Thought leadership is not leadership. Expertise in the direction of the moment does not make one a strategist any more than the direction itself constitutes a strategy.
We can see this by looking at the waves of fashion in business consulting. A time series of business buzz phrases- if you picked them carefully – might suggest some natural evolution or succession. N-grams tell a different story: “core competencies” do not build on “total quality management” any more than trees leaf green one year and blue the next.
Such thoughts are ordinary. Indeed, I was in the middle of a perfectly routine meditation on the evanescence of business jargon when I was struck by a truth of great force, an absolute proof that jargon-driven strategies are as vapid as they seem. In its most concise form, this “first law of strategy” may be stated as:
1: Buzz is noise.
What a beautiful truth this is! At the semantic level it is perfectly analytic and absolutely undeniable. Yet at the business level it is nearly invisible; it leads to the same bitter realization, time and time again. If only we could inscribe on our hearts the truth that bad strategies can be recognized by their level of buzz content!
Barson’s Law, to give it a modest name, has a number of important corollaries, but I wish to draw attention to two that apply to product strategy and R&D, those areas being classic (and consultant-rich) corporate battlegrounds.
Corollary 1: Companies that focus their product development on buzz-heavy categories are more likely to make noise than money.
Establishment and propagation of this principal is very important: There are thousands of people out there – losers in R&D allocation debates – who are just dying to scream “I told you so!” But they need cred. This rule is for them.
“But wait!” you say. “There are insanely great companies out there who make fantastic profits off buzz-heavy products.” Yes, I reply, there are indeed such companies. But your objection displays ignorance of the next rule, whose purpose is to remind us that most arrows do not split the apple.
Corollary 2: The losses incurred by companies seeking to imitate buzz-heavy successes reduce the overall profits in the product sector to normal levels.
I concede that Corollary 2 would only be true in the model world of what the economists call “perfect competition”. We do not live in a world that – averaging across a sector – typically displays perfect competition; many sectors probably do show net economic profits over and above payments to labor and capital. But we are even farther from a world where following a hot category, as a strategy, is likely to yield extraordinary profits. Your company, your strategy might be exceptions. They probably aren’t. Chances are, someone in the buzz-sphere has already had your idea and is executing it well enough to make the opportunity you perceive “normal” at best. In such an environment, imitation can be the sincerest form of folly.
Still, the temptation to chase the buzz can seem irresistible, especially since some idea categories appear to promise lottery-winning-like returns. But this is a lottery where to some degree you can buy a winning number after it is drawn and announced. If patents aren’t protecting the leader, you will have a lot of company as a follower: that’s Corollary 2. And if you are the leader? Well, that is a different post.
So do I have a point, here, beyond satirizing my former profession of business consulting? Only the simple one that the vast majority of profits are made by companies who pay attention to the brand, the quality, the cost competitiveness, and the innovation frontier of perfectly ordinary products and services. If you have such a product, and if it is profitable, take care of it. Strategy starts there.