Flash back with me for a moment to the 1980s. The decade of big hair, Reaganomics and the DeLorean, the 80s was also the cherry on top for more than three decades of stupendous growth in the music industry.
When Elvis shook his pelvis, and Bill Haley taught us to “Rock Around the Clock” back in the 1950s, it kicked off a Rock n’ Roll movement that powered the music industry through the next three decades. Driven by radio airplay, then the Walkman, then MTV, the industry made fat profits and re-purposed the same content -- first in records, then tapes, then CDs. Life was good.
But a turn was coming, and few in the industry had tried to look around the corner. The Internet, lead by Napster and other music “services,” started turning highly profitable content into “freeware.” “One Album, One Consumer” turned into “One Album, shared among many” -- and in many cases, not paid for. An increasingly “sticky-fingered” music consumer helped to drive the industry into a chilly recession. Eventually, more than 95 percent of downloaded music was obtained illegally. Profits were down, and most importantly, no one in the industry seemed to know what to do about it.
Enter Steve Jobs. He saw a new way. His company, Apple, developed a secure, encrypted platform known as iTunes, and would charge 99 cents for each song. He pitched his idea to a skeptical music industry, which quite frankly thought Jobs was nuts. The industry never sold by the individual song; a typical music purchase included a couple of “A” songs with a heaping pile of “Bs” to fill out the album.
But, what did Steve Jobs have working for him, in addition to his ability to see around the corner? Timing. The industry was hurting; profits were down; and the bleeding was only getting worse. By conjuring a unique idea that held the promise of saving an industry, the die was cast. And, as they say, the rest is history. The industry reluctantly signed on, music sales exploded, and profits skyrocketed. Apple was at the center of the renaissance, taking bows from all sides.
Timing. It’s the essential ingredient to the success of any business endeavor. To understand timing, you have to understand your marketplace. That said, what works at one point in time, may or may not work at another.
On that note, let’s continue the story by fast-forwarding to today. Sadly, Steve is gone, but his company is now trying to do a repeat of iTunes, but this time with TV. All the basics are there – the TV viewing and consuming experience is horrible. The cable companies don’t get it. The interface is confusing. Consumers are forced to pay a huge monthly fee for a bundle of channels they don’t want, to get the few they do want. The FCC is trying to wrestle the set-top box interface away from the companies, and the companies are fighting it.
Apple shows up with a seemingly amazing solution: A small, power-packed accessory with an incredible easy-to-use interface. A “skinny bundle,” so consumers can get what they want without paying a fortune. The ability to search not only for specific movies, but specific scenes and words. And all at a competitive price of $30 per month.
BUT, not this time. This time, timing is working against Apple. The legacy programming providers are powerful, well-connected, and are making huge profits (if you are a fan of eye-popping gross margins, click here). They are following former General Electric Chairman Jack Welch’s maxim of NEVER letting anyone between you and your customer. Despite years of trying, the answer to Apple is NO. Apple has had to shelve its more consumer-friendly pay TV model and push forward with a watered down version.
So, what is the lesson for your business? Well, it’s threefold:
- Learn from your own history. The lessons are right there in your company, churning about in the heads of your employees. Dig it out. The past is a source of learning and ideas for the present, but this education has a “shelf life.” Apple learned from its iTunes success and tried to take the lessons forward to TV. That’s a good first step.
For another example of a company that understands the essence of these values, click here to read this blog about Tesla by my Chief Outsiders colleague, Deborah Fell.
- Market structure matters. You might have the best idea at the best value, but if you can’t get it through a distribution system, or find alternate pathways to your customer, success will be limited. Understanding how you go to market and what the advantages and disadvantages are is a critical step in ensuring your idea can reach the intended target. Back in Cupertino, Apple’s executives are hand-wringing, because the distribution system is blocking Apple -- and there isn’t much they can do about it. If that is happening to you, you have to find another channel, or try something else.
- Adapt. Apple isn’t giving up. They are still incredibly devoted to creating seamless experiences with technology, and they are finding other spaces and ways to do that. And, they keep pushing. If the FCC opens up the set top boxes, maybe there will be an opportunity in the future. The timing that’s not working for you now, might just pan out for you tomorrow.
Timing. It’s everything, but not the ONLY thing. As a CEO, your formula for success should include the ability to understand your market; to develop insights based upon strategy; and to assemble rigorous execution plans. Of course, none of this matters if you don’t understand your market, and whether or not this is the right time for that idea. So, make sure you know how to “tell time.” If you do, you might just be on the pathway to growth and success for your company.