Commodities and the MBA Graduates that Hate Them. Get away from the fear of commodity businesses. Or, get an MBA.
If you hang around guys who have MBAs, guys who want MBAs, or guys who think they deserve an MBA, one of the cardinal sins of Business Administration is to get involved in a commodity business. Business is about differentiation, business is about having a competitive advantage, and the last thing that you want when you’re trying to get a leg up in the world is to be doing the same damn thing that everyone else is doing, especially when what they’re doing is based on razor-thin margins.In general, I agree, but in some cases, there exists the opportunity to break in on a commodity business by using technology to gain substantial leverage over your competitors. You see these opportunities in classic “mature” industries such as finance or healthcare, usually in the form of a de facto monopoly which operates a lot of legacy technology.
Spend a few hundred thousand bucks building a system that runs on a modern platform, and suddenly you can halve the entrenched billionaire dollar competitor’s prices and service while making a comfortable margin. Screw the old guy hard enough by giving so much value through your enhanced technology platform, and you just might find yourself the owner of your very own lucrative monopoly commodity based business.
So what’s the rub?
Well, the part you won’t learn in class is that most unsuccessful businessmen look at technology the same way they look at employees: both are considered interchangeable tools. When you think of a business as an assembly line with your knowledge workers as cogs in the machine, you think my idea of opportunity existing within stodgy old markets and businesses as being preposterous. After all, if there’s no room for differentiation within a commodity business built on commodity parts and commodity technology, then what’s the point?Here’s just a few case studies: Japanese Auto Manufacturers in the 70s and 80s, Google in the late 90s, and Southwest Airlines. All of these companies came on the scene well after the entrenched players. All of them leveraged new and better technologies into a more agile organization that prized innovation and focused on delivering a core product better, and all of them have toppled or are in the process of toppling the Good Old Boys. Imagine the conversations these companies were holding just a few years ago within their boardrooms: “We should start an airline! We’ll beat everyone!” or “We should kick Yahoo and Microsoft’s ass by making a better search engine with fewer features!” or “We should go up against the largest companies in the world to build a car that most Americans have never shown any desire for!” It sounds ludicrous, but in the end those companies won where every MBA said they’d get killed.
Nowadays, the opportunities are even greater. Almost every established industry has a top dog that doesn’t deserve to be there anymore, and nowhere is this more true than in the realm of software or software enabled industries. Go against the established, ugly, expensive, high maintenance, rigid single platform thick client application with your slick looking, lightweight, easily customizable, low maintenance, web driven application, and you’re suddenly in business.
Get away from thinking that all technology is equal. Get away from thinking that knowledge workers are interchangeable. Get away from the fear of commodity businesses. Or, get an MBA. [Peebs]
