This post is based on a presentation I gave at London’s Digital Shoreditch last week…
In a recent Vanity Fair interview President Obama said, “I don’t want to make decisions about what I’m eating or wearing. Because I have too many other decisions to make…You need to focus your decision-making energy. You need to routinize yourself. You can’t be going through the day distracted by trivia.” Obama wears only two types of suits – grey and blue – in the exact same cut. He lets the White House chef decide what he eats most days. Why? Because these decisions are a distraction from making bigger, far more important decisions about our country’s future.
Today I want you to apply this thinking to your business.
How much of your day is spent doing high value, innovative work? How much of your day is spent doing tedious, busy work? How about your employee’s time is spent in each of these catagories?
Focus and innovation are inextricably linked. In order for your company to innovate it cannot be distracted. The more time you and your employees can spend on truly innovative work the more likely you are too succeed. Companies that fail to do this, spread themselves thin, quickly burn through capital and ultimately go out of business.
There is perhaps no better example of this than Webvan. Webvan was an online grocery delivery company. The idea was great, “we’re going to be the Amazon of groceries!” Pick your items, pick your delivery time and forget about driving to the market and hauling things home. With famous founders, an innovative business concept and rapid plans for expansion Webvan easily lured investment from Sequoia Capital, Goldman Sachs and Yahoo.
While Webvan was an incredible service, their infrastructure costs far exceeded revenues. They invested in high tech warehouses, state of the art logistics infrastructure, and an full server farm. They opened their doors in 1999, and filed for bankruptcy a 2 years later in.
When all was said and done the company burned through $830 Million dollars of investor capital.
Webvan and other distracted, dot com duds didn’t have to fail. They could have succeeded if they had focused their energy. If they had realized what their most innovative offering was and focused on it relentlessly.
Airbnb is one of my favorite companies. They offer people the ability to rent homes or rooms in homes as an alternative to overpriced hotel rooms. If Airbnb had taken the Webvan approach to building their business, they would have bought homes all over the world. Then they would have hired staff near each of these homes to greet guests and get them settled. To scale this would have cost billions of dollars in capital, and yielded no better result than Airbnb has been able to achieve.
Instead Airbnb decided to focus on its core value proposition – developing a beautiful, easy to use directory of homes across the world and building a community based on trust and reputation that allows people to stay in other people’s homes without anxiety. Airbnb charged homeowners with the responsibility of owning and maintaining their own properties, and developing their own profiles on Airbnb.
Airbnb was laser focused on its highest value proposition and offloaded non-core activities to their own user base. As a result of this, they succeeded.
I can’t tell you what your company’s areas of true innovation are. But here are some guesses: if you are developing technology its likely product and development, not customer service and billing, if you are running an ecommerce company its likely user acquisition, experience and conversion, not photo retouching and product descriptions and if you are running a social media website it’s likely product and engagement, not content moderation.
To stay on the leading edge your company must focus. Start by figuring out your core value proposition. Then figure out ways to outsource and crowdsource or otherwise delegate everything else to third party service providers or your own user base.
Slides from the presentation below: