It's Not Your Competition... It's You

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If your business gets killed, don't blame the competition; it's you.

If your industry is upended, don't blame the competition; it's you.

Back in the late 90s, partners and I founded 2 start-ups.

  1. The first - electronic transcripts in the Web's early days - died in its cradle, when the big gorilla in the industry indicated it was going in that direction. In retrospect, letting our startup go was a mistake. It took many years for electronic transcripts - think of them as secure academic wire transfers - to take off, and there is still plenty of room in that industry, over 15 years later. It wasn't the big incumbent that killed it; it was our misreading the situation. We simply did not yet have the experience in strategic marketing to understand what was going on.
  2. The second - mobile Web for devices that ran on GPRS with tiny screens - lived somewhat longer, and then died. Officially, it was the result of the horrible market in 2001; nearly no one could raise funds, and we founders had families to support. But it was at least as much the result of mistakes we made. Everyone makes mistakes, so I don't feel too badly, and I am unlikely to make the same mistakes twice, but the market only provided the challenging environment; we were responsible for its demise.

I was reminded of my own past when I watched the interview of Finnish Prime Minister Alexander Stubb on CNBC. PM Stubb says that Apple killed Finland's 2 big industries, its "national champions", and is thus responsible for its recent downgrade.

  • The iPhone devastated Nokia, whose once-dominant phones looked ancient overnight. Nokia tried to but simply could not catch up.
  • The iPad took a hatchet to the paper industry. Many will say it is very good to use less paper, but when you do, major paper manufacturers are going to suffer.

Is the Prime Minister correct that the iPhone and iPad have severely hurt Finland? Of course he is, but only in the proximate sense. Apple could not have done so without Nokia and the paper providers leaving the field open to innovation that could do them so much damage. Despite being somewhat (paper) or very (Nokia) high tech, these companies - the industry as a whole - acted like the world would remain unchanged or, at best, change at the pace they set. The parties responsible for the companies' damage were themselves.

But in an evem deeper sense, the damage is the responsibility of, well, Finland. By tying its economy so closely to a few industries and a few "national champions", Finland, with national resources unavailable to most private companies, was able to give a leg up to those same champions for quite some time in their industries, as long as the industries were not fundamentally changed. The moment that a truly innovative competitor came along, they didn't have a chance. Their being "national champions" hamstrung them in their ability to be flexible and respond.

I certainly feel badly for the Finns. But the interview itself shows that the Prime Minister still sees Apple, not Nokia or Finland's policies themselves, to blame.

Somewhere in the borders of Finland, new competitors in existing industries, or possibly even new industries, are waiting to provide the next generation of Finnish strength. But it will only come when Finland allows and helps them to grow and innovate, rather than shed crocodile tears over its once-glorious past.