Class Trips

Sorry -- no blogging last week. We were on vacation in Vienna and Salzburg (for Mozart's 250th birthday) and there just wasn't time. (See the photos here.)

Speaking of class trips, while away I thought more about Geoffrey Moore's "Best In Class Is a Sucker Bet" post. I think what bothers me is the use of the word "sucker." I completely get the problem of being the class leader in a class that's about to be rendered obsolete by a class killer. In fact, I would say if you are "beyond the class" you had better be killer.

Jeff's point is that class leadership is always a bad goal as an investment strategy. But a goal is not a strategy. Dell is class leading because it can set the benchmark price for commodity PCs. Setting the benchmark price is an objective. Process innovation is a strategy. The test is not whether the goal is high enough. (Does it matter if Google's founders aspired to reshape the web?) Everyone wants sustainable competitve advantage -- the bigger and more sustainable the better. Having a goal isn't hard. What's hard is strategy, tactics, and ability to execute -- and, yes, picking the right objectives.

But what about companies that aren't killers? Should we call investors and managers in those companies suckers? Maybe they just do it better, faster, cheaper -- and with less risk -- than companies who settle for nothing less than the Next Big Thing. Maybe the suckers just work harder; mine a more lucrative niche, have more experience; take more pride in their work. And as a result maybe they charge more, have premium brand equity, and have access to customers and resources that competitors lack. Maybe they have a more innate sense of what customers want; or maybe they're just lucky.