On Being Prepared to Walk Alone

Between 1994 and 1998, I was first a senior consultant and then a Director (partner) at Arthur D. Little. ADL was really a technology consulting company and the majority of the people I worked with were highly skilled, hard core engineers and scientists, many of whom held Ph.D.s. (ADL ran into trouble – after I left – because the people who ran it forgot its essence and decided to compete head-to-head with McKinsey. But that’s a story for another day.)

One day, infuriated at a “McKinsey wannabe,” I turned to an outstanding engineer. “Dave,” I said, “One reason companies run into trouble is that everyone believes that he or she can do strategy. No one questions the fact that to do what you do, you need years of specialized training. There have been great inventors who never ever attended school, but they were few and far between. In contrast, there are many more examples of people – like Bill Gates – who became brilliant strategists without any training. So, everyone seems to believe that they too can be great strategists – without investing any time or energy or creativity. What utter nonsense!” Dave made sympathetic noises and returned to his work.

This story has a link to my last post on competing with “free” on the Web. A key reason why media companies are hemorrhaging money is that few have true strategies.

All the great thinkers in strategy agree on two issues. First, a strategy must be unique and hard to effect. Recall that in the heydays of the dot com companies, every website had a page entitled, “Our Partners” which – invariably – named IBM, Microsoft and Cisco. For years, I’ve told executives, “If IBM is everybody’s partner, then IBM is nobody’s partner.” Generalizing, if every company has the same strategy, no one has a strategy. This is definitely true of most media companies: most have the same content; all are reliant on advertising; all have roughly comparable technical capabilities; all can be accessed from around the world; and only a handful have true brand names which could give them great advantage.

Second, a great strategy is about fit – lots of little factors are designed to work together as one seamless entity. Thus, simply copying the most prominent and visible of these factors does not help a competitor. For example, in my post, “Time to Re-read ‘What is Strategy?’” I argued that simply copying Apple’s retail strategy won’t help Microsoft, just as it didn’t help Sony. Apple’s retail stores are a seamless part of the “digital culture” that pervades all its products and services.

Media companies will not thrive if they all rely on advertising. This funding mechanism worked for newspapers and broadcast TV since they differentiated themselves first by content and second, by distribution. It also work for Google for pretty much the same reason. Since there’s really nothing unique in the online personas of most media companies, an advertising based model will inevitably reduces competition to a dog-eat-dog level, forcing them to compete with “free.”

A different solution can be found; it only requires creative thinking. After leaving ADL, I became the Chief Technology & Strategy Officer of a high tech company, TurboChef, which still manufactures a device which I’ve always described as “a computer which cooks.” When I was creating its online strategy, I deliberately eschewed advertising. No person who could afford to buy a TurboChef was going to spend endless time sitting in front of its control screen watching advertisements.

In its place, I focused on the one thing we controlled that no one else, regardless of size, could duplicate – at least as long as our patents were valid. I asked my engineers to design the device so that its operating system would be upgradeable for several years. This required, for example, the use of flash memories, which were just appearing and very expensive. Nevertheless, I mandated the use of flash memories. We would give consumers a “free” upgrade (naturally downloaded directly into their TurboChef ovens) if and only if they participated in the online community we were creating – where they could buy exotic foods, high end kitchen artifacts and yes, exchange recipes (by downloading them directly into each other’s ovens). We would make money online through this community – without relying on a single advertisement.

We would also be able to do something no consumer durable company has ever been able to: keep in constant touch with our consumers. That way, in five or seven years, when we told them that their hardware (the physical oven) could no longer handle the latest versions of the operating system, they would virtually be compelled to buy the latest TurboChef available.

Much of the “strategy” churned out by companies stinks (and that’s putting it mildly) because people who formulate them think it is a mechanical exercise. Creating good strategy requires creativity comparable to that which underlies the output of a good artist or a top-notch engineer. And so, the worst possible time for companies to create strategies is in conjunctions with their annual business planning cycle. At that time, the only creativity observable is in the “massaging” of budget numbers to produce a pre-determined output!

Since childhood, I have loved Bengali song that says, “If no one hears your call, then walk alone.” (Trust me, the poetry is much more lyrical in the original language!) Creating anything, particularly something unique, requires the courage of conviction and the willingness to walk alone.

Category: Business Tools, Online Business Models | Tags: , , , One comment »

One Response to “On Being Prepared to Walk Alone”

  1. Prakash Waknis

    Dear Dr.Mukherjee,
    Many thanks for spending a wonderful 1 hour with us. I regret that you couldn’t see students.
    Your blog indicates that strategy cannot be formulated by management alone and in isolation. It should be a team effort involving technical management, product and marketing management. We often discuss in a class : ” Can Companies develop a competitve edge on the strength of their supply chain?”. Dell does it even now. Others are trying not with much success (you can validate this statement). ANother question that comes to my mind is related to your statement about the “”worst possible time to create strategies – annual bsuiness planning cycle”. I feel this is the time to fine tune the strategy not redefine or create anew. So the question is “When is the right time?”.
    Warm personal regards.

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