The Duality Of Strength & Weakness in Business

Duality = anything and everything holds opposing truths.

The 🌎 is both a gigantic body and a smote of dust.

Business is full of dualities. Strength can be a weakness. Weakness can be a strength.

Let’s dig in…

To understand the duality of strength & weakness better let us turn to that famous story of David and Goliath.

Goliath was giant, trained in the arts of traditional combat while David was a common shepherd trained in protecting his flock from wild animals.

At first glance, the conclusion seems obvious - Goliath was as sure to win as the sun was to rise in the east. He had formidable advantages - physical size, strength, years of training, strong armor, weapons of his choice, etcetera.

David just had a sling and a few pebbles. But David won.

Goliath was built and trained for physical confrontation, while David - given his opponents were wild animals like lions who threatened his flock - was used to battling from the distance.

In the end, it was the very ‘strength’ of Goliath that became his greatest weakness. Goliath’s size meant he was an easy target for a crack shot like David.

His armor and weapons slowed him down which made it easier for someone who practiced against animals far quicker.

His deep training for hand combat left him ill-equipped to handle the tiny aerial missile that was a pebble.

Now just replace David and Goliath with Amazon and Walmart respectively.

Walmart vs Amazon

Walmart is perhaps one of the greatest organizations of the 20th century, and Sam Walton has been repeatedly touted by his peers as the greatest retailer who ever lived. Walmart was the outcome of a perfect lollapallooza - an exceptional team led by an intelligent fanatic learning machine who went around decimating rivals.

In the process, Walmart became the largest physical retailer by far in the world with sales growing into hundreds of billions of dollars.

And Amazon came and overtook Walmart in less than two decades. It was not supposed to happen.

And the reason here again was the greatest strength of Walmart - which was its large size backed by its sophisticated systems and extensive physical distribution network.

Given its origins and evolution as an offline retailer, Walmart’s whole organization was designed to maximize the efficiency in physical retail. The system conditioned for so many years to dominate the physical space could not pivot quickly enough to counter the online competitors.

The stupendous success in their field of choice itself sowed seeds of their eventual weakening.

Goodbye Britannica Encyclopedia

This story is also paralleled in the rise and fall of Britannica Encyclopedia.

Owning a Britannica was a mark of prestige in the past, it signified wisdom and the books were just beautiful. They were at once storehouses of knowledge and objects of beauty.

The business changed hands a couple of times in the last century but grew steadily to become the most prestigious of the encyclopedias in the world.

The brand was extremely strong (there were brand extensions like atlases and year books), and the organization had shrewdly built a formidable direct sales organization that targeted the aspirations of middle-income families for their children.

The content was updated every four-five years and the direct sales team earned fat commissions by selling the copies to parents who wanted to gift knowledge to their children. The company effectively dominated the market.

It would have been a dream business to own - a 200 year brand, generous margins, remarkable sales force and steady growth. But it pretty much died within a decade. And one need look no farther than its strength to find its weakness.

The strengths that led to the weakness here were the physical nature of their product and their direct sales force.

CD-ROMs decimated the market. While Britannica sold physical copies for $1,500-$2,200 per set (depending on the quality of the binding), CD-ROMs sold for $50-$70.

That was not even the worst part, many CDs were in fact given away for free to promote sales of computers and peripherals. The marginal manufacturing cost of a CD was $1. The marginal manufacturing cost of a Britannica book was $250.

But it gets worse. When Britannica tried selling its own CDs (at a price much higher than the competitors’) it faced a revolt from its biggest strength - its direct sales force.

You see, the salesperson earned a commission of $500-$600 on the printed product. CD-ROMs would have to be sold through a completely different channel and this would eat into their potential commissions.

And so, to appease the sales force, they decided to bundle the CD with the printed product for free. If a customer wanted to buy the CD-ROM alone, they could pay $1,000. We can all guess the outcome to that strategy.

There are many more examples like the above where the venerable became the vulnerable.

Finding Strength In Weakness

And they lead to an interesting thought - if the moat of a business is akin to a chain, then it is only as strong as its weakest strength.

So, then, what is the characteristic that most lends to durability of a business? It’s the willingness and ability to adapt.

As the quote goes, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”

The past has already come and gone. Strength ebbs and flows like water on the beach. Creative, thoughtful leaders don’t stay weak for long. They adapt to the quickly changing tempo of business and make it look effortless.

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