This weekend, we watched a documentary about the wirewalker called “Man on Wire”. It was phenomenal. The protagonist, Phillipe Petit, dreams from a young age to walk across a rope strung between the two World Trade Center buildings. The movie is the story of how he achieves that dream.

One of the things that struck me most about his preparations for his performance was his extensive study of the environment he would be in. At 120 stories high, the winds are fierce, the weather changes quickly and the buildings sway. And so Philippe prepared.

It’s the same for entrepreneurs. The environment is a critical element for the success of any endeavor, inlcuding a company.

On Strategy

I love to read strategy books. The one I’m currently digging into is the Wharton on Dynamic Competitive Strategy. In this particular book, there is the most succinct definition of strategy that I have come across:

Strategy is about seeking a competitive edge over rivals while slowing the erosion of present advantages.

To develop a strategy, a company must be aware of the environment that it’s operating in. You can’t start a successful company with a strategy developed in a vaccuum. The theories always break down when rubber hits the road.

There’s a great example of this in Bill Gurley’ presentation on the changing media landscape. On slide 24 of the presentation, there is a quote about Tru2Way

…it’s a race to see if cable can create a UI on tru2way fast enough to hold off the video boxes and the internet

Most people have never heard of CableCard because it was a failure. In short, it was a technology to enable interactive TV, more specifically a la carte purchasing of TV content.

As one of the executives at Project Canoe told me, interactive TV has been possible for more than 10 years. But it’s only now coming to households in a meaningful way as a result of Tru2Way. Read through the issues with the CableCard initiative and you’ll see the failure was due to the environment – cable card companies’ lack of support, ineffective policing by the FCC, lack of standards, etc.

More than other factors, the greatest contributor to the lack of adoption of Tru2Way technologies was the environment. The technology was ready, the content was easily creatable and consumer demand was there. Even the FCC was behind the initiative. But the cableco’s weren’t. They were the strong winds blowing the tightrope walker off the wire.

Today, however, Tru2Way, CableCard’s successor, has broad support. By the end of 2008, Tru2Way was deployed in 80 million homes in the US. The reason: competitive pressures from the enviroment, in particular, the internet.

In this case, it was the lack of competition in the environment that caused the failure the technology. Understanding the forces in the environment were key to getting Tru2Way adopted.

Doing the work

In The Art of Strategy, the authors discuss game theory and competitive positioning.  In others like The Boston Consulting Group on Strategy, competitive marketshare and growth strategy are the main topics. In others still, the strengths and weaknesses of Porter’s Five Forces, the Three Horizons, or the BCG Matrix are analyzed. Each of these frameworks can bring a better understanding of the environment and that understanding is as essential to a company’s survival and success as understanding the weather conditions atop the World Trade Center.

Other recommended books.

The Granularity of Growth