Unrealized Business Potential
“Opportunity is where you find it,” not where it finds you.
Luck, chance and catastrophe affect business as they do all human endeavors. But luck never built a business. Prosperity and growth come only to the business that systematically finds and exploits its potential. No matter how successfully a business organizes itself for the challenges and opportunities of the present, it will still be far below its optimum performance. Its potential is always greater than its realized actuality.
Dangers and weaknesses indicate where to look for business potential. To convert them from problems into opportunities brings extraordinary returns. Opportunities have to be reflected against the experience of a company and against its past success and failures. Sometimes all that is needed to accomplish this transformation is a change in the attitude of the executives. Three questions will bring out the hidden potential of a business:
- What are the restraints and limitations that make the business vulnerable?
- What are the imbalances of the business?
- What are we afraid of, what do we see as a threat to this business – and how can we use it as an opportunity?
Finding Opportunities in Vulnerabilities
Finding and realizing the potential of a business is psychologically difficult.
Finding and realizing the potential of a business is psychologically difficult. It will always be opposed from within because it means breaking with old, established habits. It often means giving up the very skill people are product of. To fight the threat, to manage an imbalance, and above all to make a process efficient despite its inherent weaknesses, requires great effort.
Searching for the potential of opportunity in a company’s vulnerabilities, limitations, and weaknesses is therefore likely to be resented by its most accomplished people as a direct attack on their position, pride, and power. This is the reason why the opportunities are often not realized by the industry leaders but by people on or near the outside. That this area is difficult, both objectively and psychologically, only means that businesses have to work hard at it and that managements have to stress it heavily.
Hitting Them Where They Aren’t
“Hitting them where they aren’t” outflanks the by creative imitation.
Here, the innovator doesn’t create a major new product or service. Instead, it takes something just created by somebody else and improves upon it. This is imitation. But it is creative imitation because the innovator reworks the new product or service to better satisfy customers’ wants and needs. Once the innovator succeeds in creating what customers want, it can achieve leadership and take control of the market.
The prefect example is how IBM became the leading producer of PCs in the 1970s. Apple invented the PC. When the Apple appeared, it was an instant sensation. IBM set to work to outflank the Apple. It asked, “What are Apple’s shortcomings?” Within eighteen months IBM had on the market a PC that did everything the PC customers needed and wanted but had what the Apple lacked: software. And within another year IBM’s PC had become the market leader worldwide; it held that position for more than ten years. And Apple had become marginal. It almost went under and only turned itself around into a respectable niche player twenty-odd years later, in the late 1990s.
Entrepreneurial Judo turns what the market leaders consider their strengths into the very weaknesses that defeat them.
The Japanese Judo master looks for the strength that is his opponent’s pride and joy. He assumes, and does so with high probability, that the opponent bases his strategy in every fight. And then the judo master figures out where this continuing reliance on a particular strength leaves the opponent vulnerable and undefended. Then he turns his opponent’s strength into the opponent’s fatal weakness that defeats the opponent.
Businesses, like judo fighters, tend to become set in their behaviors. And then Entrepreneurial Judo turns what the market leaders consider their strengths into the very weaknesses that defeat them. For example, the Japanese became the leaders in one American market after the other: first in copiers, then in machine tools, then in consumer electronics, then in automobiles, and then in fax machines. The strategy was always the same. They turned what the Americans considered their strength into a weakness that defeated the American companies. The American saw high profitability as their greatest strength. And thus they focused on the high end of the market and left the mass market undersupplied and underserviced. The Japanese moved in with low-cost products with minimum features. The Americans didn’t even try to fight them. But when the Japanese had taken over the mass market they had the cash flow to move in on the high-end market, too. And they soon came to dominate both the mass market and the high-end market.