the First rule of strategy is have an appetitie to do it.

I like strategy, when I see it developed and executed it’s a thing of beauty.  I love the game play and like deciphering what the competition is doing – incidentally imho Simon Wardley’s work is as ground breaking as it is simple)

But what is apparent to me is that a lot of companies talk about strategy, but actually have no appetite for it.

let me explain.  Recently I’ve recently had the fortune to have some catch ups with some of my old strategy colleagues. They have all cycled out of the business and for various reasons are now back ..they’ve come back wiser and with energy and lots of opinions… and many of the discussions we have (strategy being collaborative and benefiting from the network effect) often have a flavour of “ this business should”…. I’m listening to them, and its good thinking, but i know that the chance of it actually happening are virtually zero.

I know this because the moment i hear the world “should”, i know it won’t happen.  Should is a word we use to beat ourselves up.  It’s a forever word, one day maybe we’ll get onto that, a word that disempowers you… “i should go to the gym”… “I should spend more time with the kids”… “we should do that”.. “i should cycle in today”.  Well I can tell you, the days I cycle in are the ones I choose too, even when its subzero outside or raining.  There’s no question, no choice, I just do it.

I bet runners like Ben Kepes don’t say ” i should run today, they just plan it and do it. Founders of companies don’t say ” i have a good idea, i should do something about it”. They just get going and working on the idea.

Delivering on a strategy is the same.  Unless the business is up for it, focussed on that (and not the next fire / deal or trinket) the chances of success are very limited.

Next big question is how to get the business up for it.


is disruption inevitable?

Reading the mainstream press you would think so… “hey we’re going out of business because we got disrupted”….Kodak, Dell, Borders…. all poster child examples of it…

But is it inevitable?

I think the first thing to get clear on is what is disruption. I summarised it (a long time ago using Clayton Christensen’s model), But it is light on an incumbents inertia to change (hey, i’ve learnt a bit since then). It appears that product disruption is slightly more granular…
There ARE unpredictable technology advances ….but in writing this, I was struck by how hard they are to identify… to me there aren’t really that many. I’m thinking truly revolutionary stuff – the printing press, electricity, 3D printing, the wheel, lasers.  I think they are truly disruptive because they caused a large discontinuity in the natural evolution of the product.. For instance, could companies who make eye glasses have reliably picked lasers would compete with them (LASIC), do builders/OEM think 3D printers are a threat to them?  For printing its an evolution, for them… thats different.


Being disrupted by unpredictable market change is part of business BUT ….. being disrupted by a predictable market change is a sign of woeful strategic failure

But then there is a bunch of things that are labeled disruptive (including by me), but really are predictable. Digital printing (kodak invented it), streaming content, cloud computing, IP telephony…. all predictable evolutions. Failure in these instances is a management failure…but its more convenient and easy for management to blame disruption or an outside force, than it is to accept responsibility.

Inertia…it definitely exists, i’ve pushed against it for years. But again its a scapegoat kind of word. All change is hard, changing the what a company does, how and why .. the fundamentals is even harder. But given the stark choice of obsolescence, or taking on hard stuff.. what are you gonna do?

How to deal with predictable disruption is also pretty well documented, (he’s my quick summary). However it is not convenient, easy or without risk… CEO’s prefer not to battle politics rather than fund a step out, they’d rather milk the cash cow than canabalise their existing revenues. (interestingly, hard ass CEO’s of great companies do this)

Embracing Commoditisation

Today saw the double announcement that Salesforce and Rackspace (and hints that Amazon) are entering the mobile app development space. In fact actively commoditising it.

Outside of the hyperbole about how mobile is the platform de jour, what struck me about this is it was entirely predictable.  I’ve fast become a big fan of the work of Simon Wardely. if you read his latest series of posts, you will see what I mean about predictability.

Firstly, everything evolves, and the commoditisation of mobile app development is no different.  Today’s announcement probably saw a rapid movement up the curve for some companies, the ones still in the custom build phase, however the SDK’s are now a product bordering on a commodity.

Simon Wardley's evolution model

Simon Wardley’s evolution model

The second reason this was predictable was using Simon’s ILC model. My view on this is that in the greater game of strategy, it is always in someones interests to be doing the commoditising, as opposed to being commoditised.  And in the new world of cloud computing, the big guys in this space have figured out models that actively target sectors to target. (see Simon’s post on Amazon)

Simon Wardley's Innovate, leverage Commoditise model (ILC)

Simon Wardley’s Innovate, leverage Commoditise model (ILC)

The thing is, in actively commoditising other industries, these cloud players drive scale onto their platforms, create ecosystems of developers wedded to their platforms, drive more integration into their core offering (SFDC) and can see the new breed of winning plays in which to acquire.  Then rinse & repeat.

Now, I know what it is to live in a company that is being disrupted, you worry about today’s numbers and how you marginally improve your portfolio day in and day out… and I know that it is easy to look back in hindsight and say “that was predictable”.  The trick for us all, and i think the true message in Simon’s serious of recent posts,  is that we owe it to our companies or ourselves to undertake the process of predicting what will happen to our company and jobs and take the appropriate steps to react.

It’s that lack of understanding [of] Why which will almost certainly be behind the highly probable and unnecessary disruption of once great companies such as HP, Dell, IBM, Oracle and SAP by a predictable market change such as cloud computing. These companies by right of their position should never face disruption by a predictable market change. They should only be disrupted by an unpredictable market change

In fact Simon is pretty scathing on companies who fail to react to what is predictable (more on this in another post)

Who trapped VMWare in the innovators dilemma …and how do they get out

A great post on techcrunch by Ben Kepes highlighted just how trapped by their business model incumbents can become.

Who trapped VMWare? To me the answer is 3 fold.

  • Bad buyers

IT departments within large organization – are, generally speaking, paying little more than lip-service to the growing calls of a new generation of technology

Buyers, traditionally the IT department are rewarded to maintain the status quo, particularly with Cloud computing – a form of outsourcing.  This response is due to cludge of drivers….Reliability demands – any change pretty much leads to outages, having kit means having a job, arrogance – we know better than you, and fear or comfort with a current technology set, there is also some pretty nefarious stuff that goes on.  People with specific technology skills have made a lifelong career in being the only person who can make an app work…

The problem with lagard IT, is it reinforces to vendors not to change, and in some instances they will actively come out and sell against the new paradigm (Oracle anyone?). HT to Simon Wardley on the above adoption cycle

Unfortunately this leaves gaps in the market for new entrants…and this leads to disruption.

  • Bad management

Listening blindly to your customer, using dated strategy or financial models to new situations or simply telling your bosses what they want to hear, not what they need to hear all lead to reinforcing the incumbent business model.  Listening to the customer, particularly the ones above creates a false sense of security.  Eventually even the IT dept will adopt the new, with cloud its because they will eventually end up at a financial disadvantage, and then you are stuffed… and in the mean time, your mid-level managers have been vetting out any ‘radical’ new business idea, so by the time you need them, well its too late.  If you look at your bench-strength and its full of MBA’s…you are screwed. They are indoctrinated with the same playbook as everyone else (there is no differentiation when its the same)…. instead you should look for outliers, rogue elements because they are the ones who will create something truely new

Senior management is also guilty of not being true stewards of their companies.

“CEO’s are doing the best they can under the circumstances, but there are units in their organization that need to be protected, prices that need to be supported, sacred cows that can’t be touched …….Which is great, unless your competition doesn’t agree. …. When you are competing against someone who doesn’t have to worry about an existing business, they will almost always defeat you.” Seth Godin

Taking a short term view, protecting the old… taking the overt or covert approach of ‘walking back slowly’ you are ceding the future market and opening yourself to disruption…. true leaders stand up, make hard calls and do the right thing for the company long term….

Apple CEO, Tablets will canabalise PC‘s

SAP has said the same, Amazon has done it.    Get the point, great companies bite the bullet

  • The sharemarket

The incessant demands of the sharemarket to protect or grow existing revenues is idiotic.  The analysts community can’t deal with new business lines … “hard to value that new thing, not used to it”.  Shares slide on news that companies are investing in non-core business.  You guys need to take a look at yourself,  the GFC (which I hold shareholders at least partially culpable) proved the point that incessant demands for more drives bad behavior… and then if you don’t like what the CEO is doing, you agitate to reinforce the status quo… numpties.

  • How can they get out?
  1. Start planning for the future – look for the areas that are commoditising and build an ecosystem on top of it.  Get a lot of developers to innovate on top of that (cos you DO NOT have the skills to build the new thing) and watch for the winners. Cloudfoundry looks like a winner to me
  2. Stop listening to your customers…. start WATCHING your non-customers. They are likely already using precursor’s of the thing that will be your death nell
  3. Get an innovation program in place – agree to the incremental risk and potentially spend (not always), and distribute your effort across core, adjacent and transformational innovations
  4. Get different people with different skills working on this different initiatives. Your rogue elements are probably already leading the way, just give them direction and focus
  5. Capture ideas from the source, and get them unvetted.  This is normally the front line helpdesk.
  6. Allocate resources to innovation, stay the course – its a long game,  and don’t compromise. If it is annoying people you are on the right track
  7. Get to grips with canabalisation, internally and externally. The alternative is extinction.
  8. Be prepared to fail, don’t encourage it but do not penalize it either.  When you do, get another group of smart folks to look at the remnants, dollars to doughnuts there is something there, maybe they can make it work



I’m becoming a fan of standards

I never thought I would, structure and constraints aren’t really my gig.  However after reading some of the great blogs by Simon Wardley, trying to deal with an industry that doesn’t have any currently and some personal experiences, I’m changing my stance.

At a personal level, i’ve just completed my second order through Charles Trywhitt for business shirts. Yep i buy my shirts online (you should too, they are bloody good shirts, bloody cheap) . I CAN do this because unlike woman’s clothes there are standards, much to my wife’s annoyance.  Same collar size, sleeve length and chest the world over. Aka a standard. I can buy the shirt trusting it will fit. (apparently due to the advent of vanity sizes -aka lying to the lady about her true size – this is no longer the case in woman’s clothes).

Another example, air travel. Pretty generic activity.  Lots of websites doing the same thing, funnily enough, not always in the interest of the customer. Check out this from expedia


And then I went direct to AirNZ’s website to validate the pricing

Whops…. $2k more to fly on the same flight, same airline…. something i caught because now the power is in my hands to check and find possible itineraries… because I can put in the destination airport code and time now instead of an agent…

At a work level, I’m trying to figure out how to get our company to buy fibre products off 4 different providers. All of which have different ways of ordering, providing, billing, managing and implementing their product… IT folks scoff at network heads, they shouldn’t. Its bloody complicated and for the most part they have solved a lot of the technical challenges you guys are grappling with in Cloud land.  They didn’t get the business model transformation part right, but neither are many of you.

At an innovation level, now I (at least partially) understand Simon’s model, I can see how standards drive componetisation which in terms commoditises activities… and in doing this you see a wave of innovation at high levels in the ecosystem (on top of the commodity).  And i’m beginning to see how this can work in my favour a lot more.  I was talking about an idea with a friend, and he off his own bat said “now cloud is here the physical cost of the new service is really small now…  barriers to start up have gone away”, and in doing so more and more folks are innovating on top of it. Very cool when you can benefit.

Next time you see a standard emerging, think through how you can best make use of it.