There are fundamental constructs that distinguish companies that don’t just run, but actually TRANSFORM their sectors. This is the crux of the matter, and the reality is that business success demands reinvention as the customer’s needs and context evolve over time. The companies that become true transformers possess a genius for staying ahead of customer Needs and Expectations, operating at the level of Perceptions (see my NEP Customer Centricity framework as explained in Harvard Business Review ). Yes, they are simply ready, no matter what tide comes in.
One such masterful practitioner is Intuit, the American giant best known for its tax software. A defining attribute of Intuit’s strategic playbook is its remarkable willingness to offer most things for free. One could almost accuse the firm of having an aversion to revenue! You will observe competitors diligently building products and solutions right on the very platforms Intuit has architected. Yet, there is a powerful, almost inevitable catch: after a few seasons, these competitors become effectively invisible. In the mind of the customer, they are simply folded into the Intuit business.
And so, for decades, Intuit has managed to quietly swallow competitors without the necessity of buying them. I have christened this model the Fish Bait Acquisition Construct. It is a sophisticated maneuver where you deliberately extend the ‘free’ offering to competitors. As they become comfortable and dependent on these freebies—the bait—you effectively set a trap. Over time, their independent strength is hollowed out, their value proposition weakened. The inevitable end game is that they eventually come to you, practically begging you to take over their remaining assets.
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In this AI era, we are going to witness this fish bait acquisition construct at scale as foundation model companies “bait” app-level players with goodies. Do not go for those goodies mindlessly!
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