Howard Stern, Open Situation, and Microsoft

Howard Stern is moving to Sirius Radio where the FCC cannot regulate him. While I don't really care about Stern all that much, this is a good opporutnity to continue my examination of the nine classical strategic situations, in this case, the "open" situation. What does this have to do with Microsoft? Read on. The "open" situation is like a race, or more precisely, like a landrush,where there is plenty of territory available and everyone is rushing to get to the best places first. Unregulated radio, like all open situations, is virgin territory, fresh for the plucking. Stern may not know much about virgins, but he is well-positioned to do some serious plucking as the first "name" star to stake out a claim. I guess his $100 million dollar contract already qualifies as some serious plucking. Today, technology constantly opens new territory, from the personal computer, to the Internet, to podcasting. (Our first podcastes of lessons on strategy are going up on our site next week, keep tuned.) In open situations, Sun Tzu's strategy teaches that the person that goes the furthest the fastest will win. I don't know how successful Stern will be, but Sirius radio will undoubtably create a number of new stars who are willing to take talk radio into areas, such as non-stop profanity, that regulated radio wasn't willing to go. The challenge of open territory is to must leave yourself well-positioned after the gold-rush is over. All open situations eventually change into something else and, with more direct competition, and when that happens, you need to be in a place that you can defend. The danger in open situations is navigating the transition to a more competitive enviroment, usually a "shared" situation, where partnership matters, or a serious one, where generating income matters. This change, when it comes, demands an almost instant change in approach. Early leaders in open situations tend to keep doing what made them successful, which suddenly stops working. In high tech, Microsoft built their whole business on knocking off early leaders who couldn't make this transition. Remeber how demonant Netscape was as a web browser. Microsoft took that early lead and destroyed it. They did this because they had more and better partners and they didn't need the income from selling browsers as much as they needed the position as market leader. Anyone who knows Microsoft's history can point to a dozen other businesses, which is why I used them so often as an example in my Warrior Class book, at least in early editions. So, where does this leave Howard Stern? The only question is if he can survive the gold rush, going far enough fast enough and fast enough, so that new industry stars don't make him seem like a has-been. If he can keep up, he has the industry relationship and money that his newer competitors do not have. When the open situation starts getting crowded, he will do quite well as the newer faces fad away.