Thursday, September 21, 2006

Blind Man's Bluff

Sorry for what could be a politically incorrect title - but sometimes succinct is very valuable.

When you were a kid you may have played a game where one person was blindfolded and stood in the middle and had to guess who tagged them or touched them. Now that I think about it - this game is probably politically incorrect now too. At any rate the game was called Blind Man's Bluff.

I think many larger businesses are playing a game of Blind Man's Bluff everyday, trying to understand what firm will provide a new product or solution that takes away valuable market share or introduces a product that makes the existing product a "me too". There are two types of Blind Man's Bluff - the simple and the complex.

The simple one - and the one getting the most focus - is: which firm will introduce the next iteration that we have to overcome or copy? Who will produce the next incremental improvement that we have to match in our products, or explain away using adroit marketing? In this matter most firms aren't really playing Blind Man's Bluff - it's really a game of poker. Who's got the cards and who's bluffing?

Where Blind Man's Bluff really comes into play in most firms is the question: which company or band of garage dwellers will create a product or service that renders our main revenue stream obsolete? Most firms have some fairly significant blinders in that they take their key revenue streams for granted and assume that a challenger can be spotted from a long way off. What's most likely to disrupt your market is a dramatic change in something you think is immutable. Paid content becomes free content. Licensed software becomes open source. What blinders does your organization have based on its assumptions? I noted earlier that many firms think that they can spot challengers far out on the horizon. In some cases that's true, but many times challengers come from unexpected directions. I can remember reading a prediction a few years ago about "Free long distance calling" and how absurd most people thought that was. Today with Skype or other applications I can call people anywhere for free. What's ATT Long distance or Sprint Long Distance business plan now?

There are several reasons why most firms are playing Blind Man's Bluff with their future. One, they have blinders they don't recognize. It's hard to think about cannabalizing your own revenue streams, but you can bet there are other people thinking that way. Two, the infallability complex. If you are a leader, you tend to think you are smarter than those around you. Three, most firms tend to look in the wrong places and make the wrong assumptions about challengers. Four, assuming the market will stay the same in the future as it is today. Record companies fought the downloading of music and concepts like I-Tunes when they make a lot of sense to a consumer - why buy a whole record or CD when I really only want one or two tunes? Last, many firms don't do a good job of looking out at the future. We've trained them to think in quarterly increments. Long term thinking, innovation and strategy are costs that impact the bottom line every quarter, but don't necessarily add to the top line every quarter.

Blind Man's Bluff is a kid's game. Why do so many firms insist on playing?
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posted by Jeffrey Phillips at 8:57 AM

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