Feb 13, 2012 | Management, Strategy
Michael Porter transformed strategy development 30 years ago by asking two simple questions:
-
- What are the drivers of industry profitability?
- What are the drivers of profitability of an individual firm in an industry?
He then provided a framework to analyse both, his “five forces“.
The possibility, and ease of entry of substitutes is one of the 5 forces that dictate strategy, and this remains the case, it is just that the possibility of finding an acceptable substitute is infinitely greater now than it was 30 years ago when the original thinking took place.
Almost every industry you can think of has been transformed in the last 10 years by the power of the web to offer substitutes. Access to substitutes of both the product of, and supplier to any business, immediately and transparently, is infinitely easier that just a decade ago.
Oh, and new industries have been spawned that have decimated, and changed forever those legacy industries, and most did not see it coming.
Porter’s framework got it right, it remains right, it is just that the time frames he worked with are now way shorter, and the entry/exit barriers lower. The net has completely altered the tactical dynamics, but the strategic thinking behind the model remains sound.
Jan 19, 2012 | Change, Social Media, Strategy
If you have not yet caught up with SOPA, the “Stop Online Piracy Act” working its way through the US legislative system, you probably soon will, because if it gets up, the troglodytes in Canberra will pile onto the bandwagon pretty quickly.
The act is a response to the digital piracy enabled by the net, but the probability of unintended consequences is absolute.
It is clear that there are problems, why buy music when you can download it for free? The legacy industries of the C20 whose business is creating content would rather you do not have the right to create and share it yourself, they want to produce second rate crap and charge you for it. You being able to do it threatens their profits.
Better ask iTunes, a C21 business by the way, they seem to have done OK, their 10 billionth song was downloaded in February last year, or the boatloads of new bands who have a profile and market for their music via the net, but not a music company in sight, and the bloggers, who have a means to express themselves without a newspaper, the list goes on.
The push against piracy is understandable, businesses are having their business models trashed, and they want it to all go away, but it won’t, simply because the world has changed and they have not, so they need to move over, or as it is happening, be moved over. Painful to the few, but inevitable.
King Canute found the tide did not stop just because he wanted it to, and had pinned his future on being able to stop it, and I suspect the proponents of SOPA will discover the same thing. Being cynical, I suspect they already know it, but are just trying to buy time at our expense. This TED presentation by Clay Shirky, one of the real thinkers in this space says it better than I can ever hope to do.
Jan 11, 2012 | Change, Customers, Innovation, Marketing, Strategy
Kodak used to “own” photography, having a massive share of the film market, end to end.
No more, Kodak is virtually broke, subject to continuous take-over speculation.
The really interesting thing is that one of the assets that makes Kodak valuable to an aggressor is its bank of patents that relate to the technology that drives the product innovation in the digital space.
The failure for Kodak is therefore not in being unable to develop the science, for individuals in the labs to see a different path, and to imagine the next iteration but to do something about it in the marketplace, disrupt themselves before somebody else does it.
Coming in parallel, but I have not seen it really considered before is the fundamental change in the way people think about photography, a complete disruption in behavior that has gone unnoticed.
Photographs used to be used to preserve memories. No more, at least, not much.
They are now used as a foundation piece of the individual communication process.
What are we doing now, who we are seeing, where we are, an expression of ourselves are now the motivations to take a photo on whatever device happens to be in our hand at the time. Creating a record for our kids is a useful by-product of these activities, although I am not sure how the current 20 year old will react to their children in 20 years seeing photos of them pissed at a party 20 years before, so perhaps creating some records will be problematic in the long term.
The photographic market has been totally disrupted, not just by the development of digital technology, but in the way consumers behave. For a marketer, being able to build a corporate mind-set that enables the science, and at the same time embraces the ambiguity and uncertainty of consumer behavior changes is the challenge that keeps life interesting.
Jan 9, 2012 | Branding, Marketing, Strategy
As a marketer, I have always sought to differentiate my products from those of my competitors in a meaningful way, to add value to the experience of use.
In a hyper-connected, multi-branded world, where most people don’t care too much despite the billions spend by marketers trying to make them care, you have to take the concept one step further.
A brand that just looks, feels, and performs just a bit better than the others is really just another brand, but one that somehow makes a difference to peoples lives, that is one that encourages and justifies loyalty.
Apple is the obvious example, Steve Jobs’ obsessive perfectionism and determination to control everything about the experience, and be as he put it “at the intersection of technology and art” has delivered more than just differentiated, competitive products, they have redefined and created markets.
My mate Louis Marangon of Riverina Grove, a little food manufacturer in country NSW is a similar obsessive, to the extent that it is possible, taking all his ingredients from local producers, the fresh, local, and transparent supply chain both offering both assurances to users, and keeping the money in the country. He is now the only Australian owned manufacturer of a number of products left standing.
Umair Haque says it very well here, as he often does.
Jan 6, 2012 | Leadership, Strategy
A friend of mine, a smart bloke, has coached local soccer teams for ages, and seems to be able to take a bunch of ordinary 15 year olds, and mould them into a winning team.
He has done it time and time again.
The formula he uses is as deceptively simple, as it is unusual. He simply motivates the youngsters to do their best, to be able to look in the mirror in the change rooms, and know that they played their best, individually and as a team. The result is almost irrelevant, no more than a means of keeping track of their progress.
He tells the kids they should not worry about the things over which they have little control, just worry about the things they can control, their own performance, and he encourages, cajoles, and drives for each individual to do their best. He focuses on improving the individual skills and teamwork the processes that lead to winning, rather than just on winning.
It may be a local soccer club, but the parallels to business, and life, are strong. Improving the processes will lead to better performance, and ultimately to winning.
Being better is the objective, winning is just the outcome.
Jan 4, 2012 | Change, Communication, Innovation, Operations, Social Media, Strategy
In the communication revolution going on currently, the infrastructure to carry it all is vital, but how relevant will the 2010 infrastructure be to the world that greets it when it is finally completed roll-out in, when?, what was the last projection? ever?. The world is changing almost daily, the NBN as conceived by our political masters will be obsolete before it is 10% implemented.
In the October issue of “Wired” magazine is a fascinating analysis of the “Tech War” going on between Apple, Google, Amazon, and Facebook. It is a must read for anyone in business, it puts a competitive context around the maneuvering we all see happening, but do not necessarily connect the dots.
We, the Australian taxpayers, are making a multi-generational investment in the NBN, billions of dollars spent by those well known, fast moving, tech savvy innovators in Canberra. Lets hope they know what is going on outside the cocooned environment of the “bush Capital that are all so pleased to live in.
Somehow I doubt they have any idea, and that is truly scary, and there will be a whole lot more of this sort of failure, and the accompanying spin before anyone in Canberra admits to a huge boo boo.
