There are two kinds of people in the world: those who over-simplify, and those who don’t.
Complexity, made clearer through categorization. But whether uber-broad categories are useful is another question.
No matter. Steve Case, founder of America Online, hit the nail on the head last week during the keynote at the Digital Media Conference in Arlington, Virginia when he said “there are two types of companies in the world: aggressors and defenders.” What he means is there are entrepreneurs and Zappos, and virtually everyone else.
When a start-up company has nothing to defend, aggressor is an obvious choice. But along with success, entrepreneurs frequently lose their mojo faster than the swooning Florida Marlins. “Be all you used to be,” except when you’re becoming fat, dumb, and happy.
Just this month, two once-aggressive innovators, Google and Gore (maker/licenser of Gore-Tex), were dragged under the FTC’s anti-trust lens and now must defend their defensiveness. According to The Wall Street Journal, (Feds to Launch Probe of Google, June 24, 2011),”‘Google engages in anti-competitive behavior…that harms consumers by restricting the ability of other companies to compete to put the best products and services in front of Internet users, who should be allowed to pick winners and losers online, not Google,’ said Fairsearch.org, a group representing several Google critics . . .”
And Gore? Legal, not Laboratory, ensures the company’s shareholder value. Columbia Sportswear, a plaintiff in the anti-trust probe of the company, said “consumers mistakenly believe that Gore-Tex is the only waterproof, breathable membrane available. And Gore has reinforced that impression by restricting its licensees from using rival brands or even claiming that other technologies are both waterproof and breathable.” In The Wall Street Journal (Gore-Tex Faces Anti-trust Probes, June 22, 2011), Peter Bragdon, Columbia Sportswear’s General Counsel and plaintiff, added, “We believe that Gore has long engaged in a systematic campaign of exclusionary conduct to insulate its dominant position against challenges from more innovative, better quality and lower cost rivals.”
Sheesh. When a company reaches the point that attorneys generate more excitement for shareholders than do chemists and software developers, you know time takes a toll on more than just physical good looks. Which brings up a question. How did IBM become a vibrant 100 years old this month when Google and Gore act crotchety at the youthful ages of 13 and 42, respectively?
Self image has much to do with IBM’s success. Not that IBM didn’t have its own anti-trust skeletons when it had a 70% market share and was derisively called an evil empire. But “from the beginning, IBM had a concept of itself as an institution, not just a technology company,” said Rosabeth Moss Kanter, a professor at Harvard Business School. Others agree. “IBM is not a technology company, but a company solving business problems using technology, said George Colony, chief executive of Forrester Research.
This insight provides much more than good ol’ customer-centric Pablum with a sell-solutions-not-products! label slapped on top. After all, IBM survived three major IT platform changes. That’s like GM transforming its product line from all gas-powered, to all electric, to all public transportation vehicles. And IBM never required a government bailout. Remarkable.
Why does IBM thrive in an IT industry characterized by innovation and change? Pigeonholing the answer into “aggressor” or “defender” archetypes doesn’t tell the story. According to a recent article in The Economist, 1100100 and Counting (June 11, 2011), there are five key reasons:
1. IBM maintains connections to its customers. “Today the main conduit is the huge services organization, which employs more than half the total workforce . . . it often ‘co-creates’ products with customers.” The company has come a long way since MAPICS and DMAS.
2. IBM has become less hierarchical. “Its Smarter Planet initiative is said to have originated in one of IBM’s ‘jams’, online brainstorming sessions where all employees and sometimes even family members are welcome. ” Not your father’s IBM, when wearing a shirt other than white was a brazen sign of disrespect.
3. “IBM tries to ensure that the output of its 3,000-strong research division remains relevant to its business.” If executives at Chrysler thought similarly, the world would never have seen the now-discontinued Crossfire.
4. “IBM is no longer a collection of independent national subsidiaries, but a globally integrated company” with a common IT infrastructure.
5. IBM has an ethos of financial planning and risk management. “One rule is to ditch businesses that are about become commoditized and no longer yield a sufficient profit margin.” Goodbye PC’s and printers, hello PriceWaterhouseCoopers!
When you think about the resources that enable enterprise longevity, a valued sales force belongs on the list. IBM has more than a few best practices worth emulating. “From the beginning, as a maker of complex machines IBM had no choice but to explain its products to its customers and thus to develop a strong understanding of their business requirements. From that followed close relationships between customers and supplier.” There are thousands of books and blogs on these topics. But IBM achieves them.
Aggressor? Defender? Both? Neither? Maybe defying categorization is the best strategy of all.
