- Image by Getty Images via @daylife
Just reading the proofs of Creative Disruption and re-reading my section of Deutsche Post. I’ve written about them as proof of how you can move into new adjacent markets,but only after you have fixed your core business.
Deutsche Post started the modernisation programme on their network back in 1990, when they were loss-making and state-owned. At the time it had nothing to do with the internet, and everything to do with looming privatisation and unification of Germany.
The Royal Mail‘s similar renewal programme didn’t start until 2004. [If you want the full comparison, read Richard Hooper's report Modernise or Decline ].
By making their core mail business profitable, they freed up the cash to move into new adjacencies: notably freight, and logistics [which are actually growing as a result of the internet']. However mail is still Deutsche Post’s cash cow, and even for all their cost control and modernisation it is still losing money.
When I spoke to their strategy boss Markus Reckling, about this – and what they thought was going to happen. He admitted to uncertainty and said
I used to think strategy was about avoiding unforseen events, now I know it’s about being able to cope with them.
There’s an enormous amount of wisdom packed into that little quote. If you follow it’s logic, it will drive you into focussing on making your business as healthy as possible right now, in order to keep your options open in the future. Which, I have to say, I think is exactly right.
In such uncertain times, the challenge isn’t the fine tuning of your big bold plan – but having a good answer to the question: ‘And what if your assumptions are completely wrong’. Because, if we’ve learned one thing – there’s a good chance that they will be, through no fault of your own.
This is why debates about ‘the end of print’ or ‘the death of the high street’ are pretty pointless in buisness. And ‘strategy’ is not about making reckless bets based on long term assumptions about such things.
Blockbuster a long time ago followed the consensus that the future of their business was on demand, so they went into and exclusive 20-year partnership with the most dynamic and thrusting business around to create a direct-to-home, video on demand service. That business was called Enron: the project never made it past a test [although Enron still managed to declare hunderds of millions in revenue from it]
It was about this time that they also turned down the chance to purchase a loss making little business called Netflix for a rumoured $50m.
Kodak, meanwhile, was way, way too certain that people would keep using film [they believed even into the 90s that the majority of consumer image capture would be on film, with people then getting digital prints]. Such certainty cost them dear.
