On the 4th of October 1957, the Russians launched the first satellite into space.
Russia was in the early stages of the 'arms race’ that gripped the world— but in reality, they could barely feed their people.
They were still broke from WW2.
They tried building a nuclear missile like the Americans but lacked the funds to compete. So the scientists launched the satellite to justify their jobs and budgets.
It was called Sputnik. It passed over the USA every 90 minutes for 4 months and was completely harmless.
The trouble was no one other than the Russians knew this.
The global media went into overdrive and doom-mongering. The Americans had no way of defending themselves.
The Russians didn’t have a radar that was powerful enough so they simply put a transmitter into the empty satellite shell that went ‘beep… beep’ in order for them to monitor it.
Paranoia swept the nation as radio station after radio station broadcasted the taunting ‘beeping’ noises of the Russian satellite to millions of terrified Americans.
Nikita Khrushchev, the Russian President, spotted an opportunity to elevate his country.
He commanded the scientists to do more ‘firsts.’
The Russians were the first to launch a dog into space.
Then they were the first to put a man into orbit. His name was Yuri Gagarin. Then they put Valentina Tereshkova, the first woman, into orbit.
The Russians were also the first to have a cosmonaut complete a spacewalk.
With each first, the world became more and more paranoid. The conventional wisdom from the world’s leading experts was that Russia could destroy countries with its nuclear arsenal.
They were ignorant of the real position of the Russians.
The Russians had one missile that could barely make orbit. They used creative thinking to create the illusion that the country was far more powerful than it truly was.
Sputnik was the first artificial satellite. It both accelerated the Cold War and started the Space Race, which in turn formed NASA.
But, for the Russians, it catapulted the country from an also-ran into a superpower in the eyes of the world.
By challenging and creating panic within the most powerful countries in the world, Russia elevated itself to a perceived equal with America by thinking differently.
And world leaders assumed Russia was a superpower.
Strategically speaking assumptions are the mother of all fuck ups.
The Russians pulled off one of the biggest fake it until you make it strategies in history.
We all fall foul to assumptions and make poor decisions by not questioning our thinking and biases.
This is because we are looking at the situation with a narrow lens. We are thinking convergently and not divergently.
This is very common especially, paradoxically, with some of the smartest entrepreneurs who follow the status quo and don’t question their assumptions.
When digital photography technology was early in development it was clunky and hard to work with. Kodak assumed it would never catch on and ignored it.
By the time the digital photography technology had developed sufficiently, it blew up and left Kodak too much ground to ever recover.
The conventional wisdom in the vacuum cleaner industry was that consumers wouldn’t pay for a luxury hoover. The industry business model was to sell the hardware ( Vacuums) cheap and make most of their money on replacement bags.
When Dyson tried selling his bagless technology they assumed consumers wouldn’t be interested. After all, the public had been buying replacement hoover bags for decades.
They never considered that consumers hated the hassle and expense of buying replacement bags.
Charles Duell, director of the U.S Patent Office in 1899 suggested they shut down the office as everything had already been invented.
Robert Millikan, Nobel Prize winner in physics stated in 1933 “There is no likelihood that man can ever tap into the power of the atom”
In 1938, Chester Carlson invented photocopying. He tried selling the technology to 20 office supply companies including IBM and Kodak.
They all declined, the conventional wisdom was photocopying would never take off as carbon paper was cheap and plentiful.
Chester started a company and called it Xerox.
These are extreme examples but they point out that assumptions are dangerous and widespread.
And this presents strategic opportunities for you in any market. Look at the conventional wisdom in your market. Employ thought experiments…what would happen if you reversed the assumptions into new opportunities?
To stand out and gain a competitive advantage, you must stop looking at your market with the same lens as your competitors.
Netflix vs Blockbusters
Strategies naturally become more complex as a company grows but in the early days they are fairly basic.
Netflix set out to be the biggest DVD rental company in the states.
They played to their strengths and attacked the weakness of the DVD rental industry to provide customers with more value.
In their early research, Netflix discovered that people liked Blockbuster. It was the process of renting DVDs that they hated.
To gain a competitive advantage you need to disrupt the process.
The 3 top pain points for the DVD rental market were:
Having to go to the store to pick up and return DVDs
The stores do not have enough stock of the hottest new films.
Late fees. They really fucking hated late fees!!
Netflix’s strategy was to invert customer complaints and turn them into customer opportunities.
They did this by creating a new process:
The DVDs were sent out and returned in the mail
They always had enough stock of the hottest new movies
No late fees, ever.
That was their strategy. Now, sure, that strategy clearly evolved as the business has grown but that was their founding strategy.
This got them a foothold in the market and they built it from there.
As an aside, Blockbuster had the opportunity to buy Netflix for $50M in 2000 as part of a merger. Blockbuster CEO, John Antico actually laughed in their faces.
The conventional wisdom was retail would always be king.
Netflix is valued at $208 billion today. Blockbuster has gone.
Disruptive Creative Thinking
As founders, we often make the mistake of looking for the hail mary pass that will disrupt markets. The one lighting bolt of innovation that will revolutionise the market and change the world.
It happens but it’s super rare. Standing out and gaining a competitive advantage is the sum of the parts of lots of tiny little disruptions that when combined give you a unique market offering.
Look at Netflix’s strategy. It was fairly simple.
They found out the top 3 biggest complaints about the DVD rental markets and provided the solutions.
Was it easy? Of course not.
Can you apply the same to your business? Of course. It’s highly unlikely you will be the next Netflix but you can certainly double to triple your business over time.
Flipping customer complaints into opportunities is enough to get a foothold and leverage that into growth.
The trick is seeing the opportunities others can’t by thinking differently.
Conventional wisdom is all around us. There are lots of opportunities to go against industry norms and assumptions to provide more value to customers.
These are your opportunities to stand out and gain a competitive advantage.
Look for conventional wisdom in your market and reverse them as a thought experiment. Will it add value to your customers?
Anytime you are faced with an assumption. Question it. Is that really true? Then invert it and see how the assumption would play out in reverse.
This is what disruptive entrepreneurs do. They use frameworks to challenge the status quo, conventional wisdom, and flip assumptions into customer opportunities in order to stand out and gain a competitive advantage.
This is thinking differently.
Beta-testing is finished! They have gone great. I’m super grateful to all those that participated.
Here’s the feedback from one:
“Jake, I truly cannot thank you enough for the wonderful gift you’ve shared with me. My brain was abuzz with all sorts of ideas, those ideas begetting other ideas, all day yesterday and upon waking up this morning. It’s certainly a frame of mind that I want to bask in forever.
Our session removed my myopic boxed in thinking and helped me see a clear path for the business without feeling stuck.
I’m holding a meeting with my partners to go through the creative strategies and divergent thinking solutions. I loved all the ideas in the workshop and I can’t wait to get there. Again, thank you so much!” — Rachel Moore, Madison Modern Homes, Los Angeles
The feedback has been great. My goal was to create an affordable 1-2-1 workshop that teaches founders, artists, and creators how to stand out and gain a competitive advantage by thinking differently.
In addition to that, based on all the feedback, the workshop is helping founders get out of their heads, get unstuck, and provide them with a clear plan to move forward.
I’m happy with that.
Next week I’m going to announce the first round of the workshops. If it’s for you then great, if it’s not then no worries. ✌️
I am shitting it though….
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