Competition changes everything in any industry. When Henry Ford was asked why potential Model-T buyers had limited selections in car colors, he replied “buyers can select any color Model-T — as long as it is black.” As an early entrant, he believed that a solid, well-engineered car would trump over any other competitor in the market. That hubris could only last so long when other car manufacturers were able to introduce other models with a wide selection of colors. As a consequence, Ford’s market share dropped.
Interestingly, in the late 1960’s, Fortune magazine asked senior Detroit executives about the oncoming competition from Japan. The Japanese focused on smaller cars with additional options. Now we witness in the 21st Century that virtually 50% of cars on the road are foreign made, and Detroit is now only a shadow of itself.
So it is fairly obvious that when consumers have multiple product selections, those with the strongest marketing strategy prospers. And this theme bridges my observations about Silicon Valley eco-system.
Everywhere I see the many startups post many positions related to ruby, C+, and so forth. Many are driven like cattle to the next best thing: mobile, cyber security, wearables, mobile apps. But let’ s look at the mobile apps in that competitive marketplace. Combining both iOS and Android apps, there are over 2 million apps competing for mobile phone screens measuring 3 by 5 inches approximately. Smartphones nowadays are required to have sufficient data storage space and RAM to even handle at least 20 apps.
Within the mobile gaming apps industry, one notices the international competition: of the top 10 apps, half were developed outside the U.S. So competition is now worldwide.
Contrast this scenario against 10 years ago. Simple apps made millions when introduced early, just like the Model T Ford. Henry Ford truly believed that he did not have to respond to all of consumer needs when Ford dominated the marketplace. That might be true but things do change. New strategies need to be implemented.
In the early mobile app era, hardly many other software development teams thought to enter this mobile market. Now everyone is entering the market. But by hiring more and more engineers, will we witness better and better products? I doubt it. New strategies must include marketing.
I think that the technology industry is morphing into the same competitive ecosystem Detroit faced in the 60’s. The products need to focus on consumer needs or demands. In an earlier blog, I criticized a startup CEO for thinking that he needed a website designer for this RFID product. I thought that he desperately needed a sales-marketing person experienced in that particular industry. His projections did not seem realistic to someone with considerable experience in the industry.
The Silicon Valley ecosystem extols the idea that startups can afford to make mistakes. But excellent strategic planning incorporates the steps to avoid mistakes by good planning, anticipation, and research. When I worked for major publicly traded companies, I noticed that the strategic group did considerable analysis before dedicating capital to new projects. Smaller companies may not have the resources for that, but they should expend some to reduce the cost of capital. Investors are leery about investing companies that make too many mistakes. They are penalized, not rewarded. One way to avoid such missteps is to focus on marketing.