Portfolio of Strategies in the Internet: Lessons from Bill Gates.Part 2

Strategy:

A strategy is a long term plan of action designed to achieve a particular goal. Strategy is differentiated from tactics, or immediate actions, with resources at hand by its nature of being extensively premeditated, and often practically rehearsed.

In the last post we saw how Bill Gates used a Portfolio of Strategies(henceforth called PoS) to remove some unnecessary uncertainties from the market. Today, we will extend and innovate on the PoS strategy in relation to internet marketing.

There are clear identifiable steps to deploy PoS strategy. And they can be roughly classified in the following manner:

1. Identify a global aim. First you have to identify the common meeting point where you want to go with your PoS.For example, the global aim of Microsoft was to be the leading PC software company. Each strategy in the PoS was achieving this common goal.
2. Contextualize your PoS. Just identifying a goal is not enough. Next comes putting your PoS in a context. Contextualizing mandates setting limitations.Let’s say your global aim is to make money through blogging, then contextualizing the PoS would amount to,for example, identifying that you are not going to make money through blogging by writing about gadgets because you are not passionate about gadgets hence you can’t write good contents about it. It is all well and good to believe in yourself, but it is imperative to set limitations and be realistic. Or, for example you can identify that your context is to make money through blogging by making a blog network.That is contextualizing on your global aim of making money through blogging.
3. Make a Portfolio. Next comes actually listing down the possible strategies which you will experiment with in order to achieve your global aim,just like Bill Gates did in his PoS. The important thing to remember is that you will not follow all the strategies in PoS till the end. You are listing down the strategies to test.What is our aim if we are not going to complete every strategy?We will see soon.
4. Create Differentiation Parameters. Once you have made a portfolio, it is time to create differentiation criteria/parameters to weed out the loser strategies. You have to ask: What pass and fail criteria can I apply to select the winning strategies and get rid of the losing strategies? It is important that you have a very definite pass and fail criteria. For example, one criteria could be that you will strike out any strategy which does not give you a particular ROI(it should be fixed number or a range). And also determine after what time you will evaluate the strategies.
5. Amplify the winning strategies. Once you have evaluated the strategies against clear differentiation parameter, you have to invest more on the winning strategies and decrease your activity that are not fulfilling your goal.
6. Refine and repeat. Once you have amplified the winning strategies, fine tune them further so that they give the optimal output. Keep milking the winning strategies. Then add a few more strategies to fill up the vacant seats of the losing strategies. Note that you should introduce two kinds of strategies to add in the empty slots. The first kind should be modifications of the already successful strategies. And the second type should be totally new, which are far removed from the already successful strategies. Tune the relative number with hit and trial, though the best combination occurs where similar strategies are about two times more than the totally new ones. Repeat the process from (1) to (6).

Note that Gates followed PoS despite severe constraints on resources. Having an internet PoS is even easier, so there is even less reason not to follow it.

The reason for the success of PoS is very simple, but often overlooked:open market applies PoS all the time. The market wins, and that is because PoS is played as an emergent phenomena in it. The invisible hands of the market play PoS in variety of ways, to co-evolve various strategies which win over time. Applying PoS as your strategy mirrors the market. You cannot beat the market, but you can go almost neck to neck with it. Since markets are inherently unpredictable, especially in the internet where things change so fast, PoS is our most optimum bet.

Even though betting on a single strategy may seem heroic and visionary, it is highly sub-optimal. PoS is the nearest thing you can do if you want to have success as your strategic goal.

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Related Posts:

• February 21, 2009 -- Warming up to social media and Network Theory: 9 links.
• February 2, 2009 -- Portfolio of Strategies in the Internet: Lessons from Bill Gates.Part 1

Tags: Bill Gates, Marketing, Microsoft, Strategy, Uncertainty