Strategic Focus: I’m Just Trying to Get My Space Together

As a long-time Grateful Dead fan, I have to say that I was advantaged in understanding how the Blown to Bits problem would affect digital media businesses.  You see, for years, the Dead had changed the business model of the music industry, choosing to use albums as a loss leader and to make money on live concerts, playing some 2,300 concerts together, not to mention those done individually by band members (e.g., Jerry Garcia at the Keystone Berkeley).

The Dead even had a tapers section at most concerts and sometimes could be heard literally stopping the show to allow someone to reposition their microphones.  The Dead have a valid claim to “we did Freemium 30 years before Freemium was cool.”

While I won’t go as far to say that Everything I Learned about Business, I Learned from the Grateful Dead (a good book that takes top ten lessons from “the long, strange trip”), I do believe the Dead were both musical and business model innovators.

Improvisation as strategy was profiled in Competing On The Edge:  Strategy as Structured Chaos, published by Harvard Business School press.  Excerpt:

The Grateful Dead met this challenge through improvisation […] as distinguished by two key properties:  first, performers intensely communicate with each other in real time […] second, they rely on a few very specific rules, such as who plays first, what are the permitted chords, and who follows whom.

While I’m riffing on the Dead, I should probably also mention Marketing Lessons from the Grateful Dead, a great book on topics including community, branding, customer centricity, teamwork, category creation, technological innovation, disruptive business models, disintermediation, and giving back.  The Dead were innovators in all these areas and the book is well worth reading.

My favorite Dead-related quote, however, comes not from that book but from The Grateful Dead Movie, in a famous scene where a completely zonked head is ambling around outside the concert and tells a security guard the inimitable:

“I’m just trying to get my space together, so that I can go into the show.”

I always think of this guy whenever I talk to a startup about strategy.  Why?  Because startups are very much about trying to get your space together.

• What space do you want to be in?
• Against whom do you want to compete?
• Where do you draw the boundaries on your space?
• What adjacent spaces, if any, do you want to incorporate into your space?
• In what adjacent spaces do you want to partner?
• How do you see the boundaries on your space evolving over time?

My meta-answer to these questions is “the world is a very large place.”  How does that relate?  In two ways.  It means first that you better define your space in such a way that you are truly world-class within it — and not using world-class as a nice sounding compound adjective, but really grokking its meaning:  what can you truly be best in the world at doing?  Second, it means that because the world is a big place that you can turn what might appear to be a small niche into a  very big business if you are truly the best in the world.  So don’t be afraid to focus.

Most startups forget focus too early and delude themselves into thinking they can be world-class in across a number of areas.  Take enterprise performance management (EPM) — the space in which Host Analytics competes –for example.  EPM is a $4B market for financial analytic applications that is adjacent to the broader $13B business intelligence (BI) market.  Some of our competitors consider themselves addressing the (incorrectly calculated) “$33B BI market” and are either building or acquiring products in the broader BI space?  It sounds good from a total available market (TAM) perspective.  Wow!  You’ve tripled your TAM.

But think for a minute — what are the odds that  your cheaply-acquired or hastily built BI tools are world-class?  None.  So all you’ve really done is dilute your focus on EPM by complementing it with some third-tier BI.  A far better solution (and the one we follow at Host Analytics) is to partner with someone else who is spending all their energy focused on being world-class in the adjacent space.  In our case, that partner is Birst who is focused on being world-class at cloud BI.

So if you’re thinking of starting a company, ask yourself:  what can we really be world-class at doing?

Answering that question is the only way to get your space together, before you go into the show.