Why you need to stop competing.

CompetitionIt was twenty years ago this year when the first Harry Potter book was published, Dolly the sheep was cloned, New Labour swept to power and Hong Kong was handed back to China. Meanwhile, across the pond, a tech minnow called Apple was teetering on the edge of bankruptcy.

In September 1997, with just two months of cash left to burn, Steve Jobs agreed to return to the company he’d founded.

The turnaround that he led was swift and brutal: he cut hundreds of product lines, swathes of engineers, almost all the development projects and 80% of the inventory. Six months later, Apple had survived and was stable, but it would take something else entirely to drive the extraordinary growth that would make it, within two decades, the most valuable company the world has ever seen.

What drove that growth?

In an interview with McKinsey Quarterly, the author and academic Richard Rumelt described a conversation he had with Jobs in the summer of 1998. While lauding the impressive turnaround, he contended that Apple could only ever have a niche position in computing because of the scale of the other players and the way the industry worked, and he asked Jobs outright “What’s the longer-term strategy?” Apparently Jobs just smiled and replied, “I’m waiting for the next big thing.”

That “next big thing” was over three years in the making, and turned out to be the iPod coupled with iTunes. The next after that was the iPhone, and the next was the iPad. Apple’s growth is a simple story of continuous improvement studded with some very “big things”. But here’s the twist: all those big things were combinations of other people’s inventions and technologies. Apple didn’t invent portable music, the mp3, mobile phones, WIFI, apps or touch-screens, but each time they were the first to bring them together into a package that people would buy in their millions.

Rumelt was right, in that Apple couldn’t out-compete the big computer businesses of the time. So, Jobs chose not to; he didn’t try to copy them, undercut them, or beat them at their own game. Instead, he looked where they weren’t looking, embraced the changes that threatened them, and jumped right past them all.

Look at the most successful organisations in your industry and ask yourself what made them successful. Chances are that at some point in the past, they saw an opportunity, a new market, a change in regulation, an emerging technology or a process from another industry, and they adapted and incorporated it before anyone else. Or at least, they were the first to do it successfully.

Now look at your own strategy. How much focus does it put on finding and capitalising on high-potential developments from outside your organisation and outside your industry, versus the time and effort you’re putting in to the competition: fighting them off, closing the gap or edging in front?

New technologies, processes, platforms and materials are being invented every day. Markets, customer behaviour and industry dynamics are shifting even as I write. How will you see the ones that you could combine to create the next big thing in your sector?

More importantly, how can you and your team step away from the coal-face of competition, even for a few days, to look at how you might jump right past the competition and make their scale, their advantages and their products and services completely obsolete?

That’s all Steve Jobs did, and look where it got Apple.