I just finished reading a provacative article written by Steve Denning titled What Killed Michael Porter's Monitor Group? The One Force That Really Matters. It is a long piece but definitely worth reading for anybody interested in business or strategy.
The basic premise of the article is that Porter's Five Forces Model for strategy is wrong. The model has been taught in every business school and has been accepted globally as gospel by most people so it is a pretty ballsy thing to come out and say that the legendary business guru is wrong and there is a better way to think about strategy.
Having read the article and spent some serious time thinking about it, I think Steve Denning might be right. My current experience at Weebly convinces me that he is on to something.
Denning basically says of Porter's model:
"In the theoretical landscape that Porter invented, all strategy worthy of the name involves avoiding competition and seeking out above-average profits protected by structural barriers. Strategy is all about figuring out how to secure excess profits without having to make a better product or deliver a better service."
He argues that radical innovation focused on delivering more and more value to the customer is what sustainable companies have done to stay ahead and to deliver above average profits over the longer term.
"Instead of seeing business as a matter of figuring out how to defeat one’s known rivals and protect oneself against competition through structural barriers, if a business is to survive, it must aim to add value to customers through continuous innovation and finding new ways of delighting its customers."
Having been at Weebly full time since June and having watched the founders build the company over the years, I believe Weebly is a real life example of a company that lives and breathes this approach every day. It absolutely works and I am a definitely a convert to this way of thinking about business strategy.
At Weebly, we don't worry about the bottom line. We worry about our customers and the bottom line will take care of itself. We want to deliver steadily more value to customers. That's the beauty of the strategy. It is simple to understand, it doesn't take months of data analytics to pick a direction and there is no need expensive strategy consultants. All it takes just a clear view of who drives our strategy and our business success... our customers.
For example, whenever we talk about building new features, we always come back to how it helps customers. When we build a feature, it is never finished until our customers try it and tell us they love it. We never say "now we need to build feature X because competitor Y has it". When we decide to send an email to our customers (which we rarely do since they don't often add value) we always make sure that the email is going to have a net benefit to the user and their Weebly experience. When we work with partners, we take the same approach. When we partner with other companies we do it is because we believe we can help them add value to their users or they add a lot of value to our customers.
This all sounds really simple. I am sure every company says that their customers are the most important thing and every feature or product line they introduce is meant to make lives easier. Trust me, it isn't easy. It is surprisingly easy to believe that everything is going to improve a customers life and when you can send a single email that drives a lot of new revenue it is even easier to "just send it" and fall into the getting revenue today trap. All these things send signals to customers and they all matter, every single one of them. Being able to say "no" matters and it is the things that you don't do that often make the difference when you think about strategy like this. That's probably the biggest lesson I have learned in my time at Weebly.
I am definitely a convert and I have Dave, Dan and Chris (Weebly founders) to thank for it. This isn't how I used to think about strategy at all and am really enjoying being part of a company that thinks this way. It is making me a better executive for sure. There is an amazing amount of clarity to be had when you take this approach. When making money isn't the immediate goal and the customer truly comes first, you can really focus on the things that matter. It isn't easy by any means and takes a lot of hard work but the benefits are worth it.
"What is the most important factor behind a company's ability to produce amazing products? Or are there multiple factors that are equally important?"
I read the above question on Quora yesterday and I think it is a great topic to ponder. The thread had some great answers and I happened to agree with most of the factors for building amazing products. The comparisons however were pretty typical, looking at tech companies (Apple vs Microsoft) that have already been covered from every conceivable angle. Don't get me wrong, there are plenty of great tech companies that design and build awesome products. I personally love Weebly (disclosure - I am an employee), Dropbox, and Square, but what about offline companies in other industries?
Which companies build products that are clearly amazing and do these companies exhibit the same "factors" associated with building great products that tech companies have.
To summarize the thread, the following were considered "factors" associated with creating amazing products:
Let me start by picking a company that builds what is considered to be the best products in their industry. Not a huge surprise that I am going to focus on cars. Pagani, the small supercar maker in Italy is the obvious choice in my mind. You would be surpised to know that people looking to spend a cool $1 million + on a car actually have a quite a few options: Koenigsegg, Spyker, Ferrari, Lamborghini, Bugatti and probably some more I am missing, but in this rarified field there is only one company that motoring journalists, rich car buyers and drooling teenagers agree makes the most spectacular cars and that is Pagani.
I have talked about their cars before in my favorite sports cars section on this site, but check out some of their cars below to get a sense. The level of detail is out of this world, you should check out the examples I cite in my piece about the Pagani Zonda.
If you are not entirely convinced that they make amazing products, check out the clip below where one of the top automotive journalists in the world is basically drooling during his trip to the Pagani factory. He is given the chance to drive one of their latest creations and is about as excited as any Apple-obsessed consumer I have ever seen. When a journalist, who for a living drives cars like this and pokes holes in them is this smitten and excited you know the product is special.
So we all agree that they make awesome cars. Now let us see if they exhibit some of the same factors that tech companies do who make great products:
It looks to me like a car manufacturer that exhibits all the same factors that tech companies who build amazing products do. That's a good thing and I think it is something companies in other industries should pay attention to. When you see people talking about Apple and their products being amazing, don't just assume you can't take those lessons or factors and apply them to your business, no matter the industry.
Are there other companies out there who fit the mold that aren't tech/internet companies?