Steve Jobs certainly gets it. The unveiling of the iPad (and subsequently, the iPad 2) was not merely a product launch, but a defining moment in which Apple shared its grand vision for the consumer electronics marketplace. The company symbolically stepped away from the familiar confines of the PC era, leaving behind its own initial core business along with the competition. “You cannot discover new oceans unless you have the courage to step away from the shore,” said Nobel Prize-winning author André Gide. In Gide’s remark, the notion of new discovery is linked to bravery. In today’s marketplace, I would argue that doing something unprecedented is not just adventurous but imperative, and that the far bigger risk is focusing on current competitors as the barometer of strategy. Eliminating competition by trying to beat it is dangerously shortsighted. It deflects the attention and the resources of an organization away from the far more important and exciting question of how to shape consumer lifestyles. A great illustration of this predicament is what happened to Kodak in 2003, when it was caught sleeping as the world transitioned from film to digital photography. The company severely misjudged the speed and impact of this transition and its lifestyle implications. As a result, Kodak’s core business, in which it was clearly dominating its competitors, was on a fast track to obsolescence. What were the consequences? Well, after 74 years, Kodak was delisted from the Dow Jones Industrial 30 Index of leading American companies in 2004. Kodak then embarked on a radical and painful restructuring to reestablish its relevance. It had to cut 25,000 jobs. It posted eight consecutive quarters of losses through the end of 2006, with a single quarterly loss of as much as $1 billion in 2005. Worst of all, the new reality was that even though Kodak quickly became a leader in digital photography, it was not a sustainably profitable business. In simplified terms, the company’s core business shifted from being a monopoly to being a commodity in the blink of an eye, and it had to scramble to reinvent itself. So instead of trying to figure out how to beat competitors, smart strategy looks to change the rules of competition altogether. To see the distinct mindset and exciting implications of this approach, let’s consider an example from the world of sports. The Hungarian national team of the 1950s is widely considered as one of the most successful squads in the history of European football, by far the world’s most popular sport. In a six-year span, the team went undefeated (aside from the controversial World Cup Finals in 1954), scoring over four goals a game, and recording the highest rating ever for a national team. They won the 1952 Olympics, and in 1953 decisively beat England 6-3 in the “Match of the Century” in front of 105,000 people at Wembley Stadium. What was their secret? For one, the management ensured that the Hungarian team was made up of extremely talented players. But it was the team’s groundbreaking strategy that enabled them to reshape the very way the game was played and to leave the competition behind. Instead of playing strictly defined positions, the Hungarians introduced unparalleled flexibility and continuous rotation on the field that other teams simply had no answer to. Moreover, they invented the concept of the “playmaker,” which gave a designated player free reign to improvise and creatively run the team’s offense. It was this willingness to go beyond prevailing boundaries rather than compete within them that allowed the Hungarians to elevate the sport to new heights of enrichment for players and spectators alike. One of my favorite Dr. Seuss stories is about The Zax, imaginary creatures who can only go in one specific direction and are very stubborn. In the story, two Zax, one southbound, the other headed north, happen to bump into each other in the middle of the desert, each perfectly blocking the other’s path. Neither of the two is willing to budge, expecting the other to get out of the way first. And they remain there, nose to nose, obsessed with winning the standoff. They become so preoccupied with and consumed by each other’s presence that they don’t notice the world passing them by — which it does. A new highway is built right around them in the desert. As Dr. Seuss puts it: “And they built it right over those two stubborn Zax. And left them there, standing un-budged in their tracks.” Make sure that your strategy doesn’t resemble that of a Zax, otherwise you risk getting left behind in the desert.Why You Should Stop Obsessing Over Your Competitors
