There is a natural trend within most of the Companies – product based – which is so widespread to be considered as a Law of Nature.
At the beginning of its life, a “Forerunner” Company intercepts some “unexpressed Customer needs” which become “the Product”.
If the Product is successful in terms of functionalities, market positioning and marketing, then it gets bundled to those customers which concur to define its own “Customer’s base”.
Incumbent competitors may try to get the same Customer’s base entering the market with a similar product: when this happens, then the typical reaction of the Forerunner is to add new functionalities, to make its own product more rich and valuable. Differentiation – as a process – is practically what always happens and contains the gene of the Forerunner’s death: if the product gets more complex (e.g. improves/evolves, as the saying is) the Customer’s base shifts along as well, finally reducing its size, compromising the sales revenue and offering competitors the chance to fill again those initial unexpressed needs that were the original motivation to have “the Product” in the Market.
If it is not yet too late, a further reaction of the Forerunner is then to consider the product as a commodity and differentiate in Services, possibly compensating the product’s loss of value. But again, this form of differentiation will change the Customer’s base for some extent, moving the whole Company in an unexplored land.
The Stars Analogy
It is easy to see that what happens to product based Companies recalls the life of Stars.
A Young Sun grows in time becoming a Red Giant and finally falls into one of two possible conclusions: a Black Hole or a somehow eternal Pulsar, a White Dwarf.
Many companies easily get to the Black Hole condition, sinking without any remedy.
Others, niche based and offering high value services, may continue as Pulsars are used to.
But is this analogy just an analogy (and then with a possible different “Finale”) or a mandatory path?
The Steve Job's Way
I recently read this book “Leander Kahney - Inside Steve’s Brain”, whose content is focused on the strategy followed by Apple Computers, mainly along the guidance of Steve Jobs.
The most surprising element of Steve’s strategy is that “less is more”.
Apple's strategy is not focused on creating products which finally grow in complexity under the weight of new functionalities. On converse, the mission while conceiving a new success consists to add functionalities which simplify the use of the product through the interaction with the other functionalities already in place: a continuous positive feedback mechanism where any functionality may exist only if of some help to the others.
Any nice functionality which does not fulfill this approach gets discarded. Old functionalities which may be simplified with a new approach are removed as well.
This view sounds to me quite unique on the Market and allows to read the Star Analogy under a new interesting light.
It is certainly true that for most of the Companies the Star Analogy is a mandatory path but this is not the result of a “Lex Naturalis”: it is just the result of a bad Strategy.
At the beginning of its life, a “Forerunner” Company intercepts some “unexpressed Customer needs” which become “the Product”.
If the Product is successful in terms of functionalities, market positioning and marketing, then it gets bundled to those customers which concur to define its own “Customer’s base”.
Incumbent competitors may try to get the same Customer’s base entering the market with a similar product: when this happens, then the typical reaction of the Forerunner is to add new functionalities, to make its own product more rich and valuable. Differentiation – as a process – is practically what always happens and contains the gene of the Forerunner’s death: if the product gets more complex (e.g. improves/evolves, as the saying is) the Customer’s base shifts along as well, finally reducing its size, compromising the sales revenue and offering competitors the chance to fill again those initial unexpressed needs that were the original motivation to have “the Product” in the Market.
If it is not yet too late, a further reaction of the Forerunner is then to consider the product as a commodity and differentiate in Services, possibly compensating the product’s loss of value. But again, this form of differentiation will change the Customer’s base for some extent, moving the whole Company in an unexplored land.
The Stars Analogy
It is easy to see that what happens to product based Companies recalls the life of Stars.
A Young Sun grows in time becoming a Red Giant and finally falls into one of two possible conclusions: a Black Hole or a somehow eternal Pulsar, a White Dwarf.
Many companies easily get to the Black Hole condition, sinking without any remedy.
Others, niche based and offering high value services, may continue as Pulsars are used to.
But is this analogy just an analogy (and then with a possible different “Finale”) or a mandatory path?
The Steve Job's Way
I recently read this book “Leander Kahney - Inside Steve’s Brain”, whose content is focused on the strategy followed by Apple Computers, mainly along the guidance of Steve Jobs.
The most surprising element of Steve’s strategy is that “less is more”.
Apple's strategy is not focused on creating products which finally grow in complexity under the weight of new functionalities. On converse, the mission while conceiving a new success consists to add functionalities which simplify the use of the product through the interaction with the other functionalities already in place: a continuous positive feedback mechanism where any functionality may exist only if of some help to the others.
Any nice functionality which does not fulfill this approach gets discarded. Old functionalities which may be simplified with a new approach are removed as well.
This view sounds to me quite unique on the Market and allows to read the Star Analogy under a new interesting light.
It is certainly true that for most of the Companies the Star Analogy is a mandatory path but this is not the result of a “Lex Naturalis”: it is just the result of a bad Strategy.
