Facebook!
by Adam Hartung | Dec 22, 2009 | Current Affairs, Defend & Extend, General, In the Swamp, Innovation, Leadership, Web/Tech
In "The Year in Innovation" BusinessWeek has offered its review of innovation in 2009. And the report is grim. Most companies cut innovation spending – including R&D. Even the pharmaceutical industry, historically tied to long-term investment cycles, cut 69,000 jobs in 2009, up 60% from 2008. Meanwhile, P&G's dust cloth Swiffer was pronounced a major innovation – indicating both how few innovations made it to market in 2009 – and the degree to which BusinessWeek must depend upon P&G for advertising dollars given this selection (I mean really – BusinessWeek ignores Google Wave and Android entirely in the article but feature a Swiffer dust cloth!)
According to BusinessWeek, the big advances in innovation in 2009 apparently were "open innovation" and "trickle up innovation." The first is asking vendors and others outside the company to contribute to innovation. Adoption of open innovation has spurred one thing – less spending on innovation as companies cut budgets, using "open innovation initiatives" as an explanation for how they intend to maintain themselves while spending less. Open innovation has not spurred improved innovation implementation, just justified spending less with no real plans to achieve growth. With open innovation, of course, failures no longer belong to the company because the "open environment" didn't produce anything – hence innovation simply wasn't possible!
Trickle up innovation is asking people in poor countries, like India, how they do things. Then seeing if you can steal an idea or two. There's nothing wrong with turning over every rock when trying to innovate, but using analysis of third world countries, where costs happen to be very low and new innovations few, to drive your innovation program smacks of looking for ways to put a fig leaf on a naked innovation program. Expectations are low, so explanations are more prevalent than results. C.K. Prahalad wrote an entire book on this approach – which is popular with big company leaders who have abandoned innovation and think it clever to steal ideas from the poor. But it's not how Apple became #2 in smart phonesor created iTunes or how Facebook has taken over social networking.
source: Silicon Alley Insider (with Google picking up 2 new carriers in late 2009, this chart will be very different by summer 2010)
None of the trends identified by BusinessWeek reflect behavior of the real innovation winners. Rather, they reflect the big companies who are mired in Defend & Extend management, and making excuses for their terrible performance since 2007. Not once does the article talk about Google, Apple, Cisco – or leading small company innovators like Tasty Catering in Chicago. There are companies winning at innovation, but they are certainly not following the trends (which have produced marginal results – at best) identified in this article.
Because planning processes look at last year when setting goals for next year, lots of companies now plan even lower innovation spending for 2010. And that's how an economy goes into a tailspin. Everyone from bankers to manufacturers to retailers are saying 2009 was weak, and they don't see much improvement for 2010. That can become a self-fulfilling prophecy. 24/7 Wall Street reported in "Immelt Speaks at West Point: Future Leadership Path" that the CEO of GE, Jeff Immelt, is doing less innovation spending and relying more on government/business partnership. And of course GE is realing from over-reliance on financial services and under-investment in new products during his leadership. While Immelt is patching up holes at GE, the company is sinking without new products manning the oars.
Companies don't just need to spend on R&D. Studies of R&D have shown that the bulk of spending is Defend & Extend. Trying to get more out of the technologies embedded in the Success Formula. P&G and GE can spend easily enough. But when it's on short-term "quick hits" they get declining marginal returns and weaker competitiveness.
Companies in 2010 must adopt new approaches. They have to quit planning from the past, and plan for the future. More scenario development and understanding how to change competitive position. And they have to quit being so conforming and promote Disruption. Disruptions are needed to open White Space so new Success Formulas can be developed. In the 2000/01 recession Apple looked to the future, Disrupted its total dedication to the Macintosh and unleashed White Space allowing the company to become a leader in digital music as well as the front runner in smart phones within a decade.
Your business can be a leader; and soon. If you start thinking differently about what you must do, quit putting all your energy into Defend & Extend behavior and invest in White Space, innovation will flourish – and with it your revenues and profits.
by Adam Hartung | Dec 21, 2009 | Current Affairs, Defend & Extend, General, In the Swamp, Leadership, Lock-in
Great blog today at MidasNation.com. Rob Slee is a book author and blogger focused on privately held companies. And today he took on "Old White Men" – or OWM – in his blog "Why 60 Year Old White Men are Killing America." Telling the story about how GM management drove the profits out of suppliers while bankrupting the company, he contrasted GM's behavior with the Japanese run firms in America who partnered with suppliers to make a better product customers more highly valued. We know who ended up with the profitable approach.
Similar to Defend & Extend management, Mr. Slee talks about "past as predicate" as he discusses older managers who keep doing what they always did, even though results keep worsening. And how "command and control" hierarchies sucked the value out of the traditional Big 3 automakers. His views about how OWM leaders expect a "return to the norm," creating a recipe for disaster in an ever changing world increasingly producing black swans. His stories are an action call for all leaders to change their behavior.
According to Marketwatch.com today, "GM Hires Microsoft Exec Liddell as CFO." Is this good, or just more OWM? According to BusinessWeek, Mr. Liddell is 50 – which makes him 10 years shy of the minimum 60 Mr. Slee denotes for OWM. More disconcerting was the final paragraph of his bio at Microsoft.com which claims Mr. Liddell "has completed a number of triathlons, including an Ironman and also enjoys rugby, yoga, golf and tennis." Pretty seriously testosterone laden language – and appealing primarily to OWM types. Like his new boss, the retired Southwestern Bell Chairman, now running GM.
Triathlon and rugby often have a way of making people Lock-in on the values of persistence, hard work and sacrifice. Jim Collins is a rather famous triathlete who loves Lock-in. Creativity and innovation are rarely the stuff of winners in those sports. Of course, competing in a global marketplace with fast changing competitors who defy all rules is a far cry from any sport. Sport analogies are usually more harmful than good in today's global marketplace, where adaptability is worth more than repetitive behavior seeking scale.
Mr. Liddell's last boss, Steve Ballmer, is one of the 10 most Locked-in CEOs in corporate America. Not a great mentoring for open-mindedness. And during Mr. Liddell's 4.5 year career at Microsoft the company's big launches were the me-too, and underwhelmingly exciting, Vista and System 7 products. Mr. Liddell didn't seem to push the innovation engine much in Seattle.
From appearances it would seem likely he'll focus on cost reductions pretty hard — something unlikely to make GM a success. GM doesn't need to launch it's own version of Vista. GM doesn't need a tough guy to whack the chicken coop hoping to get more eggs – instead just making the hens all upset. GM needs significant Disruption – attacks on its Success Formula – with a revitalization of new product development and technology application. GM needs an entirely new Success Formula, not just a better Defended and Extended one.
Keep your eyes on Mr. Liddell. Perhaps he'll surprise us. Look for Disruptions and White Space. It doesn't seem to be Mr. Liddell's nature. But watch. Until then, there's no sign yet that GM is taking the right actions to make itself a vital competitor against Hyundai, Kia, Tata Motors, Honda and Toyota.
by Adam Hartung | Dec 15, 2009 | General, In the Swamp, Leadership, Web/Tech
In a tough year like 2009, many business leaders want to jump in a foxhole and focus on survival. The goal becomes maintain, and then try to grow again sometime in the future – when the economy gets better. They cut marketing and sales costs, stop new product development/introduction, and literally plan to do nothing new until "the business" improves. Unfortunately, that sets a business up for failure.
In today's fast moving competitive world, it's impossible to stand still. Your business either grows, or it falls behind. Think about Yahoo!. The company hoped to maintain it's search business at it entered a "turnaround." Unfortunately, the competition isn't willing to give Yahoo! any time at all. Microsoft grabs off 10% of the market with its Bing introduction, and Google just keeps taking share. Take a look at Yahoo's performance:
source: Silicon Alley Insider
Or consider AOL. AOL was the undoubted leader in bringing people to the internet. But over the last decade AOL has tried to maintain its customers without offering any new products. It has saved investment dollars, but lost its relevancy. Now Facebook has more unique visitors than AOL – a clear sign AOL (which recently went public) is well on the way to disappearing:
source: Silicon Alley Insider
Blockbuster was the clear market leader for video/movie rentals. The company even had a college football bowl game named after it! The CEO bought a baseball team, and made it into a World Series winner! Blockbuster was THE store for obtaining entertainment for many years. But the company saved its dimes, tried to defend its market position, and didn't develop new solutions. Now it is being overwhelmed by competitor Netflix:
source: Silicon Alley Insider
Too many business leaders believe in "The Myth of the Flats" (from Create Marketplace Disruption.) They think that you can build a business, and then ride a market position. When business is bad they depend upon living on past brand position. They think they can wait for a better market to come along before they use White Space to introduce new solutions that meet emerging needs. And the competitors, who don't slow down, use market downturns to introduce new solutions and overtake the former market leader.
Smart companies don't rest on their laurels. They don't wait for a better market. They keep using White Space to develop new solutions. And even in a bad overall economy, like 2009, they sell more and make more profits. Just look at Amazon, achieving record market valuation in 2009:
source: Silicon Alley Insider
If you want 2010 to be a great year, it starts with recognizing that you can't stand still. You can't wait for "a better market." You have to create that better market by pushing forward with White Space to introduce new solutions that meet emerging market needs.
by Adam Hartung | Dec 14, 2009 | Current Affairs, In the Rapids, Innovation, Leadership, Web/Tech
"The Google Phone, Unlocked" is a Seeking Alpha article detailing the early release of a Google phone planned for market introduction in 2010. Will this be successful or not? Legitimate question – given the success of Apple's iPhone. And the answer to that really has nothing to do with cell phone technology. It has everything to do with the downloadable applications. The market for phones has shifted to where applications are rapidly becoming more important than the phones themselves.
Which is why "Android to become eWallet" on MediaPost is an important article. Mpayy is offering an app that supersedes both credit cars and debit cards. It's Paypal on steroids. This app allows users who want to buy something to use their phone to instantaneously pay for something. Users can perform an eBay style transaction with immediate payment. And they can do this buying products in the Burger King, or Starbucks, or Target.
Two things are emerging that represent significant market shifts to which all businesses must react. Firstly, mobile devices are much more than phones. They are more than laptops. They allow people to do a lot more things than they previously could, and these activities can be immediate. From reading a CAT scan, to finding the closest pizzeria and downloading a coupon, to paying for a Pepsi at the convenience store. This represents substantially different use of technology. Those who remain Locked-in to old fashioned credit card/debit card technology – or internet transaction technology – will be left behind as users move quickly to mobile phone payment.
And, secondly, those who rapidly incorporate these opportunities will have advantages. If you're making your business more internet friendly you are likely fighting the last war. To be successful in 2012 it will be important you are able to offer real-time transactions buyers can access from their mobile device. People will want to find you, find your discounts, and pay you from the device in their hands. They will want to complete their business seamlessly using their mobile device – without a call, without a browser transaction. Those who make life easy for customers will increasingly win – and making life easy will mean access via the mobile device
It is increasingly ineffective to build future plans based upon completing projects started last year – or the previous year – or a few years ago. Customers don't care about your enterprise system implementation that is X years into implementation. Customers are running fast – really fast – toward using new, low cost and easily usable technology. This is a substantial market shift. And your scenario plans must incorporate these shifts, expect them, and use them to move beyond Locked-in competitors by implementing these shifts fast and effectively. That allows you to Create Marketplace Disruptions which create superior rates of return.
