… and “Out-Understand” the Competition

How Bezos, Hastings, Jobs, and Greene Mastered the Art of Market Insight

Concept in brief.

True genius lies not in clever strategies but in a deep understanding of market dynamics, technology, and cultural trends. Successful leaders like Jeff Bezos, Reed Hastings, Steve Jobs, and Diane Greene achieved greatness by listening to the market and aligning their products with the currents of change rather than trying to outsmart the competition. If a strategy is contextual or complex, it’s not wisdom; it’s not timeless. Instead, it’s a hubristic attempt to outsmart the competition when you need to focus on out-understanding them.

Foundation.

1. Wisdom is timeless and situational (not contextual). It is not based on clever product approaches or outsmarting competitors to some market position.
2. Believing you are smarter than the competition can lead to failure. Smarts are not infallible; it’s not like wisdom. One shift can lead to catastrophic failure.
3. Success comes from understanding. Success comes from understanding market dynamics, technology, and cultural trends.
4. Great product leaders are curious. They ask, “What is the fundamental truth about the market and where it’s headed?”¹ Innovators possess discovery skills such as observing, questioning, and networking with diverse people.
5. Great product leaders swim with the current. Swimming with the current and aligning products with market understanding leads to success while trying to outsmart the competition can lead to missteps.

Viewpoint.

Wisdom is timeless and situational, not based on clever product approaches or outsmarting competitors. The belief in your genius can lead to catastrophic failure. Uber thrived when it aligned itself with where the market was heading; it made its brand toxic when it focused on outsmarting the competition.

Success comes from understanding market dynamics, technology, and cultural trends deeply. In the book Little Bets, Peter Sims summarizes research on innovators from noninnovators:

[There are] several “patterns of action” or “discovery skills” that distinguished the innovators from the noninnovators, which […] included observing, questioning, and networking with people from diverse backgrounds. “You might summarize all of the skills we’ve noted in one word: ‘inquisitiveness.’ ”

Sims, Peter. Little Bets: How Breakthrough Ideas Emerge from Small Discoveries (p. 107). Free Press. Kindle Edition.

True genius, the kind that wins markets, isn’t found in a clever strategy. Instead, it’s found in a deep understanding, so connected to the marketplace it can’t be wrong.

Wisdom is always wise. It does not change. It is not clever. It is not complicated. Wisdom comes from knowing the truth of things. If a strategy is only successful in a narrow context, it’s most likely not built on timeless principles, so I don’t write about it nor clever product approaches or outsmarting the competition.

Leaders like Bezos, Hastings, Jobs, and Greene understood the truth of their markets. They saw where things were going.

Jeff Bezos (Amazon) knew the internet would grow, leading to more buying and selling. He also knew books were a good place to start because the long-tail book had as much value to its reader as a best seller had to theirs, possibly more, and a physical store could never serve that customer.

Reed Hastings (Netflix) understood that machine learning technology could give people smarter recommendations and that video would eventually move to digital.

Steve Jobs (Apple, Pixar) knew that people cared about a product experience from start to finish. He knew that making people put the pieces together would always result in a product that didn’t meet the needs of the customer groups.

Diane Greene (VMWare) understood that tying one operating system to one physical computer didn’t match the device’s capabilities or businesses’ actual needs.

To be a great leader, you must listen well. Not just to your customers and employees with empathy. You must listen to the market as well. Product solution strategist Indi Young calls this “data science that listens.”² When you understand deeply, you understand how the world is changing, and when you follow your understanding with conviction, you capture opportunities your competitors, who are focused on tactics, miss.³

You can win through understanding because most companies don’t lead with understanding; they try to compete.

The timeless approach is to never try and be cleverer than the competition. Doing so leads you to chase taillights instead of customers.

Microsoft tried to outsmart competitors by bundling browser technology into its operating system. It worked until it didn’t. Instead, it opened the door to products like Firefox and Google Chrome, which understood that the web needed freely available, standards-based web browsers.

On the other hand, Google’s Gmail was a product built on understanding the value of email and the need for greater storage. At the same time, an older reader will remember Google+ as a product that tried to outsmart the competition by leveraging Google’s scale. It was a product that didn’t understand where the market was headed and ultimately failed.

Listen to the world around you.

Swim with the current of change.

Don’t try to outsmart the competition in your search for a better opportunity. Instead, lean deeply into the market and listen. Out-understand them.

Put it in practice.

1. What is the market missing? What valuable user groups need to be heard?
2. Where is the market headed?
3. What is the magic wand your customers would wave? And what boundary is getting in the way?
4. What does it mean to align your product where you understand the market is heading? (Remember this isn’t a race against competitors–it’s alignment with the market and winning through how strongly you’re aligned)
5. Common areas for “out-understanding” the competition: time horizons (is the market and solutions going to develop faster or slower than expected); feature sets (are all features equal or is one feature set far more valuable than others); integration (are customers ready for an unbundled solution, or a bundled solution); meaning (has the meaning, the intended job behind the market shifted in some way, or should it).

Timeless💡: Capture these insights and circulate them in Product Strategy 3P.

Books.

Some of my favorite books on gaining a deep understanding of the market.

• Overcrowded, Roberto Verganti. Link (Amazon)
• Competing Against Luck, Clayton M. Christensen, Taddy Hall, Karen Dillon and David S. Duncan. Link (Amazon)
• Mental Models, Indi Young. Link (Amazon)
• Uncommon Service, Frances Frei and Anne Morriss. Link (Amazon)

Footnotes.