This is a phrase I have used a lot in recent meetings in the office. The basic premise is that organizations can't be good at two skills which oppose each other, which basically require a whole different mindset. Here are a few examples
- You can either be the largest video platform on the planet or be the largest paid video subscriber base, the two require different skills. YouTube is all about discovering the best user-generated content, Netflix is about consuming the best, now heavily curated, video library. Yes, YouTube has subscription base, but relatively the money will be chump change.
- You can either be the largest restaurant chain in the world or be an authentic fine dining restaurant. Again, they require very different skills, Subway is all about managing the supply chain to the brand and the consistency in flavor, your favorite eat out around the block may probably have different flavors of food based on who is cooking that day
- You can either be a mass media newspaper trying to get as many readers and advertisers or a small 1 person publication running paid subscription site.
It is not to say that organizations can't change their skill set. Microsoft is working hard to move from an Operating System organization to a services organization. New York Times seems to have made a successful move from a traditional newspaper to one driven by subscriptions. But these changes are relatively slow and very deliberate and not to mention challenging. Many have failed to make the transition, Blockbuster for example.
The skillset is driven by the strategy which drives, and also gets driven by incentives, more on incentives and their effects in a future post.