December 11, 2009
Dear Strategists,
Hope
you all had a great thanksgiving weekend, and are enjoying the holiday
season, the bad winter-storms in the mid-west notwithstanding.
Let's talk some strategy. You must be aware of recent acquisitions by HP / Dell / Xerox?
Well, if you did not, now be knowledgeable that they acquired EDS /
Perot Systems / ACS respectively; all these being IT Services
companies. In particular, how can HP / Dell benefit from this? How can
these firms, following IBM's footsteps, charge big bucks for their
computer (and printing, and storage) products? How can Dell and HP
leverage IT strategy consulting, and IT systems implementation to boost
profits for their traditional business of manufacturing and marketing
hardware products? How can they use the Loss Leaders strategy
to lead their customers into fully-priced computer systems coupled with
outsourced IT services (specifically, software development in Russia /
india)? To, learn more, please read through our business concept
write-up on Loss Leadership.
The
above services routes these firms are taking begs the question: are
"Services" the ultimate nirvana for high-tech firms? Not! To understand
why, let's go through the "Dumb and Dumber" musings below...
Dumb and Dumber
I have a friend / side-kick; he is humane, somewhat geeky, and completely opinionated. But he does not get strategy. He also hates Zuckerberg, since he thinks Zuckerberg stole the code from his Harvard project and got Facebook started. In fact, he calls it "Fagbook" and "Fakebook," alternatively. I have had many dialogues with him regarding how trying to be rich is not a crime in this world choke-full with greedy bankers and stealing entrepreneurs (as you know, I love dialogues: my first book Strategic Case Analysis contains a multitude of solved business cases in a Socratic Dialogue format). I have told him that by not having a "Fakebook" account, he was missing out.
So, one day, I decided to teach him strategy, and in the process, make him love Facebook, or "Fakebook." I wanted to explain that Facebook has a good strategy, since it is not a "product," but a "platform." To explain to him that Apple took off after it changed its strategy from Products to Platforms, I started taking about i-Phones (yes, the i-Phone platform to which a million apps have been written)... However, he was already angry that I was not angry with Zuckerberg or "fakebook." So, my friend started arguing over Skype (he knows I save money by using a TracFone): "I own an i-Phone, do you own one?" Before I could delve into Product vs. Platform Strategy, he signed off...
Dumbfounded, I wrote him this mail:
"But I forgive u, since u dont understand strategy...zuckerberg is executing...u r starving...the point is not who owns the iphone and who doesn't the point is who understands strategy and who doesn't
u don't get it hence i call u dumb
did u know twitter generates all the rss feeds for u
did u know an app connects twitter with facebook
did u know facebook paid off the guys in harvard and settled the law suit
who are u
above all laws
like god?
u r a hater too, u hate zuckerberg
grow up"
.
.
.
I thought the sidekick would wake up, and send me a nice mail. But he was sulking, since I had called him dumb. So, I sent him a second e-mail, explaining the "Platform Strategy" that high-tech companies need to adopt to win:
"This is how Twitter and FaceBook help me by automating my work for free ---
http://franconomics.com/global-economy-rss.html
Even people in India use it for viral marketing. You must be dumb to be stuck in the google world of products. The world has moved to platforms, and Fakebook is one such platform. Thousands of small entrepreneurs feed their belly by writing apps to the Fakebook platform. I used iPhone as a platform example --- once Apple did that (and changed its focus from products to platforms), its stock started going up... that is strategy.
But you quarrel about who owns an iphone and who does not --- you must be really dumb. And dumber to waste money on the gadget, when u have no income.
If you are so serious about copyright infringement, write to the judges who settled the fakebook lawsuit..."
.
.
.
While I am hopeful that my friend will someday forgive Zuckerberg for "stealing" the "fakebook" code from his "Harvard employers;" you have hopefully understood the new realities of networking effects we live in... In particular, for high-tech businesses, for a while, it has been not just products, but also services. And now, a paradigm shift is emerging: it is not just products (and services), but also platforms. Especially when it comes to software products and solutions, one can't win by just a services strategy anymore; one needs to think platforms.
To always have a Strategy 101 book for easy reference, you need to buy Strategic Case Analysis, now a prescribed text-book in a major accredited university (UNLV - University of Nevada, Las Vegas). If you want me to inspire your executives with a day long strategy coaching session, please don't hesitate to e-mail me. Don't have an executive team yet? Don't worry, just bookmark this Strategy Portal for future reference. And do read up on Loss Leaders, it is a new article I wrote earlier today: this new biz-concept entry explains how HP and Dell can charge full price for their core hardware products by leveraging their EDS and Perot Systems acquisitions, respectively. Thank You!
Happy Holidays!
Sam
P.S. I hope you have listened to the candy case solved as a Socratic Dialogue between me and my son Jay. If you did not, listen / download now by clicking here.
P.S. Hello Business School Professors: I have created a robust set of accompanying teaching materials for Strategic Case Analysis... To receive your desk copy of the book (and the supplementary teaching materials by e-mail), please write to us. Thank you.
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