Tag Archives: competitive strategy

Platform Revolution: How Platforms Change Strategy with Geoffrey Parker

Platform Revolution: How Platforms Change Strategy with Geoffrey Parker

The internet is the big disruptor of our time, changing the advantage from products to platforms. Case in point, Uber, Airbnb and PayPal. They all disrupted their markets when they launched. Today they are industry leaders.

What’s the secret to their success?

benchmarking against the competition is stupid

Another reason why benchmarking against competitors is stupid

benchmarking against the competition is stupid

One of the problems of measuring an organizations innovativeness is R&D spending. If you ask people: Who’s more innovative between Apple and Microsoft? They’ll say Apple. Yet if we measure them based on patents and R&D spending, most people don’t know what they’re talking about. Microsoft blows Apple out of the water on R&D.

Yet, the reality is that Apple is more innovative than Microsoft.

Spending huge on R&D does not equal innovation.

You can spend all you want on innovation, but you can’t guarantee success. In fact, the most innovative companies are not necessarily the biggest spenders, according to Booz & Company’s recent global innovation study. What matters instead? The ability to build the right innovation capabilities to connect with the overall business strategy and other critical capabilities.

But what the heck does that mean?

These lists make for good conversation, but they also prove to be worthless if not approached with objectivity. Why?

As Jason Cohen points out, organizations (and humans) have an unhealthy fixation to emulate #1:

We tend to fixate on whoever is #1, in business as with sports, tacitly assuming that the contest is mostly skill and therefore the tournament has selected the rightful leader. But I’m not so sure we know that skill/luck proportion. I’m not so sure we can assume the contest (marketing, sales, product) and tournament (the marketplace) picks #1 based on repeatable, codify-able skill-set. Same with #2 or anyone else.

That number #1 is dictated by a system, a market, not people. On top of that, if you give people a list of the most innovative companies; they’ll want to emulate #1. It’s that simple. We’re suckers for it.

For innovation firepower turn weakness into strength

I’m not a fan of the idea of only working on your strengths and ignoring your weaknesses. It’s too one-dimensional and leads to ‘more of the same’. This idea of only working on your strengths surely leads to continuous improvement no doubt but not dramatic change. Only by working on your strengths ‘continuously’ and turning your weaknesses into strengths can you have superior capability.

On Saturday night I was watching UFC 124 and . His opponent, Koscheck, had to much respect for him that he decided to be tentative and never showed any intent in fighting. And thus made all of us watch a boring fight.

Why didn’t a guy that was aggressive pre-fight, look like a punching bag at fight time?

Because Georges St. Pierre is a superior all-around-fighter, and made Koscheck’s game plan irrelevant. GPS is versatile and can adapt to any fighting style on the fly. This is what makes him so good. He has no obvious weaknesses. The guy is a strategist.

What GSP does, is work on his weaknesses and turns them into strengths. This has lead to a dramatic change in his fight style and more importantly how his opponents perceive him. His opponents come prepared with a strategy to defeat him, but GSP adapts to it. This leaves his opponents in limbo as their game plan is now made irrelevant by a fighter who shows no weakness.

What does this have to do with innovation?

Working on improving/eliminating your weaknesses leads to dramatic change. It’s like renewal. A few weeks ago wrote a great post on how there are basically :

  • meet existing needs and expectations that customers are aware of,
  • anticipate needs that customers are not (yet) aware of (perception).

The first is short term focused and relies on an organization exploiting it’s known strengths. The second, relies on going beyond the known. Sometimes even relinquishing some of it’s strengths and turning their weaknesses into strengths. The majority of organizations focus on meeting existing needs (known by analysis) but not on anticipating needs. This logic is pervasive. It’s what you’re taught in school to do. Anticipating needs (imagination+insight), which was taken away in school, is done by very few.

As Ralph noted in his post: Successful companies of the future will most likely be able to combine both capabilities.

Basically, most organizations are good at exploiting existing capabilities but not good at creating new ones. Among other things, it’s this lack of imagination that is the weakness of most organizations.

Do you see the connection?

Last week I wrote that in the world of innovation there should be a . You have ‘projects’ that are intended to improve your product or service, but also have ‘projects’ that are beyond your known domain that are meant to either stretch your existing capabilities or acquire new ones. This is the way to go! By only improving your strengths you’ve already setup your tombstone.

To be built to last is to be built to change, and that only happens by continuously improving what you’re good at and relentlessly working on turning your weaknesses into strengths. Your strengths might save you in the short term, but your next source of advantage most likely will come from turning your weaknesses into strengths. And thus, will keep you relevant in the long term.

Thoughts?

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Don’t waste people’s time. Help them do more

CIMG0274

The gap between what is right now and where others are become very obvious when you go from one extreme to another. This past week I spent a little time with a friend I’ve known since kindergarten as he just opened a restaurant in Mexico and I went over to see how he was doing. This is his second restaurant venture for him, his first one closed after a year and a half.

While I was there he was telling me how he’d just bought a new restaurant management software homemade in Mexico. The incentive for him was that the top Mexican restaurant chains, such as Sanborn’s, also claimed to use the same software to manage their operation so in his eyes it was good decision to buy. Nonetheless he asked me if I could give it a test drive to see if it was worth the buy…

Before I dig in I just want to say that with any kind of business if you have pitiful customer support you are in a whole lot of trouble no matter how great your product or service is. With that in mind, here we go…

What you see in the picture above is restaurant management software made by Nationalsoft. The software is still delivered in a package, the serial number is taped on the inside (post it note inside the CD) which registers a single computer. The software is less than 15 MB and takes less than a minute to install. Feels like you’re back at the end of the 90’s huh? Wait it gets better!

If a user loses their password (which did happen) they have to call support who then has them create a .dat file which they then have to send back to support by email so they can ‘do something to it’ to unblock it. After support does something to the file, they’ll send it back to the customer so he may add it to a folder and overwrite the previous one. Are you kidding me!? What happened to the ‘forgot password’ link that is not a default setting in any kind software?

If these people were doing business in the US they would be out of business. But wait, it gets even better…you have to pay them to get the software unblocked.

A modern software company not only provides support by phone but also provides customers with online resources such as FAQ, forums or wiki with answers to common problems. Seems Nationalsoft forgot to add this to their checklist because they’re nowhere to be found. Ironically they do have a Twitter account and a Facebook Fan page! None of which are used as customer support touch points. Promote first, serve later right?

There’s more but I think I’ve provided you with enough information to see how frustrated I was when I was seeing this happen before my eyes. The way this software company is designed to operate is to deliberately waste their customers time, not to help them get going as fast as possible.

 

Signs that you’re behind the curve

Businesses in Mexico still operate by the logic of ‘forcing customers to do what I want them to do’ not ‘I make it easier for my customers to do what they want to do’. The result of operating by this logic is that people who may be interested in your product or service have been programmed to expect ‘below average service’, they expect to be treated like crap. They put more obstacles in place for the customer, never taking into account that the customer is a human and therefore ignoring the fact that humans do make mistakes. In a world where software is as ubiquitous as water, the days of bloated software are over. Today every piece of software (including websites) are designed for humans, not robots. As an example see Facebook’s platform, which now 500 million people use, it epitomizes software designed for making social interaction as simple as possible.

Point: Design your operation so that every interaction your customer has with you helps him do more by making it simple. You’ll not only have happy customers but also angry competitors. Here’s how to do it:

 

Create barriers to entry not barriers to use

Barriers to entry is what you do to make it difficult for competitors to compete with you (like doing everything in your power to make your customers happy). Barriers to use (such as having weak customer support, no online Q&A, making customers pay because they lost their password) is what you do to impede customers from getting on with it and start using your products, and if all goes well they’ll be very happy and tell their friends about it.

Anticipate human stupidity

Humans make mistakes, in the online world it becomes even more obvious because everything they do online has to be done through a digital interface. As software has evolved from being used exclusively used on the desktop to be used on the web, it’s become important to focus on designing your software to anticipate the fact that humans need things to be spelled out for them just like children, therefore making it easier for them to do what they want to do. For example humans will also forget things, including passwords, so make sure you cover the basics.

Learn how Zappos treats it’s customers

No seriously I’m being honest. If you want to make competitors really angry and therefore put them in a disadvantage, focus your efforts on making your customers really happy by actually giving a damn about them.  That’s Zappos secret weapon Smile

 

What do you think, is making customers happy an unconventional strategy?

Make your own game

Here’s my latest post on @Oninnovation:  

Enjoy!

The essence of strategy is choosing to perform activities differently than rivals do; and the most vital competitive weapon is not lower price, but new ideas.

Across the border in Mexico, we  have a taco shop in every corner. They all sell the same thing and their business name usually starts with the name of someone plus “tacos.”  It’s safe to say that their businesses all operate very much the same way; the only difference between them is where they get the meat and ingredients.

We live in a world of sameness, and the only way out of it is to innovate.

There are brave souls who choose to question the dominant logic of competition; who chose to do something entirely different. There is one taco shop in Tijuana which doesn’t follow conventional logic; it doesn’t sell tacos, but rather, art.

Tacos Salceados created what is known as the “Quesataco,” which starts with flakes of cheese spread across the flat iron stove. Your choice of cuts are then lined down the middle and then ultimately encased in the crisp golden cheese. The stuffed crisp cheese roll is then placed in a fresh thick tortilla, and topped with house dressings and avocado. The Quesataco later spawned other creations, such as shrimp tacos covered in a sweet tasting sauce.

It is this fresh perspective which makes it stand out among the rest of the taco shops.

The thing people forget when they compete, is that you must stand out in some manner. Too many people copy their competition too much. They assume if it is working for the competitor, then it will work for them. Passion for what you are doing, consistency, and a sprinkle of uniqueness is just the start. Sticking with it and always looking for that unique tweak is key.

Here are 4 ways to help you think about defeating sameness:

Purpose matters

Conventional logic says that businesses exist to make money. Why not exist to deliver meaning? The difference between you and competitors is nothing more than how you answer the ‘why’ of your intentions: Why are you doing this? Online retailer Zappos knows why they are in business; not to sell a lot of shoes, but rather to deliver the best customer service in a meaningful way.

Reset expectations

Your customers have interacted with your competitors, as well as with other businesses, and have an idea of what to expect. These same expectations will be put into play when they interact with you, and if you deliver the “same,” then you’ll be easily ignored. You must reset those expectations by going above and beyond the normal, delivering equal or more value in a faster, more convenient, easier and meaningful way.

Define yourself by what you know not what you do

Over the time your business has existed you have accumulated a portfolio of abilities and strengths. Think about these bundle of skills that you have accumulated over time, things that you are good at and that when combined provide new value to your customers. Stop looking at your company as a provider of specific products or services for specific markets, and start seeing it as a reservoir of skills and assets that can be exploited in different ways or different contexts to create new value.

Be something your competitors are not

In order to compete businesses follow the logic that they have to target the middle of the market, the mainstream consumers. This also means they configure their business just like competitors who are already ahead of them. The problem is that everyone else is going after the same market and with so many choices, so many brands, so much noise it isn’t enough to be good at everything. You have to be the most at something. What are you the most at? Are you the fastest? The most responsive? The most innovative? The most transparent? Look up field or downfield, go to the edges, to the extremes where you can be the most at something.

Key Takeaway: Compete differently and play the game you know you can win.

What do you think?

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Must read innovation stories of the week: creating sustainable competitive advantage

How do you win in the marketplace? Seth Godin argues that creating a sustainable competitive advantage can take many forms: own something that’s hard to copy, creating a brand, creating a network where most of the power rests on you, creating switching costs and building a culture that’s innovative.

Weekend innovation tip: competitive advantage is temporary

the future is blurry

To stay relevant in a competitive world, we must act as though today’s advantage will be gone tomorrow.

Everybody wants to be the player that has it all figured out, the one that stays competitive in changing times, the one that stays ahead of the game and redefines the game for everyone else.

These players are rare!