First Step Marketing

In the age of customer scarcity and the Internet, the boldness and ambition of the new market leaders are unprecedented. Like their market presence, their aspirations are larger than life. They stretch their resources to the maximum and set unprecedented goals for businesses still in their infancy. They are determined to rule their markets and have no qualms about making the serious and risky commitments necessary to do so. Such spirit stands in marked contrast to the traditional manager’s tendency to spread risk and exposure, to take small, well-tested steps forward, and to avoid putting all the eggs in one basket.

Not long ago I spoke to the leaders of a company in the cutthroat communications field that, in terms of its competencies and operating model, looked very promising. But one vital element was missing: The leaders‘ aspirations were woefully inadequate for the battles that lay ahead.

Instead of making the courageous decisions required to become the undisputed market leader in a chosen segment, they were spreading their resources over a host of different technologies, markets, and customers—trying to avoid becoming overly reliant on any one. In spite of its talent and reputation, this company set itself up to flounder for at least the next few years, becoming easy prey for rivals with fewer resources but more focus and gumption.

You don’t have to look far for leaders and companies that exemplify boldness. One is Qwest Communications International Inc., a telecom company with sales of barely $70 million just six years ago. After hiring former AT&T Corp. executive Joseph Nacchio in 1997, the company embarked upon a huge acquisition spree, initially gobbling up LCI and then agreeing to a merger with US West. The 1999 sales of this combination exceeded $17 billion. Just imagine this jump: from $70 million to $17 billion in six years. If Nacchio was a flea setting out to attack an elephant, he wasn’t fazed. Rather, he figured out how it could be done—and did it.

Qwest’s founder, Denver oil baron Philip Anschutz, gambled against conventional wisdom by laying nearly nine hundred thousand miles of fiber-optic cable, building bandwidth at a time when experts said it would not be needed. Now, with data traffic quintupling every year and the competition scrambling to catch up, Qwest has a clear lead.

With the capacity to transmit 31 million phone calls simultaneously, Qwest needed customers, and Nacchio set out to find them. Initially at least, he bought them in a spectacular series of acquisitions, primarily using other people’s money and his own soaring stock price to swallow up much bigger companies.

In 1993, Amazon.com didn’t exist. Less than seven years later, it ranked 17 on my list of the one hundred new market leaders. Its aspirations are enormous. As CEO Jeff Bezos told Business Week magazine, “We want to build a place where people can find and discover anything they might want to buy online.” Books and music were only the beginning. In short order, the Internet retailer has expanded into clothing, collectibles, electronics, photography, and a myriad of other product categories. On-line auctions and referrals to other merchants are among the latest initiatives. Amazon.com is in a super hurry to cultivate customers and put together an efficiently scaled infrastructure. With expenditures amounting to $1.50 for every dollar of sales it brings in, its efforts certainly amount to an audacious bet on the future.

At number 2, General Electric was the highest-ranking of the old blue-chip companies, in large part because it is as bold, if not bolder, than any newcomer. Just listen to the language that Jack Welch used in a recent speech: “Reality in the Internet world means moving at a fanatical, maniacal pace everywhere in GE!” As anyone who is familiar with the company can tell you, these aren’t empty words: GE is surging ahead at Internet speed.

Again, the market leaders‘ boldness should not be confused with recklessness. Yet their willingness to place much larger bets in order to pursue outsized opportunities represents a fundamentally different approach to life. They have much more than grandiose fantasies; the new market leaders have the capacity to make their visions come true even if others think them ludicrous.

A decade ago, Qwest’s meteoric rise would have been considered impossible. Five years ago, anyone who predicted that Amazon.com’s market capitalization would surpass that of Caterpillar, Volkswagen AG, or Campbell Soup Company would have been told, “You’re out of your mind.”

Today, business works on a totally different scale with different standards and different expectations of performance. The horizons are boundless, the pace is quicker, the growth is bigger— and its essence is boldness.

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This entry was posted on Wednesday, February 13th, 2008 at 5:05 pm and is filed under Business Management, Marketing, Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.