Don’t Force It: Timing is Everything


Athletes will often hear their coaches tell them to “not force it.” This is pretty common and when mistakes happen on the field or court is usually because somebody “forced it.” Forcing it is trying to create something out of nothing or win the game in a single play. This may be a quarterback throwing a ball into triple coverage in the back off the end zone or a baseball player missing three straight pitches trying to hit a homerun when a single will do. Trying to do too much with what you have can be a fatal mistake in sports, life, or business.
 
When formulating a strategy for your business there are several routes you can take including cost-leadership, differentiation, and an integrated approach. Each of those have different drivers of success and business models will be developed to support your strategy, product, and function within your respective industry. But having a solid strategy and business model may not be enough; in business timing may be everything.
 
Strategic industry and market analysis involves feeling out the external environment for consumer attitudes, preferences, and demands. This is probably the hardest thing to gauge for a firm. It is easy to think a consumer could use something or even want something in the future but is now the right time? Right here is where the firm has to really keep itself from forcing it, because doing so could be a catastrophic mistake.
 
For example let’s look at the Palm Treo smartphone. First released in 2002 these were way ahead of their time with many features the original iPhone had upon its first release in 2007 and the Blackberry before that. Palm had a first-mover advantage and a relatively solid business model but didn’t survive until smartphones became main-stream. Now it is nearly impossible to find someone who does not have a smartphone. The funny thing about Palm is that they were not lacking in features but just seemed to have mistimed their introduction to market. Upon their release the smartphone was not something consumers were looking for. Blackberry and Apple eventually followed up with similar and improved upon products that left Palm behind when consumer demand grew.
 
This illustration shows that strategy, product, and business models can be for naught if the timing is not right and we force action before the market is ready for it. It is vital for entrepreneurs everywhere constantly be scanning in order to time the market just right going forward.

What is the Purpose of a Business?


What is the purpose of a business? This question has been asked over and over again with varying answers. If you are sitting in a business school lecture you may hear many say, “To make money.” While this answer is correct in its own way, it may not tell the whole story.
 
As part of a business plan, strategies and models are created. These nearly always include a value proposition. Value is defined by the consumer and it is the job of the business to create the value that consumers are seeking. Whether this is long-term or short-term is also determined by the consumer. So, it could also be concluded that the purpose of a business is to provide sustainable value to its intended customer. Achieving what Peter Drucker said, “To create and keep a customer”
 
Phillip B. Crosby, author and quality management expert, once said the following concerning a company’s purpose, “A company’s purpose is to give people worthwhile lives by providing the opportunity for meaningful work, a decent living, and an opportunity to make a contribution to others. In pursuit of this purpose, a company has to make money, it has to grow, and it has to be successful.”
 
Crosby also states that making money is crucial to a company’s purpose but does not list it as the foremost purpose of the company. Making money is the means to an end or so it seems by his remarks. The company is responsible for creating meaningful work that not only brings value to the consumer but to employees and partner companies. Obviously that cannot happen if the company is not growing or producing profit.
There are still many other opinions of what the purpose of business is but I think we can draw some major themes from the few we have already mentioned.
 
1. A business must be successful at generating profits
2. The purpose of a business spans far beyond the sole objective of making money
 
New businesses drive economic growth, increase quality of life, and spur innovation. As we all undertake new ventures it is important for our visions and missions see beyond the objective of making money. There is an interesting chain that exists in the few examples we have shared. Money cannot be made without providing a product or service that consumers value. Without money it is impossible to provide meaningful work and decent lives to those involved with the business. So is it is the purpose of a company to simply make money? Absolutely, without it cannot fill the other needs for which businesses exist and provide us with the products and services we value. At the end of the day, businesses drive our lives, just as we drive them.

Don’t Confuse Your Strategy with Your Business Model


If you want to read about business strategy you probably do not need to look very far. Vast amounts of articles, blogs, tweets, and books have been written about the topic, some credible and many not. As most of us have probably noticed, strategy has become a bit of a buzzword in recent years and throwing it into conversation suddenly makes your point credible and valid. It has become an excellent “name-drop” of sorts in business conversations.
 
So, what is strategy? How is it related to your business model?
 
A watered-down definition of business strategy is, the actions taken by a firm to gain and sustain greater performance than their competitors.
 
A business model defines how a firm intends to make money.
 
How do strategies and business models differ? First and foremost it is important to understand that strategy is relative. While a business model determines how a firm will make money, a business strategy determines how a firm will make more money than its competitors. In this sense a business model does not directly factor into responses for external factors and precede true strategic initiatives such as first-mover advantages, differentiation, and cost leadership. At the end of the day, the business model is a tactic or supporting player in an overall strategic initiative.
 
Netflix is a good example of the differences between business models and strategies. Netflix began in the late 90’s as a DVD rental company which would mail movies to your home for a flat rate each month. Their business model was built around high availability and low-cost distribution. Essentially they made money by increasing subscription sales and creating a better distribution method which was more convenient for movie renters. Now their strategy has evolved over years (as any strategy should) but let’s focus on their most recent strategic initiatives. As of late Netflix has been a leader in transition to instant streaming video, leading a strategy to be a first-mover and cost leader. But what is most fascinating is Netflix’s response to match such competitors as HBO. Netflix has begun to create its own original TV shows which are available as live-streaming and all episodes are available at once instead of releasing new episodes each week or so.
 
The business model has not changed. Netflix still is making money through subscriptions but how are they seeking superior performance to competitors? They have created a strategy of getting away from DVD rentals, focusing only on live-streaming capabilities, and innovating through technological advantages and superior content availability. This is represented by the move to make its own original TV shows and making itself available on multiple devices with higher quality software capabilities. What has not changed is its strategy to remain a leader in easy distribution.
 
Netflix exemplifies evolving strategies while maintaining a relatively constant business model. As stated before it is important to recognize the relationships that exist between business models and business strategies and that they are not the same thing. Confusing your business model you recently developed for a viable strategy can be disastrous for business but a great business model implemented as part of an overall strategy can lead to amazing results.