When the rampaging elephant drops dead

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When the rampaging elephant drops deadBy Francis Moran

When I started inmedia Public Relations in the late 1990s, Ottawa and much of the rest of North America was mid-way through one of the most inflated economic bubbles that had been experienced up to that point.

The 1996 Telecommunications Act in the U.S. had spawned scores of ILECs, CLECs and a host of other acronyms describing various flavours of telecommunications carriers, all of which were on hungry equipment-buying sprees. This coincided nicely with the rise of data versus voice traffic, and so the requirement to build out brand new kinds of packet- rather than circuit-switched networks. These twin market drivers were the impetus behind a raft of new optical, silicon and networking startups in Ottawa as well as the unprecedented climb of Nortel Networks, which at one point had a market capitalization worth more than one-third of the entire Toronto Stock Exchange.

Driving much of that data traffic — either actual or anticipated — was this thing called the Internet, which was in its first furious bloom. The notion had somehow taken hold of otherwise canny people that you could put up a web site to transact almost any sort of business and that massive value would swiftly be created simply by attracting eyeballs to that site, even if precious few of the owners of those eyeballs ever actually bought anything.

Fortunes were made, mainly on paper, but occasionally through the sale of vastly inflated stock holdings by insiders skating dangerously close to, if not well past, the boundaries of regulatory propriety, or of entire young companies snatched up by fearful acquirers that felt they could not afford to be left behind in this frantic new gold rush.

It was an elephant rampaging through the jungle. Out of control. Slashing a path impossible to forecast. Thrilling and dangerous. Until the elephant dropped dead.

Now, there is an undeniable skill associated with hanging on to the elephant as it rampages through the jungle. You might have no control over your destination but if you hang on long enough, you will get somewhere interesting. When the elephant drops dead, however, a whole new set of skills come into play, and too many of the companies that thought they would ride forever found themselves in hostile territory lacking the ability to navigate their ways forward.

What they lacked were fundamental marketing skills — the ability to find and then engage effectively with a customer who has a compelling pain that can be solved in a unique high-value fashion — and fundamental strategic skills — the ability to develop and execute a plan to build such a solution and bring it to market.

I used to recite my parable of the rampaging elephant a lot in the early 2000s, and I find myself returning to it again now. While today’s technology marketplace has few of the characteristics of an over-heated and unsustainable bubble, it exhibits many of the same shortcomings that left the last decade’s startups stranded in the jungle.

Jerzy Gangi got to the heart of the problem last week in a provocative condemnation of the group-think nature of venture capital investors. I think his thesis is sound, and would argue only that it ought to be extended to tar entrepreneurs with the same brush.

Just as at the height of the bubble, it reflects a failure to embrace fundamental marketing principles. Rather than looking for a real problem that could be uniquely solved, too many companies today are looking at what someone else has already done and saying, “We could do that just a little bit better than they do.” As a marketer, I hate this approach because it makes value propositions soggy and unconvincing, it makes differentiation narrow and not compelling, and it makes sparking attention in already-crowded and noisy marketplaces difficult.

The similarity between today and a decade ago is not the rampaging elephant; it’s the folks lost in the jungle, unable to navigate a clear path to novel product development and value creation.

Photo: © Francis Moran

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