With writing instrument in hand I set off on another circling and commenting adventure. This week I read ‘The Hare & The Tortoise’, which is a collection of short essays about business strategy. It doesn’t deliver ground breaking revelations, but it did throw up the occasional insight.
The opening essay ‘The hare and the tortoise: a fable for senior executives’, revisits the infamous original story but with a twist, this time round the tortoise has some insecurities and wants to be like a hare. He gets advice from some clever marketing types who propose he could surpass the hare by becoming a jaguar. The moral of the story is if you’re tortoise – be a tortoise. Huh? well whilst other markets may look like they have greener grass, the first obligation of a company is to compete in markets that they are most adapted to. The essay doesn’t mention diversifying, but it would be reasonable to expect the essay to say – ‘I’m not saying a company shouldn’t expand or change its activities, I’m saying it should do what it is good at’. So here I think I’ve got to core of the essay and that is: to be comfortable in your own skin and keep doing what you’re great at.
The next stop is ‘Distinctive capabilities’. What are they? well a distinctive capability is something a company has or does that is very difficult for another company to reproduce, such as: a loyal customer base or a trade secret. A company can only hope to have a few and many don’t have any. It is important for any company: to know its distinctive capabilities, to continue to utilise them and finally not do anything to lose them! Because a company that is lacking in the distinctive capabilities department – can not sustain success whilst others can easily imitate what makes them successful. I’ll summarise with a catchy slogan – ‘don’t sell fizzy drinks, sell Coca Cola’.
‘The plane that fell to earth’ looks at why Boeing lost its dominating position to Airbus. Boeing was market leader for over 20 years, and looked unbeatable, so why then did things change? there was a change in leadership, and more specifically there was a change in mentality. Boeing’s glory days were led by Bill Allen who’s focus was aircraft first and profit second. This is illustrated by 747, it was the riskiest project the company had ever undertaken yet they didn’t even know what return-on-investment would be. When Boeing was taken over by profit driven Harry Stonecipher and Phil Condit, it lost what had kept it successful. The lesson – ‘money is not everything’ and more importantly ‘make kick-ass stuff a priority’.
‘First movers please’ points out that history has not favoured innovators. For example: Berkley produced the first calculators, Chux the first disposable nappies and Ampex the first video recorders. These companies were first movers but where has it got them? nowhere! They have all been outclassed by the brands we know today. This supports part of my philosophy, that although a great idea is important the real distinction is in the idea’s execution, that’s what sets you apart.
To finish off I’ll leave you with the lesson from ‘Cost and competitive advantage’. It gives the example of a water utility company. If all the staff were fired, the water would keep flowing, but eventually something would go wrong and need fixing. It is a drastic example but shows cutting corners today can have delayed negative consequences. It seems obvious but it also seems like many companies either can’t foresee the long term impacts of their actions or that success today is more important than success tomorrow. The water company example also highlights the balance of cost vs output, water needs to be clean and reliable but can always be cleaner and more reliable if more money was spent. A compromise must be reached, and in some cases can be phrased ‘the compromise is better than the better solution’. And on that philosophical bombshell I bid you fair well.
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