Laroche

Articles

A blog about design, technology and our own experience & expertise.

Slow and steady wins the race

laroche_business_strategy
 

We all have become obsessed with growth. We want to earn more money, raise more capital, sell more products that we forget to build a great company. We are obsessed with hiring more and more people so in a year or two we end up not knowing who is the guy or gal next to us. This leads to no cooperation between the teams so you end up not knowing what everyone does which leads to low performance and everybody become selfish at their work. This all happens because leaders nowadays are obsessed with building the biggest building in the town, without even building a proper foundation to it. We all want to dominate our markets, but few of us even own they niche we perform in. We all want to have the best product, and we neglect the aspect of people behind great products. 

There is a quote in Russian that sums up the entire process of building anything in life: “ Quitter you go, further you will get.” This is a direct translation, but in English, it would be: “Slow and steady wins the race.”

And from my own experience and analysis, I learned that building the best company usually requires brand, scale, network effect, technology, and patience. But to make these things work you have to choose your market carefully. Every company is small at the start. But if you do not choose your niche correctly, you have all the chances to fail. Reason? It is easier to dominate a small niche rather than an entire market. You should find a small group of people that are served by few or there is no supply at all.

If you go for 1% of a $100 billion market, chances are you will lose to the big companies or simply will fail to serve the right customers. But even if you choose a small niche, you have to know one thing. Your profits will be zero. Because fighting against the big guys it’s always time and resource consuming. So you have to choose strategically and carefully your next move on whom to serve next to or with which products to extend your portfolio.

Many have tried to learn from Apple’s success and some of the companies are still trying to copy their model. Branding, paid advertising, minimalistic design, beautiful package and so on. But all these are useless unless your product has a substance underneath. Not many know that Apple has a strong network of suppliers that allows them to dominate the pricing part and buy superior quality hardware at lower prices. The entire Apple’s game is in the details, but not the front details which everyone thinks it is. Same thing applies for example to Tesla, that has its own entire logistic path that allows them to cut the prices. Or for example, they do not use resellers but use their own locations to sell their products.

There are 2 crucial mistakes that the majority of companies make and it’s not that your product is not innovative enough, or your package minimalistic enough. It’s that you do not know the end game. So what are some things I personally hate when companies do?

 

For God’s sake, do not disrupt

By introducing a product on the market that simply does the job better (it’s simply a V2) than it’s predecessor is not disruption. It’s a misused word only to create a fuss around your product. But you should know that you attract too much attention and the big companies will notice it. And fighting the big game is not your end goal. This has become a buzzword among entrepreneurs and show something as new or innovative. So it by default created a competition on who is going to disrupt the next market.

Disrupt - drastically alter or destroy the structure of (something). (Google). 

Constantly battling bigger guys and telling them that their technology is old and yours is the new standard will get you more and more trouble. Only the fact that you are competing against someone will make you think about the obstacles that lie ahead, rather than thinking and planning about your product. You will be in a fight of you against big companies and not you creating a great product for your customers.

To disrupt a market means threatening companies that are already established and own the market. People who disrupt something get the attention, but they also get the trouble. Being a threat to a company means by default that you create competition. Disruptive companies usually pick fights that they can’t win. As you plan to expand or go to a new market, try to avoid disruption because you do not need competition.

 

Wins who comes last

So many companies are stressing about moving to a market first with their new innovative product that you can count them by your fingers on how many actually succeeded. I have heard this line almost in every 2nd meeting with a potential client “We want to be the first company on the market with this new technology/product / etc.” or “Our technology is so disruptive and new that everybody will use it in the future”. And from this comes the reason of their crazy short deadlines, absence of any strategic thinking and not knowing the true end consumer. The bad news is that you are not the first one that thought about the product or technology you just have. So signing a dozen of NDA’s won’t help you. And moving first to the market is a tactic, not a goal.

The most important thing is to generate cash flow or revenue based on your new “disrupting” service or product. It is much better to be the last one on the market with a better product and monopolize the market for decades that will come rather than be the first mover and find out that you are by far not the best or unique.

You should have the entire game planned ahead and study thoroughly the finish line. Having a good strategy behind your product is a crucial thing. Because business is like chess, every move has to be planned and once a threat appears, you have already thought about a dozen of solutions to it. History is your best friend. Wars have been won not because someone had the biggest army or best weapons. Wars are won strategically. I personally learned from a historic war on how having 10,000 soldiers and a good strategy can help you win against a superior army with 100,000 soldiers and with much better weapons. 

Being big is an advantage, but the strategy is the game. And now, before you go start using quotes from “The Art of War” in your next management meeting, ask yourself if your product does the job for your niche, if you truly understand your customer and you know where to go next. Just be so God damn good at something that when you launch your next product, your reputation is already set.