Learning the Lessons of Luck and Smarts in the Tech Market - by Judith Hurwitz
This week's author guest post comes to you from Judith Hurwitz. You might very well be familiar with her fantastic technology blog, on her website judithbalancingact.com. As president and CEO of Hurwitz and Associates, Inc. (a strategy consulting and research firm focused on emerging computing technologies) she knows to be successful in any highly competitive market, you have to be smart, but you also have to be lucky enough to be at the right place at the right time. And you have to be smart enough to realize which you are. Enter Judith's new book, Smart or Lucky?, for business leaders who are interested in learning what it takes to be successful in emerging markets and how to sustain success over the long term. You can pick up the book here.
The technology market is one of the fastest paced businesses around. Companies start with great expectations of success and expectations of great wealth. What does it mean to be successful in this type of business? There has been a raging debate for years: is it better to be smart or lucky? Most of the entrepreneurs I speak with are quick to state that they would rather be lucky. In fact, luck has a lot to do with the ability of a start up to be successful. At the same time, you can’t rely on luck alone. The most successful companies – no matter what industry you are in – has to execute with a combination of luck and smarts. Here are three examples of when luck and when smarts play the key role in success.
• Luck matters most when success depends on the supporting infrastructure being ready.
There are many examples of companies that had great technology but were too early for the market. For example, there were social networks/collaboration software companies in the 1980s and 1990s that were just as inventive and compelling as Facebook and LinkedIn. Why did they fail? There is a simple explanation. For a social networking company to be successful there has to be a ubiquitous Internet so that individuals and groups can quickly interact. During the end of the 20th century the Internet was the bastion of scientists and researchers. Companies that tried to provide collaboration environments had to convince companies to standardize on their own networking and connectivity software. This software was often cumbersome to implement and even more difficult to manage and use. So, being at the right place at the right time often trumps smarts.
• Smart is most important after the initial luck.
Many companies that are at the right place at the right time fail because of arrogance, political infighting, and forgetting to anticipate competitors. Once a technology company succeeds because it was at the right place at the right time, it tends to grow very quickly. If it executes well in the early years it can become a huge force in the market. When companies are successful they often lose sight of potential stumbling blocks. They create a mythology around their company about their value to customers and grow powerful. They begin to believe those myths and see themselves as invincible. When a new nimble competitor emerges with new technology and a different approach many of these companies ignore the warning signs. Smart companies, on the other hand, understand that they were, in fact, lucky. They also anticipate that customer needs will change and there will be challenges. Staying at the right place is often more difficult than getting there in the first place.
• Lucky + smart is the only answer.
The successful companies are those that combine being lucky and smart. This accomplishment is much harder than it might seem. As companies grow larger and more powerful it is inevitable that they lose their focus. Sometimes it takes a near death experience or a few very bad quarters before a company recognizes that it has lost its focus. Sometimes, a company will move into new markets that are too far afield from their core business. Other times, the company forgets to pain attention to the needs and problems of existing customers. In other situations, a company holds on to legacy products for too long even though they are draining resources from newer initiatives that will ensure future success.
From the outside looking in it is easy to assume that once you are lucky, the path forward to assured. Throughout the history of fast moving technology markets you need initial luck to allow you to be allowed to compete. You need to be smart to sustain that luck.