With good intentions, and also a good dose of Facebook business strategy to expand its base of users, Mark Zuckerberg has struck out to promote Free Basics, a free limited Internet for the poor in less developed countries sponsored by Facebook and its local telecommunications partners. While on the face of it Free Basics would seem to have merit, Zuckerberg has run into a wall of opposition. On close inspection of the details, Facebook’s problem, despite all of its global corporate sophistication, appears to be naïveté about the foreign markets it is trying to enter. It is possible to argue that Zuckerberg and Facebook have the best of intentions and sound arguments. But the best of intentions and sound arguments mean nothing if the key element lacking is a clear understanding of the current foreign market, and the crucial need to adapt to it or fail. Zuckerberg could have looked no further back than 2013 for clues to why he has failed.
LinkedIn shares yesterday plummeted precipitously after the company announced poorer than expected results, and downgraded prospects for the remainder of the year. Looking beyond the downgraded forecast and the costs associated with the $1.5 Billion acquisition of lynda.com, some analysts scrutinizing the press release, noted that there was no growth reported in the user base of “over 350 million users”, despite moves into China and other markets. Premium user revenue grew significantly but that did not come near to offsetting the total revenue number. Revenue and number of users are the two numbers followed most closely by investment analysts.
LinkedIn’s recent acquisitions have been noted as a LinkedIn strategy for compensating for flat overall user growth, and for diversifying into new markets to augment growth.
I am a strong believer in strategic focus, however I have also personally experienced a case where an “openness” to opportunism turned the enterprise from a pedestrian company to a Silicon Valley legend. Ascend Communications was “focused” on ISDN based video conferencing with an OEM agreement with AT&T. However, AT&T came to Ascend and asked if it could solve a much bigger problem…dial-up access to the Internet over the voice switches was overloading them. 90 days later, Ascend delivered the solution, and the rest is Silicon Valley legend. The Ascend MAX became the global industry standard for dial-up Internet access, and the company the most successful SV company in 1996. So it always pays to keep your eyes and ears open.
Culture Eats Strategy For Breakfast Next Story Reblogged from TechCrunch Editor’s note: Bill Aulet is the managing […]
In yet another sign that applying monetary fines to corporations is nothing more than adding a “cost of […]
My undergraduate and graduate students may find this an interesting topic for discussion and debate. http://www.economist.com/news/business/21567062-pursuit-shareholder-value-attracting-criticismnot-all-it-foolish-taking-long Reading this […]