What Bezos buying The Post teaches us about business threats

wapostbezosJeff Bezos set off quite a bit of handwringing and soul-searching when he purchased The Washington Post earlier this month for $250 million, from the digital disruption and destruction of the media industry, to debate over exactly where the Amazon.com founder lives (in case “the other Washington” wasn’t clear enough), to the inevitable online shopping jokes.

Clearly, owners of city newspapers now have more to fear than media consolidation and the disappearance of advertising revenue.

The acquisition of some of the country’s most talented writers and a marquee brand is reason enough to worry from a competitive standpoint. Bezos also has a history of building business models that dominate every industry he enters.

Even if digital is ultimately the strategy for The Washington Post, don’t be surprised to see a new national newspaper emerge from a distribution infrastructure that will likely be able to print and deliver a physical paper regionally more efficiently than anyone has ever done (assuming, of course, that anyone still wants a physical paper.)

But, for businesses outside the media industry, this isn’t about the news. The lesson to be learned for the rest of us is to pay closer attention to the real threats industries will face in the future.

Looking at how companies use one of the most common business analysis models – the SWOT analysis (strengths, weaknesses, opportunities and threats) – paints a picture of how far we have to go.

Even when viewed through rose-colored glasses (which, let’s be honest, they often are), companies usually have no problem articulating strengths and opportunities. This is natural, as they are the “dare-to-dream” quadrants. Likewise, most business people are self-aware enough to identify weaknesses because they provide an opportunity to evaluate the skills or technologies they need to improve to reach their vision. This turns “dare-to-dream” into “here’s how we’ll make this happen.”

But the threat quadrant typically remains both generic and anemic. Whether it is because most companies don’t want to acknowledge what could really make them fail or they simply don’t have the capacity to know is anyone’s guess. But giving your business permission to (temporarily) panic, making “nothing is sacred” the mantra for a minute and imagining the worst possible — and yes, even the unimaginable — threats is healthy and critical to success. Here are three ways to start.

Study your history: Kodak, Blockbuster and Borders all lost their leadership positions because they failed to recognize (or, at least, moved too slowly) changing customer preferences. When threats emerged, they relied on their histories while competitors swooped in on consumers of the future. Those are only recent examples – history is littered with the hubris of companies that refused to adapt. Understanding the “who, how and why” of competitive destruction will teach companies of all stripes the lessons of the past to help predict the future.

Break your business into its smallest and simplest parts: Square is making in-roads in small business point-of-sale technology against traditional financial services companies like American Express with a portable hardware device to support very simple software sitting on top of a lower cost business model. Airbnb found a market with the demand for extra bedrooms and empty houses, taking business away from traditional hospitality companies who never even realized they had the supply. Very rarely will a business be taken over by a competitor who looks exactly like them. Businesses, business models and customer purchase patterns are all being simplified. If you’re not simplifying yours, there’s a pretty good chance someone else will do it for you.

Think like a chess master: It’s too simplistic to think that your sales model will be taken over simply by a better sales model. Businesses are complex organisms. When you’re examining your threats, bring in viewpoints from every corner of the company – marketing, operations, finance, IT, human resources and administration – to really understand every potential move from every possible angle. Even better, bring in viewpoints from outside your industry or from individuals who can honestly represent the customer or shareholder perspective. Only by looking at the whole board, and by thinking five moves ahead, can you really start seeing where the real threats will emerge.

Companies need to spend more time thinking through threats and really reaching to extremes.

Amazon.com started with books but it now dominates Christmas, owns publishing and, apparently, its owner is going after newspapers.  When you look at the business model, it all makes sense. But you can be sure they were on no threat radar until it was far too late.

Chris Smith (@disruptsmith) and Chris Stephenson (@cjstevie) are co-founders and partners at strategy consulting firm, ARRYVE (@arryve).

  • http://www.coachsdeattle.com/ Hsuan-hua Chang

    I enjoyed reading the analysis. I could easily argue that Mr Bezos was looking into opportunities since he personally purchased the Post. At the same time, I agree that a leader with vision and open mind makes a significant impact to his/her business.