Building a strong culture at a start up is a critical element to success. However, a couple recent news stories have me re-thinking the “stronger is better” conventional wisdom and wondering how you make sure to always question the fundamental assumptions that shaped your culture in the first place. If you don’t, you risk delivering on your internal goals but losing your consumers.
Yesterday, there was an article about how Japan lost its electronics crown in the Wall Street Journal. If you have a subscription it is worth a read. If you don’t want to jump over the paywall, the basic premise is summarized in this quote from the head of Panasonic, Kazuhiro Tsuga:
Japanese firms were too confident about our technology and manufacturing prowess. We lost sight of the products from the consumer’s point of view.
As a culture, the Japanese firms were focused on “Monozukuri” — the art of making things — and poured energy and passion into building hardware with incremental improvements — thinner, smaller, faster, brighter — and forgot about the value to the consumer of higher level focus on design and ease of use.
I see the same thing in the recent Slate coverage of Amazon same day delivery as it relates to Wal-Mart.
Wal-Mart has always been on a mission to deliver “everyday Low Prices” and the whole organization is dedicated to finding ways to squeeze pennies out of the cost of a two-gallon jug of laundry detergent for the family of 5 in Southwest Ohio. I have been to Bentonville a few times to sell video games and the no-frills approach is tangible from the moment you walk into the lobby to the time you shake hands and walk out of the buyers offices. Cheap is a way of life over there.
When Amazon started to compete outside of books, Wal-Mart focused on the sales tax issue rather than revisiting the basic assumptions about their place in the world — including the assumption that lowest price wins. The lower price that Amazon could offer the consumer by avoiding the state sales tax was a huge thorn in Wal-Mart’s side and I can imagine how “un-fair” it seemed. How can you compete with online retailers if they are not operating on a level playing field when it comes to price? If you believe you can’t, and you know you can’t take another 3-7% out of your prices, you work hard to level the playing field with lobbying etc.
In this case, I think Wal-Mart’s focus, their mission, their culture obscured a changing competitive landscape and a consumer who was no longer choosing a retailer based on price alone. The consumer increasingly valued the convenience of online shopping and Amazon’s willingness to pay state sales tax in order to deliver the immediate reward of same day shipping cements this fact. I think it is not too far off that the headline will be “How Wal-Mart lost its Crown in middle America.”
I wonder what would have happened if they had poured resources into an online consumer experience combined with a delivery service and leveraged their local supply chain to compete with Amazon with a better solution to the last mile problem? For Sony, I wonder what could have helped them see the magic in products like the Walkman was not the features and functions or size, but the experience of mobile music. After all, Sony had electronic ink years before Amazon but failed to capitalize on the e-book movement because the culture was oriented toward the wrong end game. Again from the article:
In the case of the e-reader, Sony was focused on selling devices, while Amazon was focused on selling books.
At the start-ups I work with, I am thinking a lot about culture and how to help founders maintain focus on “books” not “devices”