3: Move Early to the Next Battleground
Traditionally, companies sought to win the battle in which they were currently engaged, which is a fine strategy in a time when there is little change in the environment, but is not very productive in an environment of rapid and constant change. In the present day, it is more important to look to tomorrow's competition and position yourself for victory in the next battle.
(EN: This is too often consider an "instead of" approach rather than an "in addition to" approach, which is a tactical mistake: lose today, and you will not have the resources to win tomorrow. Be careful of that.)
Case Study: Rosetta Stone
The author considers Rosetta Stone, a company that specializes in language software. In 2005, the firm was "practically unknown," but by 2012 it became the world's leading provider of language learning solutions.
(EN: This is an odd example, particularly because the firm is a financial failure, which lost two-thirds of its market value in 2011 alone and has been operating at a net loss since, so I do wonder what the author thinks qualifies it as a success.)
The language-learning industry had long been a crowded market of small firms selling similar products: books, tapes, and CDs designed to replace classroom learning with self-study. Most of this took the traditional pedantic approach of memorizing vocabulary by rote and learning basic grammar and syntax. Rosetta's difference was more of an "immersion" technique that taught phrases in the context of realistic scenarios.
They also made the bold move of selling their product at a significant premium, about $300 compared to the $20 standard price, to create a perception of quality. They also sold their product at airports, which is not a market others explored (selling $300 software package amid junk-shops that sold $10 sunglasses seemed questionable), but the positioning seemed natural, to learn enough of a language on the flight to a foreign location.
Their "airport package" gave them name recognition with travellers, and was the entry product to a more extensive subscription-type service for ongoing tutoring via the Internet.
Krippendorff admires the boldness of this strategy, which would be very difficult for competitors to copy: it would require them changing their core products, attempting to enter markets where Rosetta had become established, and retooling their operations and human resources.
(EN: But what any of this has to do with predicting the next battle is unclear to me. It seems Rosetta is fighting the same battle with slightly different weapons and tactics.)
Think Before You Shift
Being first to the battle is not enough. Winning the fight means understanding how the changes in the environment can be leveraged - sometimes that requires moving faster than others, but it always requires being smarter than others. Sometimes, that means waiting rather than rushing in. And sometimes, it means avoiding the fight entirely.
Many of the firms we consider to be innovative were not the first movers in their marketplace, but instead let others take the risks of being the first and observed the critical errors they made in their haste, then entered the battlefield later with a superior strategy.
Apple is an excellent example of this approach: it wasn't the first to offer a personal computer, or a portable music player, or a smart phone, or a tablet computer. In a time when firms were seeking to rush poorly-designed products to market and work the bugs out in version 2.0, Apple watched and waited. It took the time to design a good product, effective and easy to use, and then entered the fray.
Here is the basic pattern of innovators like Apple:
- Someone brings a new product to market
- Adoption is slow while consumers figure out whether the product offers value to them
- The initial inventor invests in changing the system, often becoming focused on one or two qualities it assumes are valued
- People begin adopting the invention, but are not entirely satisfied with how it works
- The innovator enters, offering a better version of the product that addresses customers' issues
- The original inventor's product seems clumsy and inferior, and loses market share to the innovator's product
This is the way that Apple beat the competition, particularly in portable music players and smart phones. It is the way that VHS beat out Betamax. There are many other examples - and in fact most people don't remember the company that originally invented something, because it was a commercial favor. No-one remembers the "MP Man," but the iPod brand is the common term for a portable digital music player.
Resist the Mob Mentality
Those who win strategically do not do what everyone else is already doing, but think more originally about a way to create an advantage that is uniquely their own. While many firms feel the need to gain first-mover advantage, they are like "a pack of toddlers playing soccer," eager but inept. Innovators choose the right moment to make their move, and move decisively.
Moreover, companies that win by innovation often look to more than one field, and have more than one tactic in their arsenal. Some, by blind luck, happen to do the right thing at the right time, but their success is short-lived and unsustainable.
Consider the example of TiVo. It wasn't the first DVR, but was the first to take the market by storm with an easy-to-use device. But they thought no further than that, and failed to consider that cable television companies already had a relationship with their customers, and could easily augment their cable receivers with digital video recording capabilities. It cannot be denied that the product was innovative, but the company was myopic. It rushed in without thinking, and was quickly out-thought.
Conclusion
Companies that focus on being better at what they presently do are not long for this world. They tend to continue doing the same things even when their competitors have left them behind - as if doing the wrong things more efficiently will help them regain their success.
To succeed and sustain success, a strategist must be truly strategic rather than just practical. Like a good golf or chess player, he must think past his current move to the next five or ten. This is called playing "the long game" and is necessary for success in the long run.