Get Smart

• Choose the right chaos to tame. Dysfunctions exist everywhere, with chaotic conditions that can make life miserable. But there’s no point in trying to tackle a problem if you bring no special resources to the table.

  Laumeister’s background was in creating and operating high-tech companies, and he knew how to use information technology to solve complex problems. Fixing the dysfunctional, disorganized parts market was a challenge suited to his skills. He wouldn’t have dreamed, for instance, of trying to cure sick airlines, with their endless delays, overbooking problems, cattle-car conditions, and passengers infuriated by interminable waits on runways. But someday, someone who knows the airline business will conquer that chaos and profit hugely from it. Maybe it will be you.

• Look for fragmentation. If you have an appetite for a strategy that’s based on simplifying complexity, look for an industry that has a lot of fragmentation. In the research for this book, I was struck by how many companies have been launched just to help patients negotiate the mazelike healthcare industry. Finding a new television remote might not have the same life-or-death aspects as treating an illness, but the problem for consumers is the same: No one has created an integrated set of services to quickly respond to a customer need. Fragmented industries—those in which there are many operating parts that do not work well together—provide some of the best opportunities for high-growth strategies.

  FRAGMENTED INDUSTRIES—THOSE IN WHICH THERE ARE MANY OPERATING PARTS THAT DO NOT WORK WELL TOGETHER—PROVIDE SOME OF THE BEST OPPORTUNITIES FOR HIGH-GROWTH STRATEGIES.

• Go for scale. Although mastering complexity in a fragmented industry is required, it might not be sufficient to outsmart your competitors in the long term. Others might be able to quickly copy your approach. But if you can achieve scale early in the development of your business, just as Partsearch did, you can become the resource of choice. (This strategy is similar to what you read about earlier in Chapter 2, “Compete by Seeing What Others Don’t: How Sonicbids Spotted a $15 Billion Market.”) The combination of ease of access, almost unlimited choice, and competitive pricing is hard to beat.

  THE COMBINATION OF EASE OF ACCESS, ALMOST UNLIMITED CHOICE, AND COMPETITIVE PRICING IS HARD TO BEAT.

• Overcome inertia. At two turning points in the life of Partsearch, Laumeister met resistance and found ways to overcome it. Resistance is a given at every kind of startup. The song says that no one loves you when you’re old and gray, but in the business world, being young is a drawback, too. Manufacturers wouldn’t cooperate with Partsearch until retailers pressured them, so Laumeister found a way to begin his catalog without the manufacturers and let Best Buy take the lead in converting them. Venture capitalists hemmed and hawed until Laumeister gave an ultimatum to one of them. But once he landed one backer, they all wanted to shower Partsearch with money. These kinds of obstacles seem as needless as they are difficult and infuriating, but be prepared for them. And if you can’t get around them, find another line of work.

  A heavyweight partner can make a business launch easier, as Partsearch demonstrated, but you risk being overwhelmed—or overtaken—by your partner. Before Laumeister sought help, he had already developed a capability that could not be easily or quickly replicated. And because he was adding value to his partners’ businesses, he had a better chance of being treated fairly in a deal. The lesson here is to develop a unique and valuable capability before you seek a partner to enter a market. You will be taken more seriously, and you will be better able to protect your own interests.

  THE LESSON HERE IS TO DEVELOP A UNIQUE AND VALUABLE CAPABILITY BEFORE YOU SEEK A PARTNER TO ENTER A MARKET. YOU WILL BE TAKEN MORE SERIOUSLY, AND YOU WILL BE BETTER ABLE TO PROTECT YOUR OWN INTERESTS.

• Expect and look for more complexity. When Laumeister started out with Partsearch, his goal was to make it easier for customers to find a part. Things got more complicated when he realized that some customers were ordering the wrong parts for the job they wanted to do. He could have ignored their confusion, chalking it up as just another example of human frailty. Instead, he trained his call-center representatives to be on the lookout for such callers and to help them order correctly. That response furthered Laumeister’s overall goal of profiting and growing by helping people live their lives with less trouble and expense. In today’s world, a businessperson had better enjoy dealing with complexity; it’s here to stay.

• Pair value with values. The desire to run a business that actually helps people might sound a bit Pollyanna-ish, but Laumeister had it right. There’s something liberating and inspiring about a business that makes a real contribution to society, not just for the owners and leaders, but for employees and customers as well. And those feelings translate into an upbeat, can-do culture; a loyal workforce; happy customers; outstanding profits; and a spectacular growth rate.