Guy Kawsaki seems to have the ability to find interesting books and subjects. Here is a great example. Michael Raynor wrote a book about why committing to success leads to failure, and though he expressed hesitancy about buying the book, he loved it and pointed out 10 interesting questions.
Michael Raynor has a doctorate of business administration from Harvard and works for a big-name consulting firm so I had to overcome several deep-seated prejudices to read his new book The Strategy Paradox: Why Committing to Success can Lead to Failure (and What To Do About It).
He’s from Canada, and I believe that I am a Canadian stuck in a Hawaiian body (vis-a-vis hockey), so I bent my rules about helping authors with such a pedigree (pedegree?). Luckily I did because his book is quite informative. I don’t know about you, but there are many companies that succeed, and I can’t figure out why. And there are also many companies that fail (some of which I invested in), and I can’t figure out why.
This book goes a long way in explaining how strategy makes or breaks a company. To put it another way, I won’t think I’m so smart if a company that I invest in succeeds, and I won’t think I’m so dumb if it tanks.
1. Question: Why did Windows kick Macintosh’s butt and VHS kick Beta’s butt?
Answer: Apple continued along the path that it had blazed with the Apple II and the Macintosh: very cool, very high-performing products built around a proprietary architecture of hardware-software integration. This was a perfectly reasonable bet to continue, but it happened to be the wrong one in the personal computer market of the late 1980’s. Like a broken clock, a strategy that never changes gets it right sometimes, though statistically it is wrong more often than not. The iPod is Apple’s latest hit, and it’s more of the same: a cool device built around a proprietary architecture. Apple’s clock hasn’t changed; it still reads twelve o’clock. It’s just that it happens to be noon again.
By contrast, Microsoft built a series of strategic options that positioned the company for success under a variety of different outcomes. Microsoft had what turned out to be a better strategy only because it didn’t commit itself to a single strategy. For example, when IBM began aggressively creating a competitor to MS-DOS and Windows, OS/2, Microsoft collaborated with IBM. The Windows development effort is evidence of Microsoft’s belief in GUI OS’s, but Microsoft was also getting a foothold in applications development for GUI-based systems by writing Excel and Word for…Apple! Corporate customers seemed to think that UNIX had a promising future, and so Microsoft was investing in UNIX too even as it released new versions of the by-then venerable menu-driven MS-DOS.
Sony, like Apple, similarly suffered the fate of a reasonable, but wrong, committment. It positioned the Betamax as a high-fidelity video recording device for time-shifting broadcast TV programs. In contrast, Matsushita’s VHS was a lower-performing, lower-cost device. Much to everyone’s surprise, using VCRs to view rented movies turned out to be the “killer app,” and recording fidelity became a secondary consideration.
Sony couldn’t adapt by cutting costs and hence price because Matsushita was, by the mid-1980’s, millions of units ahead of Sony on the VCR experience curve: any move by Sony would have been easily countered. In other words, much as Apple had done in the PC market, Sony made a perfectly reasonable bet that turned out to be the wrong one. Matushita didn’t end up on the right end of this battle because it had a more strategically flexible stance than Sony as in the Microsoft/Apple case. Rather, Matsushita made a different bet that simply turned out to be the right one.
[More at How to Change the World]
I strongly suggest you read the above link. the points he pulled out where some interesting ones.
Tags: Book Review, Interesting
