9: Attacking the Interconnected System
The author returns to Scipio Africanus, who avoided confronting the Carthaginian army and instead attacked Carthage itself, whose farms and cities stood largely unguarded. This showed considerable insight, as the expected approach to warfare is to attack the enemy's army - but the military was only one part of a system. Scipio recognized that Carthage was an interconnected system that could more easily be defeated by attacking a different part.
Most people show very little intelligence, particularly when their emotions take control. Like an animal, they attack the stick that is being used to poke them, rather than the person holding the stick, which is the real cause of the problem. It is only when you apply intelligence and understanding that you can understand which part of the system is most responsible, and which is most vulnerable. And until you do so, you remain focused on the most proximate element of it rather than the one that is most important.
A more palatable analogy is medicine: a patient may complain of their symptoms, but a good doctor thinks past the superficial manifestations to identify and treat the actual cause of the sickness, which may not be located in the same parts of the body that experience discomfort or disability.
Another example is that most people consider the automobile to be the cause of the American cultural revolution, and speak about the vehicle itself. They ignore the fact that the vehicle is only one component of a system, and that it is the highway system that is the root cause: interconnected roads made for an interconnected and mobile society, and the automobile is only one vehicle that might have travelled on them.
He mentions a personal experience traveling in Africa, and the difficulties of getting from one place to another. They had a very excellent vehicle, but there were not many roads and the ones that existed were in serious disrepair.
A similar situation enabled RIM to dominate the market with its Blackberry devices. Their devices used the pager network for transmitting text messages from device to device, at a time when cell phone networks were spotty and disjointed. So while cell phone providers were struggling to build up and improve their networks (which took a lot of time and enormous cost), RIM used the system that was already in place, being ignored by their competitors.
Conceded, RIM fell into the trap of focusing on what originally gave it success, and so fell behind when the cellular networks overcame their limitations - so while they dominated the market for over a decade, they collapsed from failure to evolve. But germane to the present point, RIM recognized that winning in the cell phone market had nothing to do with the phone, as it was the least important part of the system at that time.
There's a rather too detailed case study of a software entrepreneur, who identified a problem with an existing system and provided a piece of add-on software that fixed it. This was, and still is, a very successful model for software start-up firms: they identify a problem with a popular piece of software produced by a giant, like Microsoft or Oracle, which the original company fails or refuses to fix. If the problem is widespread enough, customers will purchase it - and even if it's an unusual problem, the start-up will get "bought out" by the software giant.
Sidebar: Recipe for Success
The author goes off-topic to speak to a specific executive's recipe for success, though what he offers is some random tidbits, which are food for thought:
- Aim low, but aim wide. Inspirational speakers often encourage innovations that change the world in some dramatic way, but many entrepreneurs make fortunes solving small problems for many people. You don't need to win the Nobel prize, just make life a little easier for a lot of people.
- A winning product passes three tests: it delivers value to the customer, its value is easy to explain and recognize, and its value is unique relative to the competition.
- Don't chase every opportunity. Recognize that resources are limited and that you will have to let some things go. So you don't always abandon an unprofitable business for a profitable one, but must often abandon a profitable one for another that is more profitable.
- Speed matters. Traditional businesses would prototype and test to mitigate the risk of rushing forward. In the modern world, sloth is the greater risk: if a larger firm recognizes the value of what you're doing, they will take your idea and beat you to market.
- Consider acquisition cost. What kills many good companies is the expense of acquiring customers, particularly for a new product. You have to account for more than production costs, but all costs related to sales, to survive a new product launch.