As you may recall, the idea of playing off the expected, cheng, with the unexpected, chi, plays a major role in Boyd’s conception of maneuver warfare. Following Sun Tzu, Boyd advises engaging with the cheng, and winning with the chi. This is the strategy of deception: Go in with something the opponent believes he has figured out, ideally with some effort on his part in order to set the hook, as it were, then at the moment you believe will have the most paralyzing impact, spring the chi. Boyd has a nice summary on Patterns 132.
As I’ve mentioned before, and devoted an entire chapter to in Certain to Win, this idea translates nicely over to business. Give the customer what he expects, wants, needs. In simple terms, the product or service you provide has to work and do what you’ve told him it will do.
But customers become bored, eventually, with this approach. To hook them for the long term, you also need the unexpected, the surprising, the delightful. This may not be just the product or service itself but could include customer service or even packaging. For years, Apple was the master of this approach.
Hiroshi Mikitani had a nice cheng / chi piece yesterday on LinkedIn: “Selling distinction in the Internet Age.” Mikitani is the founder and CEO of Rakuten, the Japanese Internet retail giant that bought Buy.com a few years ago. What’s interesting about Mikitani’s approach is that he’s advising not more delightful packaging, which you could implement as well through Internet sales as anywhere else, but shifting to a new domain entirely.
What’s important is that your business think in these terms. Harried CEOs sometimes regard anything other than getting product out the door as distractions or at best “nice-to-have,” and bean counters look on them as added costs — i.e., they get points for griping about them or worse, eliminating them. Actions like these leave you open to smarter competitors.
What I recommend instead is that from the very beginning you regard your Schwerpunkt as not the chi nor the cheng but cheng / chi.
I think that it goes back to your last post – values.
Today, a lot of the “leaders” (careerists?) are not looking for adding value to the customer, to delight them, to try to build a product that will genuinely change the world. They’re looking for the way to make a quick buck, so to speak.
Hence the emphasis on lowering costs. Witness for example the efforts to weaken labor in the US as an example. I’m not saying labor groups are perfect (they’re not), but the effort shorts their priorities. Costs, not adding value.
Putting short term ahead of long term has alarmingly become a part of our society. That, and the fact that mavericks are suppressed rather than being put in an environment where they can maximize their potential.
Perhaps the only positive result from this country’s focus on short-term profits is that it opens up the field for entrepreneurs.
On the other hand, entrepreneurship appears to be slowing down in high tech:
From “With Fewer New Firms, the High-Tech Sector is Losing its Dynamism,” by Ian Hathaway, http://blogs.hbr.org/2014/02/with-fewer-new-firms-the-high-tech-sector-is-losing-its-dynamism/
I don’t know what this means. Are established companies in that sector doing a better job of hanging on to mavericks, that is, potential entrepreneurs? Are creative types with an entrepreneurial bent going into other areas? Or to other countries? Is entrepreneurship being retarded by external factors such as lack of venture capital, new regulations making it harder to start businesses, or widespread perception among potential entrepreneurs that the economy now won’t support new businesses?
It may very well be that the computer industry is beginning to mature. You do not for example see very many start-ups in say, automotive or aircraft. The reason is because those industries are more mature and the high capital costs often involved.
By contrast, there’s quite a lot of interest in the biotechnology field for example. There’s also quite a bit of interest in nanotechnology.
Looking at that HBR article, there’s one thing that’s far more worrying. The number of young firms within the entire economy has been on a downward trend for the past 30 years. That to me is far more worrying.
The question as you noted is what is happening?
It’s very hard to say whether it’s a matter of established firms doing a better job of holding onto existing mavericks or something else at work. You’d have to ask people who otherwise would be entrepreneurs. But what people “would otherwise be” is the question.
Other nations? Chet, I think there’s an easy way to look that up. Look at global entrepreneurship rates and compare them with American ones. If you see the rest of the world stable or rising, and the US falling, then yes, indeed, other nations may be the answer.
It may be as that as the rest of the world develops, there have been relative gains made compared to the US and the West. In that case, the incentives to go to America are reduced for people in other parts of the world.
Very much so, since our population and economy have grown considerably in the meantime. My guess, and it’s only a guess, is that it’s established firms doing a better job of protecting their turf either through innovation or by using their resources to influence the political and judicial systems.
“My guess, and it’s only a guess, is that it’s established firms doing a better job of protecting their turf either through innovation or by using their resources to influence the political and judicial systems.”
Perhaps the best way to figure whether it’s by protecting their turf or through innovation would be to look at:
– Research and development spending as a total percentage of corporate revenues
– Capital projects and expenditures as a total percentage of corporate revenues
– Amount of money spent on legal expenses
– Growth in lobbying expenses
If compared to the 1980s when the chart began, R&D and capital projects have soared, then it’s probable that innovation is the answer. If legal and lobbying expenses have grown faster than R&D/capital expenses, it may very well be through “protecting their turf”.
Seems reasonable. Please report back here when you complete this analysis. Sounds most interesting.
A couple of things come to mind in casual response to Chet’s most recent.
The conventional theory of economics that I re-visited, going through collage for
a second time, recently, has to do with economy of scale.
The cruise ship industry for example, it’s very efficient and surprisingly cheap to serve gourmet
meals, for thousands.
However, looking at taxation, and the delivery of government services, across the board,
with population increases and densities, taxes rise, and we are told, and told again, that by politicians and bureaucrats, that costs increase.
When you stop to thing about it though, It’s contrary to convention.
However the reasons for this are complex, and myriad.
Second in terms of innovations, perhaps it’s always been this way, but I notice a tendency
to put the horse before the cart. What I’m getting at, is the production of frivolous items,
being very successfully promoted as essential.
There is a lot of “more of the same,” in my field, electronics, which is now entirely dominated
by computer technologies. The gigantic cellular phone market comes to mind, along with
the current (early days yet,) struggle to promote 4K TV as something you can’t possibly live without.
Interesting, and very much related to the OODA;
More OODA related.
The closer you are to accuracy in perception in the observation and orientation
stages the more likely a favorable outcome.
A lot of the problems today in business, military, governance and politics are related
to those in decision making positions being very insulated, and separated from reality.
How many of these have you experienced ? Seen go down in flames ?
Or been guilty of ?