Competitive strategy for this decade and beyond is served well by the parables of deep knowledge and strategy. How do we ‘win’ without battle? How do we gain market share in a declining market? How do we ‘come out of left field’ leaving our competitors gaping in disbelief? How do we mysteriously neutralize our competitors without them ever realizing what is happening or fully knowing why their business is deteriorating and never once believing it had anything to do with us. How do we achieve invincibility within a myriad of new technologies, and how do we create value where none existed before.
The latter question is what intrigues me most as it reflects the ultimate application of creativity and invention – creating significance from insignificance, creating value from nothing, seeing value where no one else does – and above all – crafting the strategy to execute the innovative design.
Here is one story of creating value from garbage, strategically.
90% of everything is garbage, and I’m not referring to the tremendous growth in waste disposal and recycling. Here’s a story of creating value through new technology – and with garbage! It captures the essence of creative strategy for the turn of the century. It goes something like this:
An enterprising technologist has a vision to improve the efficiency of compacting garbage. Not automobiles, nor extracting plastics, metals, and materials, just improving the technology to handle the run of the mill mega tons of garbage we generate by the minute in the world today. He works up a new design of garbage compacting equipment that can be shipped to a remote site to be ‘fed’ from standard ‘garbage handling’ and hauling vehicles such as front end loaders and your regular garbage and dump trucks. It works relatively well! He misses his mark somewhat and finds that his new (patented) equipment will compact garbage to about one eighth its former size. Short of his goal but workable nevertheless.
Strategic question? So what does he do next? Multiple choice:
A. He goes back to the drawing board.
B. He sells his new technology to the leading waste disposal firm.
C. He licenses his technology to several new high-tech waste management services.
D. He starts a company to manufacture the equipment to sell to municipalities and waste disposal firms.
So what does he do? None of the above!
He buys garbage dumps!
Sorry, correction. He doesn’t buy just any old garbage dump. He buys full garbage dumps!
What is the value of a full, completely full, exhausted garbage dump? Next to nothing, at least early in the game. So what does he do? He buys the dump for next to nothing (who else really wants it?) He uses his equipment to compact the garbage in the full garbage dumps to one eighth its size. He then re-opens the dump for ‘business’. Theoretically, he will be able to generate additional dumping capacity of 56 times what the original dump could ever sustain.
Creative strategy in garbage. Creating value where there was none – the ultimate application of knowledge and strategy.