History Repeats Itself
Students of history know this adage well, and use it as their fundamental reason for studying the past. Those who are not familiar with the past are doomed to repeat it, and this is extremely relevant to businesses. If you come out with a product that you believe is a game changer, only to find out that another company tried the same thing a decade ago and failed, would you be inclined to attempt it again? Has anything fundamentally changed in the years between that could give you success where your predecessors had failed? This is a common theme in tech companies – what was impossible yesterday becomes possible today. What if you found that a rising fad today is merely repeating a trend from decades ago? Would you be able to use your knowledge of that trend to forecast the next hot one? This occurs all the time in the cyclical world of fashion.
The first step to developing a winning strategy is to be an astute student of history. This will help you understand the desires of your targets (customers), the benefits receivable from your allies, and the weaknesses of your your opponents. These three are the holy trinity of establishing a winning business strategy.
Competitors’ Successes and Failures
While it’s human nature to marvel at your competitors’ products, grow envious, then try to copy them, it is not always the most profitable route. Take for example Apple’s seminal iPhone and iPad, which revolutionized smartphones and tablet computers, and the slew of imitators that followed. The imitators, mainly from Asia, were unable to match Apple’s numbers, and instead lost money while giving Apple free advertising with inferior products. On the flip side, however, Japanese automakers like Toyota and Honda were able to imitate American automakers Ford and General motors so successfully in the 1980s that they almost caused the collapse of the Motor City in 2008, and created the perception that Japanese autos are cheaper, better made and more fuel efficient, which persists to this day. Imitating your competitor’s success is a 50/50 venture, although the later entrant to the competition will always start at a significant disadvantage.
It is more important to learn from their failures. In the 1990s, Apple nearly collapsed due to the spread of a universal operating system – Microsoft Windows – across a fragmented hardware landscape of IBM clones, or PCs. Apple, with its closed hardware system using its own operating system, was unable to match the combined might of PC makers such as HP and Dell, and was marginalized by a software company which had never sold a single computer.
Who learned from Apple’s failure? Google. The world’s largest search engine, setting its sights on the throne shared by Microsoft and Apple, launched Android, a freely distributed operating system that was sprinkled all over the fragmented hardware landscape of smartphones and tablets from various vendors. Just as Microsoft did in the 1990s, Google captured a large portion of the smartphone and tablet markets through the combined might of a motley crew of hardware vendors using its operating system.
The lesson? Learn from your competitors’ successes, but also understand their failures. Mapping these out will allow you to succeed where your competitors have failed.
Make Sure Everyone is on the Same Page
Many companies have sallied forth, believing that they had an airtight winning strategy, only to have it all fall apart when it became obvious that no one was on the same page.
A perfect example is the “Google triumvirate” of “grown-up” Eric Schmidt and “kids” Larry Page and Sergey Brin. At the height of its powers, Google looked like a streamlined monster – the world’s largest search engine which earned record revenue and record margins through advertising. Then that plan started to fall apart. Pardon the pun, but current CEO Larry Page was never on the same page as former CEO Eric Schmidt.
Whereas Schmidt was committed to advancing the company as a search and advertising juggernaut, slowly evolving it to horizontally integrate with other businesses, Page and Brin were happily delusional, spending their time on bizarre pet projects. The pair started building wind power plants, designed a driverless car, attempted to cover all of San Francisco with free WiFi and invested in a human-powered monorail. While that all seemed like harmless fun, the dynamic duo caused serious damage when they pulled Google out of China, in a move that almost broke the self-celebrated triumvirate. With no one on the same page, the company took a step back as people no longer saw the Google as an invincible monster, but a chaotic, confused beast.
What can we learn from Google’s blunders? That everyone in your top-tier management must be committed to the same goals, and if they are not committed to your strategy, get rid of them, to avoid massive headaches down the road.
Plan Your Strategy – S.A.M.
No matter what industry you’re working in, the classic acronym SAM – Specific, Achievable, Measurable – applies to all winning strategies. Your ultimate goal, tempered by the lessons of the past and lessons from your competitors, must be all three. If they are not, start over. If they are indeed specific, achievable and measurable, then you have the foundations of a winning strategy. Just remember to stick with it for the long term.