The biggest danger in modern business strategy is confusing successful products with sustainable businesses. Hyper-growth abounds due to near-zero marginal cost, anchored by digital systems which are powered by the unbounded and unconstrained internet, confusing strategists tethered in the old-thinking that a Great Win has arrived.
One danger in the modern economy is companies confusing successful products with sustainable businesses. Listing off examples like GoPro, Groupon and Pokemon Go, Abbosh says explosive growth is not necessarily the signal of a long-term win that it once might have been. Social media makes it easier than ever for viral trends to take off, but also to be replaced, overtaken and erased. “The market doesn’t play out in a gentle S curve,” he says. “It’s more of a shark fin, with a sharp drop off. You have to realize when something is just a product. It’s not a business.” (Fortune newsletter)
Yes, ephemeral growth like the one experienced by Groupon can happen, easily replaced or overtaken, and possibly completely erased within a very short time. Groupon would have been a great product but not a great sustainable business – that distinction is important.
Groupon inside Google which wanted to buy it would have done well but a standalone Groupon business remains a bad idea.
This thinking should guide you when to sell that viral “product”-business over thinking you can build it and make it a sustainable business.
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