Fernando Salazar

And, what is the word?  No, not inconceivable – the word I have in mind is strategy.

Working in software products of course I have heard “strategy” in one context or another on a daily basis 20 years of more, and now as a product manager I hear it even more, if such a thing is possible.  However what the vast majority of self-styled strategists are really talking about is just features, like “Our strategy is to have web-based something-or-other”, or “Our strategy is to use middleware to achieve this-or-that”.  These kinds of statements are not strategy, they are just features or architectures.

What is strategy?  Among the things that stuck with me from my time in B-school at Babson was a statement from a professor (a former partner at Bain & Co.) answering that very question.  He said:

Strategy is: Where do you play? and How do you win?

“Where you play” is your target segment.  If you are not targeting some specific thing, you already don’t have a strategy.  Certainly the very biggest players in some industries can address really big and wide markets, but even the obvious examples – like Apple – use some targeting.  If asked about the target market for Apple I bet a lot of people would answer, “Everybody”.  Not true.  Apple targets higher-income consumers, and adapts for sub-markets in that group, like convenience-oriented multi-tasking men age 25-55, or family-oriented women age 20-40 who use technology to stay connected with friends and family.  I think segmenting is in fact even more important in the business software world.  I often hear vendors – my own employer included – saying things like “We sell to the biggest enterprises” or “We aim at the mid-market”.  These are probably true statements but they’re not helpful.  All business have specific problems inherent to their place in their market – they need to sell faster, or need to communicate with more customers, or need higher manufacturing efficiency, things of that nature.  If the benefit you provide is too generic and doesn’t address a clear problem and pressing problem, then you are a nice-to-have, not a must-have … and, nice-to-haves finish last.

“How do you win?” is a bigger question than most people think.  Many people believe winning is solely about better features: my light bulb lasts longer than the competition, my body-spray smells better, my car goes faster, my collaboration is more collaborative, stuff like that.  But think – Why are there so many examples of outwardly inferior products dominating their markets?  In my own industry I think the most telling example is Microsoft Sharepoint.  Now I can’t say Sharepoint is especially inferior; the product has a 12 year history after all and has seen a lot of improvement in its time.  But when Sharepoint came out it was not especially innovative and even today is criticized for having lousy administration, being slow and unwieldy, and for promoting “document graveyard” styles of collaboration.  For all that, Sharepoint apparently drives $2B of revenue a year for Microsoft.  How can something so bad be so successful?

Lots of reasons, actually.  A big one is network effects. Lots of people have Windows, lots of people use Windows Server, lots of people develop for Microsoft systems … all of this creates an ecosystem where technology buyers are likely to know about Sharepoint or know someone who knows.  From this they get confidence that the Sharepoint bet is a good one.

Next is ease of acquisition.  Sharepoint is easy to buy – just an option in your per-user Windows licensing – and easy to deploy – it’s a standard Windows server like all Windows services.  This short time to value goes a long way towards easing concerns the customer might have about not getting the ideal solution, from a features perspective.

Finally think about Sharepoint’s feature-gaps – real or imagined – as opportunities and not liabilities.  Enabled by the network-effect and Sharepoint’s  ease of acquisition/deployment, there is a large after-market of ISVs who offer products and services to augment Sharepoint or address its shortcomings.  Microsoft claims over 700,00 developers write for Sharepoint.  That number is probably too high, but there’s no question there are 1000s of Sharepoint partner vendors and 100s of solutions for the platform.

Network effects; Ease of acquisition; Developer ecosystem .. almost like they planned this, right?

Anyway my point is not that Sharepoint is some great thing.  In fact I see it as just sitting there waiting to get bumped off, the way Wordstar was bumped off by WordPerfect, and WordPerfect was bumped off by Word.  The point is, Sharepoint actually has a strategy and features are only one part of it.

Anyway, happy to talk to you about strategy.  Just be aware before you come by there’s a 2-question quiz: Where do you play? and How do you win?  If you don’t pass the quiz I may send you to this master for remedial training: