What are the death magnets when building a business?
I finished Guy Kawasaki’s book Rules for Revolutionaries yesterday, and there is one chapter in the book I wanted to highlight because it summarizes some common mistakes when building a business.
Kawasaki calls these mistakes death magnets, the “traditional habits and patterns of thinking that seduce companies”. Here are his top ten:
- picking low-hanging fruit – make sure your initial market focus fits not those most rabid for your product (the early adopters who will nitpick), but those who are strategically viable.
- just sucking less – don’t be happy with just sucking less than your competitors, because you will remain open to a new market entrant.
- overemphasizing budget – remember to take opportunities when they come even if it costs more than you wish.
- overemphasizing consistency – don’t fall into cycles and patterns just because that’s they way it has been before.
- attacking too many markets at once – this one is so awesome it gets a quote: “You have to pay your dues by knocking down barriers and dominating niche markets one at a time.”
- diluting your brand – don’t waste any brand recognition by going in an odd direction.
- outsourcing – don’t outsource core competencies.
- mimicking the big guys – don’t copy processes and activities just because a big competitor does it.
- lowering prices – gaining market share, killing competitors, increasing profits on volume… none of these are a guarantee.
- assuming that “best product wins” – one of the greatest business lessons ever
The book was written in 1999, so it’s great to see how applicable these points are today. I wonder what Guy Kawasaki would say now about #9. The freemium model emphasizes the 0 price point as a way to gain market share (and mind share).