#1 - When a company's biggest strength becomes its biggest weakness
Something I’ve been pondering lately is how often it seems fast-growing technology companies run into an intriguing dilemma: as the company scales, their biggest strength ultimately becomes their biggest weakness and often poses the most acute threat to their long-term success.
This particular thought was prompted the other day when I observed a teenager, in broad daylight, throw an electric scooter off a bridge into a creek below. A quick bit of Googling suggests this is not uncommon practice.
What a number of years ago was the scooter companies biggest strength - that you could pick up and drop off the scooters anywhere - has ultimately turned into one of their biggest sources of criticism. For a scooter company, large numbers of scooters are now at the bottom of lakes, in bushes or even destroyed lying on the street. This is clearly a bad thing for scooter companies: it surely hurts their profitability (unnecessary “fetch and repair” costs), it poses environmental risks (given the lifecycle of a scooter subject to this vandalism is very short), it damages their brand reputation (it cannot be positive to see scooters lying in a heap on a street corner) and even if I’m unsure I agree, many suggest these dumped scooters pose a safety risk for commuters walking on footpaths.
Scooter companies all over the globe are now being heavily criticised and risk government regulation if they can not sort out this “ride and dump” issue.
It’s not hard to spot similar dilemmas facing some of the world’s biggest tech companies:
Twitter’s was once heralded as a platform for global free speech (remember Twitter’s role in the Arab Spring?), but is now being heavily criticised for facilitating hate speech, racism and actual crime IRL.
The same could be said of Facebook whose mission is to “bring the world closer together”. Whilst for years it seemed to hold true, the “Fake News” movement and controversy surrounding Facebook and the 2016 US election suggests that Facebook is struggling to live up to that mission and has become more divisive than ever.
I want to be clear: the above is not a direct criticism of these companies, in fact I’m a happy customer of AirBNB, use Twitter daily and like most - am not overly upset about being locked into a number of Facebook services like WhatsApp, Messenger etc.
However, I do find this an interesting phenomenon, that is, how often a set of strengths and unique competitive advantages can turn on a company and becomes one of its biggest threats.
I do think though, that for tech companies, this situation is inevitable. Today, it seems in vogue to criticise tech companies, and of course plenty of it is well warranted. In addition, the way in which many tech companies get big - by exploiting gaps in the market, often creates clear “winners & losers”, which is sure to attract negative PR.
Whether or not these companies will overcome these challenges, time will tell, but I think there is a learning here for fast-growing tech companies - to be aware and mindful of how their strengths and competitive advantages will play out over time. The companies who can stay a few steps ahead should be well served to ride out the inevitable storm that will come their way.
Lastly (and importantly): I don’t claim to know the answer or how each company should best tackle this problem set. This post is more about highlighting the dilemma itself.
Perhaps the “solution” and examples of companies who’ve succeeded here is a topic for further investigation and a follow up post.