10:06 AM Friday August 7, 2009
by Nikos Mourkogiannis
Conventional wisdom would have us believe that in a world where Wikipedia is the first port of call for millions of people, an encyclopaedia, such as Britannica, should no longer exist: There is nothing “Blue Ocean” about leather bound books. As far as its competitive position is concerned, it could not be worse: why pay for information when the same information is available for free?
Yet this year, defying predictions of its demise, Britannica leapt 19 places in the ranking of Brands in the UK. It charged ahead of Virgin Atlantic, Nike, and Sony. What’s the key to Britannica’s success? Britannica focused on its purpose; this made it possible to think clearly about its advantage.
The story of Britannica is a story of the pursuit of excellence; excellence is Britannica’s purpose.
If one created an organizational chart of the various approaches to creating a great company, purpose would be at the top of the chart in the “chairperson’s” position. Competitive advantage would be a member of the board. To put it in a different way, advantage works within a specific industry, while purpose works in all industries.
Purpose is not just about doing well but also about doing good with the same actions. It is, thus, the only source of advantage that lasts, for nothing can last that is not deemed good. Companies, like Britannica, which have a clarity of purpose, realize that they cannot think clearly about advantage in their industry before they think clearly about their purpose.
“The best thing about having a purpose is that it tells you immediately what not to do, which makes my job fifty percent easier,” a client in Australia told me some months ago. Britannica has to compete in the information industry, an industry that generally lends itself to pursuing a purpose of discovery.
However, Britannica chose to stick to its purpose of excellence. It allowed others to provide us the news, reach mass audiences and readerships, or, in the case of Wikipedia, use information to build a community of readers and contributors. As the industry continued to change , Britannica stayed focused, setting the standards on excellence in information.
Pursuing excellence is not compatible with a low-cost strategy. This is a lesson apparently not lost on Britannica. It continues to rely on 4,000 experts and academics, while Wikipedia is compiled by only 23 employees based in California and 1,200 volunteers. A £50 subscription to Britannica’s site limits its subscribers to 40 million, as compared with the hundreds of millions who visit Wikipedia. However, this is to be expected: excellence is never a big numbers game.
Knowing that their purpose is excellence allows Britannica to bring perspective to innovation. Britannia was the first encyclopaedia to go online and has expanded its product line to include not just new print products but also software. The encyclopaedia is still published in book form, with 10,000 of the 32-volume sets sold each year. However, renovation is imperative, as long as no corners are cut and the renovation is completed to the highest of standards.
The positioning of all these products is consistent with the company’s stated aspiration to be the worldwide leader in reference, education and learning. And the target customers remain the same: the learning and educational community, where mentions of Wikipedia as a source will likely face a heavily arched eyebrow.
Britannica, as with all companies whose purpose is excellence, is totally dependent on the loyalty of a specific community to whose standards it caters. Britannica’s board is packed with Nobel Laureates and Pulitzer Prize winners. Academics and educators are not just their customers, but the fellow defenders of the invaluable distinction between sources of reference and mere sources of information. Absent this distinction, Britannica could not survive for long in today`s world; it would have no advantage.
Yes, Britannica has suffered financial woes in the Internet era. It had to let go of a strategy based on deploying salesmen. It changed both ownership and organizational structure several times. It had to adopt new technologies and adjust to feedback from its readers. But it never gave up on its purpose of setting the standard in reference and relying on experts to do so. It got the advantage right because it thought hard and long about its purpose. The mere fact that Britannica survives is a miracle, when even the all-mighty Microsoft had to discontinue Encarta and withdraw from the encyclopaedia market, unable to compete with the Wikipedia juggernaut.
The above is not the story of a company, impressive as it is. Rather it is a short case study on the power of purpose. There are many great companies, small and big, old and new. I have found that most of them did not have to find a “Blue Ocean” to avoid competition and almost none of them are obsessed with “Competition”. Great companies were good long before they were great, and good companies can deal with competitors. However, all great companies have a common characteristic. They know their Purpose, and they are constantly striving to attain it; they are competing against themselves.
The Power of Posterity
by David Brooks
Nikos Mourkogiannis, Nikos@Nikos.com
July 28th, 2009
Your column on the power of posterity is both excellent and timely. Wondering about posterity is important for discovering Purpose, without which both individual and institutional lives amount to mere existence.
A good way to access the power of posterity is for each of us and especially those in Leadership positions to ask the question ” What do I want to be remebered for?”
Author, ” Purpose: The Starting Point Of Great Companies ”
Viewpoint July 16, 2009, 6:05PM EST text size: TT
The Return of Protectionism
The G-8 meeting should have focused on the unemployment crisis, not climate change and free trade. Instead we get old-fashioned protectionism
By Nikos Mourkogiannis
The recent G-8 meeting in Italy was a failure, an event with an agenda looking for a purpose. While unemployment is the dominant issue in the West, reaching agreement on climate change and free trade dominated the talks.
Climate change is the great social democracy issue of our times, promising well-being while selling fear of the unpredictable and the hope that governments can protect people. It gets a lot of vocal support. But dealing with climate change is expensive. The developing world asked for $150 billion to do their part, but the G-8 refused to foot the bill.
On the other side of the traditional ideological divide stands free trade, the defensive line of free market loyalists. State capitalism, as practiced in China, has recently proven more effective in achieving growth than have free markets in the West. Private companies, especially the banks, are now trusted even less than public bureaucracies at preserving wealth. It was government guarantees that kept the banks going and—unlike many people in the private sector—civil servants didn’t see their jobs disappear. But what keeps free marketers in the market of ideas is free trade. In the past 20 years, hundreds of millions of people were elevated from poverty and consumers enjoyed incredible buying ability because governments lowered tariffs.
Missing: New Ideas to Create Jobs
The problem with free trade, as with all ideas of its ilk, is that when taken to extremes it produces change that approaches anarchy. And the problem with climate mitigation, as with all socialist ideas, is that it costs money. The immediate problem with both ideas is that neither addresses unemployment in the West, which is the big problem of our time. Politicians are downplaying this, and for good reason. They are ashamed that they don’t have any ideas about how to solve it. Central bankers prefer to fight inflation. After all, nobody was ever fired for trying to prevent a problem that hasn’t surfaced.
The green revolution—attacking climate change—is the strategy of the left for creating employment. However, the dirty little secret is that in the short term only a trickle of jobs can be produced—and in the longer term, most of them will need to be subsidized. On the right, the strategy for dealing with unemployment has been to encourage innovation. However, this seems to have failed as well. After years of emphasis on innovation, competitiveness, and the like, the U.S. and the U.K. are each experiencing unemployment of about 10%, while unemployment in Spain is around 20%.
We are clearly at an impasse. The new jobs being created don’t begin to make up for the jobs being lost. Companies die, but humans survive—unemployed with no prospects.
Protectionism Unites Right and Left
What is the next episode in the drama? History would suggest protectionism, an inflammatory word that G-8 cooperation was supposed to relegate to the dustbin of ideas. In fact, protectionism is already being practiced. According to President Barack Obama’s new energy bill, products from countries that do not cap carbon emissions and trade carbon credits will face tariffs. Other countries came earlier to the party. Months ago the Chinese earmarked their huge stimulus package to help only domestic companies. Russia abandoned its ambition to join the World Trade Organization a year ago.
Significantly, protectionism is now bringing together the extremes on the right and the left. The former welcome it as a reinstatement of national sovereignty. The latter can practice it under the mantle of advancing climate mitigation, as the U.S. is doing. Protectionism is back as the main lever of policy against unemployment, without any of the G-8 governments admitting it. Protectionism—though not pronounced for reasons of political correctness—is written in the fine print of all bailouts, stimulus packages, and stabilization plans introduced by G-8 members.
There is still some hope. Employment has always been a lagging indicator of recovery. But because most of the lost jobs are not coming back, managers and policymakers alike must tackle the prospect of a jobless recovery as priority No. 1. If we fail in this challenge now, we will be confronting matters of national security next year.
A leadership consultant, Nikos is author of the book Purpose: The Starting Point of Great Companies and can be reached at Nikosonline.com.
- The True Purpose of the Board
- Purpose: The Search for Strategic Alignment
- The Return in HR from Purpose
- Purpose-Led Planning & Strategy Execution
- An Interview with Nikos
- Using Purpose to Drive Innovation
- Thinking on Purpose
- Purpose: The Starting Point of Great Leadership
- The Search for Purpose
- Four Routes to Success
- Purposeful Leadership