July 31, 2006

News & Opinion: Get Back In The Box - Know Your Business Better

By: 800-CEO-READ @ 2:35 PM – Filed under: Innovation & Creativity

I have a pile of books that sits on my desk that I promise myself I will get to. Doug Rushkoff's Get Box In The Box has been there for awhile. I finally picked it up and liked what I found. Rushkoff is a little long winded in getting to his points, but I think it is worth your time. I am going to share some of the stories from the book in a series of posts.

This first topic of interest is the idea of knowing your business in deep and powerful way. This is really where the title of the book comes from. Rushkoff says companies are wasting their time looking for the next thing. What they need to spend time on what they are already doing and know it better than anyone else. He compares XM to Sirius and how they came to market.

While Sirius inappropriately applies the generic, out of the box strategies of other businesses to the specific case of a new technology and market, XM got back in the box to reinvent both radio and the business model surrounding it from the inside out.

Although Sirius was the first in space, first to IPO, and first to market, it quickly lagged behind its upstart rival, XM. The reasons are clear. While an impatient Sirius made the mistake of farming out its chip design to Lucent spin-off Agere Systems, XM assembled an in-house team of former Motorola engineers and steamed ahead. Without direct access to, or even knowledge of, their own research and development, Sirius suffering incapacitating production delays. XM, on the other hand, made its technologists central to the business and ended up innovating over and over again. And despite Wall Street's predictions that XM would forever lag Sirius, it actually made it onto the air almost a full year earlier.

XM didn't stop there. It pioneered the SKYfi boombox, MYfi personal receivers, and a variety of new distribution channels for satellite, including commercial jets and Internet streaming. XM's in-house technologists also gave it the ability to make its single best business move to date: a partnership to install XM-capable radios in General Motors and Honda vehicles. Marrying technology development with innovative business strategy, XM CEO Hugh Panero invited automakers to be part owners of the company, making them stakeholders in creating the success of XM. Panero's willingness to reconfigure XM's billing and accounting departments to mesh seamlessly with GM's (And why not? They're just spreadsheets!) was what ultimately won over the auto giant. Using similar strategies, SM has made deals to pipe its music into Starbucks, and has even convinced Microsoft to embed XM into its new Mediaplayer. Of course, knowing how your technology works makes you much more capable of imagining what your technology can do.

This lines up with the thoughts of Chris Zook in Profiting from the Core and Beyond The Core. Companies never tap out the possibilities of their core business and are instead in too much of a hurry to do something different. These efforts end in failure the majority of the time. Rushkoff points out that if you know your knitting, the possibilities are endless.

(I'll be posting on the book all week, so stay tuned...)