Plunge

There are two basic ways to enter a swimming pool.

The first involves testing the water, cautiously inching your body into the pool as you slowly descend the steps or the ladder. It’s all about deliberateness and the hope that this “safe” approach will allow you to avoid any unpleasantness.

The second, of course, is to simply jump in–to plunge.

The avoiders come from a place of fear. The plungers embrace the risk, accept the trade-offs and commit. Once you are in the air, there is no turning back.

I wonder where Osama bin Laden would be if the Obama administration were afraid to plunge?

I wonder where the entrepreneurs behind Groupon, Netflix, Gilt Groupe and so many other share grabbing innovative businesses would be if they were afraid to plunge? And where the competition would be if they hadn’t been afraid?

I wonder what would be different if you took the plunge?

Taking Pitches

In baseball we often see a batter “take a pitch.”  In other words, before the ball is thrown the batter decides he’s not going to swing regardless of how good the pitch is.  Sometimes this is a tactic to tire his competition–the pitcher–out.  Sometimes it’s an attempt to draw a walk because that’s the best the batter can hope for under the circumstances.  Sometimes it’s a strategy to wait things out, figuring a better opportunity will present itself later.

Lots of businesses take pitches.

When Sears allows discounters and category killers to erode their core customer base and chip away at their dominant market share, they are taking pitches.

When Blockbuster fails to mount a compelling response to NetFlix and Redbox, they are taking pitches.

When Neiman Marcus, Saks and Nordstrom allow flash-sales sites like Gilt and RueLaLa to build brands with significant market value, they are taking pitches.

When dozens of companies deny the future of social networking and location-based marketing, they are taking pitches.

Of course there are times when it makes sense to wait things out–to study and analyze before placing a big bet.    Customer-centric companies know who their most important customers and prospects are, and when the metrics on those customers deteriorate, they dig in to understand the drivers and take action.

You don’t always need to swing for the fences, but it’s hard to win without a few hits.

Wrong Turn at Lung Fish: Critical Decisions in Strategic Evolution

Twenty years ago the brilliant Chicago-based Steppenwolf Theater Company debuted Garry Marshall and Lowell Ganz’ play Wrong Turn at Lung Fish.  This farcical piece is an inquiry into the often harmful peculiarities of human behavior.  In a pivotal scene, one of the characters wonders whether mankind may have made a profound wrong turn along the Darwinian path of evolution.  The “wrong turn at lungfish” sets humanity on a path of despair, and ultimately begs the question whether our fate is inevitable, or could pain be averted with different decisions at critical junctures?

With the benefit of hindsight, it would appear that many businesses have made profoundly wrong turns in the evolution of their business models.  Sears failing to enter (or acquire into) the big box home improvement category.  Blockbuster neglecting to launch a serious alternative to RedBox and NetFlixCircuit City’s decision to exit appliances and abandon its high service sales model.   Any number of smaller retail formats laid to waste in Walmart’s wake.

These are retail examples, but virtually every industry has multiple stories of brands that were on top, but that failed to evolve to the changing customer and competitive environment.  Before long they found themselves dropping from leadership positions to also-rans or, in some cases, filing for bankruptcy and possibly disappearing altogether.  And indeed for some their fates may have been inevitable.

Yet, in the Sears, Blockbuster and Circuit City examples, it’s clear that those companies had the opportunity to know-and the resources to act–to change their course.  Through a lack of customer insight, faulty economic analysis and a fundamental misperception of risk, they somehow failed to see what was obvious to many others.

For these brands the worst case scenario has come true, or the day of reckoning is drawing ‘nigh.  Their fates are sealed.

Chances are, however, that you still have time to act, to develop deep customer insight, to understand your vulnerabilities to competitive innovation, to realize that you should be the one to cannibalize your cash cow.   It is easy?  No.  Is it more than a little scary sometimes?  Of course.

But I always think about the guy on the way to the bankruptcy hearing and what they wish they had done differently when they had the chance.  I bet what they are about to go through seems a lot harder and a lot scarier than what they could have gone through.   Don’t be that guy.