The Strategy Paradox

I remember the day my father came home, proudly, with a Betamax videotape player and a movie: Bedtime for Bonzo, starring Ronald Reagan and Bonzo the chimpanzee. Our very first home movie night via videotape ushered in a new era, in which we controlled what we watched.

Move aside TV Guide.

At the time, neighborhood video rental stores were popping up everywhere, and the nearest one to our house was but a short bike ride away. The convenience and affordability of selecting movies and watching them from the comfort of our own home was a new luxury. We could now select the right content (our movie picks), via the right channel (videotape cassette), and watch at the right time (whenever we wanted). That was “On Demand”, ‘80s and ‘90s style…

Be kind, rewind.

I recall vividly that video stores initially offered a wide selection of both Betamax and VHS videotapes. But at some point the balance started to shift, and the Betamax sections of neighborhood stores started to shrink, while the VHS sections grew. Eventually we were relegated to picking movies from just a single aisle, and then from just a couple sad shelves, at which point it became abundantly clear that we had placed our consumer bet on the wrong horse in the race to videotape market dominance.

What happened to Betamax? What led to its rapid surrender of market share to its VHS competition? Was the utter collapse of Betamax the result of an ill-conceived business strategy? Poor execution? Sub-par product? Misunderstanding of its customers?

In The Strategy Paradox: Why committing to success leads to failure (and what to do about it), Michael E. Raynor suggests that Sony’s Betamax suffered from the Strategy Paradox, whereby “strategies with the greatest possibility of success also have the greatest possibility of failure”. Raynor argues that Sony made reasonable commitments in a campaign built for market dominance, in which Betamax was a great product designed to provide customers with the best home movie experiences.

Sony made a strategic bet on product differentiation, by focusing on the optimization of high-fidelity picture and sound quality, at the expense of manufacturing. Matsushita’s VHS, on the other hand, pursued a cost leadership strategy, by offering a cheaper product that was easier to manufacture, and therefore to license.

Sony and Matsushita each hedged their bets on their strategic value propositions, for which there were many trade-offs. For example, with its larger cassettes and slower tape speeds, Matsushita’s VHS offered two-hour recording capability, while Sony’s Betamax tapes were just shy of the two-hour mark, which meant that they couldn’t be used to record two hour broadcast television movie specials.

The Strategy Paradox dissects the Betamax / VHS history in great detail, and also explores many other interesting technological developments, including the transitions from LPs, cassettes, and CDs, to digital media. Further case studies break down the competitive strategies employed by companies such as Microsoft, Johnson & Johnson, and the telecommunications industry.

Ultimately, Raynor lays out a framework that companies can apply to successfully navigate the unpredictable future. He suggests that strategic uncertainty should be managed by hedging bets on possible futures, in order to be best prepared for the unknown yet to come.

Back in the day when I rode my bike to the local neighborhood video store to pick up a movie rental, I was keenly aware of the shifts in product selection as a consumer. But I was oblivious to the cutthroat competition that was taking place between Betamax and VHS. There are many lessons to be learned here, with respect to product differentiation and company strategy, and if you’re curious to dig deeper into these questions, challenges, and mitigating solutions, I recommend checking out The Strategy Paradox.

Saving Chocolate

CacaoPod

In 1997 I was backpacking deep in the rainforest of Costa Rica’s Parque Nacional Corcovado, one of the most breathtaking places I have had the good fortune to explore. On this trip I was traveling with a local guide who, for much of our journey, led us on a path that only he could see. I recall vines as thick as my leg, a tiny yet highly poisonous green snake curled up tightly on a single small leaf, a family of monkeys crossing a river by leaping effortlessly from tree to tree, a sloth curled up high in the canopy, and colorful toucans and macaws passing by, among so many other incredible memories.

It was also on that trip that I was introduced to the cacao plant for the first time. In the thick of the rainforest, the guide stepped off his trail, and walked us over to the tree. He cut open a bright leathery pod, and revealed the cacao beans cased in their fruity pulp. A chocoholic all my life, it was fascinating to hold a cacao pod, the source of so many tasty treats.

I had no idea at the time that the world was running low on chocolate, that demand was far outpacing supply. I’ve since learned that environmental factors including diseases, and economic factors such as competing crops, have pushed the chocolate industry to pursue new breeds of cacao. It’s an intriguing story of trade-offs between quality and quantity, of breeding varieties that are not only resistant to diseases such as frosty pod and witches’ broom, but that also deliver the flavors that the world so craves.

One of my favorite podcasts, NPR’s Planet Money, produced an entertaining show on this topic that I recommend, called The Chocolate Curse. It’s interesting and fun; check it out.

The first cacao plant I was introduced to, years ago on a magical trip through the rainforest, held the key to a rich story I had always taken for granted whenever I’d taken a bite of chocolate. I’m eager to learn more about the bean’s journey, from cacao pod to chocolate. I’d also like to better understand the plant’s historical origins, and how it has spread throughout the globe. Ultimately, I’m curious to learn more about how the recent environmental and economic factors have influenced the business strategies in the modern chocolate market.

If you have any favorite resources to recommend on this topic, please share!

Shortcut to Prosperity

Shortcut to Prosperity is an inspiring read that is structured around a set of great career recommendations. Mark Hopkins reminds us of the importance of pursuing our passions, because motivation is the burning fire that drives us, and that ultimately leads us to success.

Prosperity requires an active decision to initiate change, and the key is to take the first step, no matter how small. As change becomes habit-forming, the pursuit of additional challenges and opportunities fuels the cyclical rise to prosperity.

Mark Hopkins describes the natural tension between your current reality, and your vision for success, as the tension you might feel when you hold a rubber band between the fingers on two hands. To move towards your vision, and reduce the tension, you have to be willing to change the position of your current reality. Do something. Take a step. Today.

Keep on stretching your rubber band now

During my college years I enjoyed a rich exploration of music across many genres, including jazz, blues, reggae, and especially funk. The old 5-disc cd player was on constant rotation, as music accompanied study sessions, inspired soccer juggling shenanigans in the backyard, and lit up many a weekend party.

Many albums became classics, such as the “green funk” and most memorably the “orange funk” cds, which were compilation albums that drew many requests. One of the universally loved albums, and one of my personal favorites, was and always will be Funkify Your Life: The Meters Anthology.

 

“Stretch your rubber band” is one of the songs in The Meters Anthology, and I take inspiration from it tonight as I kick off this very first blog post. May we always challenge ourselves to stretch our minds, our beliefs, and our assumptions. May we continually push ourselves outside of our comfort zones, as humble students and compassionate teachers along life’s journey. Stretch it to your left, stretch it to your right.

My intent is for this blog to become a repository of reflections and musings on many topics, including music, books, documentaries, technology, business, products, and language. I look forward to this new journey of expression. May it be funky.