One of the greatest fallacies of organizations is the belief that they can out ‘business’ their competition. What do I mean by out business? Well generally it means that their is a belief by management that they can do something that will be more innovative, more competitive, and more market changing than their competition in a mature market. The key being a mature market… It ultimately is one of the core reasons that managers drive people to heart attacks through caustic competition.. i.e. a culture that’s oppressive and damaging to the individual contributor.
They drove their people to unrealistic levels of productivity and consequently there was high turnover in the workforce.
A very recent example can be seen in the Cell phone market. Apple, reinvented a market by introducing the iphone. It was a blue ocean strategy.. let’s get rid of all the smartphone garbage and reimage the platform as an appliance. The iPhone was small, beautiful, and it super easy to use for your average person. The competition at the time was garbage… So Apple went from zero to massive market share in the span of a few very short years. Good for them. But then the competition caught up.. Android phones – especially those from Samsung – went from terrible to really good. The samsung strategy was to blanket the market with multiple models and variants at lower price points. Samsung pretty much got the other half of the smartphone market. Then the chinese manufacturers stepped in. They could produce phones just as inexpensively and with just as much quality as Samsung.. and then Samsung, even with all of their billions, all of their driving their engineers to work crazy hours, simply couldn’t keep up. They couldn’t out business the competition.
In one example a pay television service was vertically integrated, meaning they owned everything except the content. They employed the installers, they owned the company that made that designed and built the cable TV boxes, they owned and managed the call centers for customer service and sales, they basically had everything they needed to keep prices down and be quicker to market than the competition. Then the competition caught up.. but the pay tv company felt they still had some sort of magic.. they kept releasing new technologies before they were fully baked. They drove their people to unrealistic levels of productivity and consequently there was high turnover in the workforce.
In my third and final example, a massive American based computer company had several of their executives sitting around a table. They were discussing reducing costs. The company, like the satellite company had a disruptive competitive advantage in that they were direct to consumer so could sell their computers at a massive discount over the competition. But then the relentless push of wall street forced the competition into selling direct as well. To compete the originally disruptive computer company started selling their machines at retail. Ultimately the playing field became level.. But the culture didn’t change. This company was still notorious for having their professional teams spend ages sitting around tables for long hours trying to squeeze pennies out of every single laptop to keep their costs lower than the competition, even when the competition was doing the exact same thing.
Bottom line is that even if company A is trying to make their gee wizbang product that much differeent, then company B will make the same changes. If company A – in a mature market – figures out how to do something less expensive than company B will do that as well. No amount of pushing on the part of management will get them back to the heady days of a real competitive advantage. The false belief that the additional work and additional pressure on their professionals will have a real impact.
Fortunately I’m smarter than that. My secret plan to blog 24 hours a day to be able to deliver more content to my audience than other sites is such an awesome idea that there is no way anyone else could have thought about that strategy. All it takes is giving up my life. That’s got to work.
I’m sure of it.