The most successful business people are monopolists, so why aren’t you?
I once wrote a book called The 5Secrets of Business Success about what I consider to be the five most important things you need to do to build and sustain a successful business. My 5Secrets are very profound and difficult to do, but on first reading many people think that they are so obvious that they not only understand them but they do them too (CLICK HERE to download a FREE copy of my 5Secrets). Sadly that is just not the case. These secrets are hidden in plain sight; a bit like how Carlos Slim became quite so rich.
The second of my 5Secrets is to Stay Different; that’s a pretty simple idea right? No, it really isn’t, as most businesses aren’t different enough; they put too little effort into being different in the first place, let alone sustaining it, and so they fade away as the world changes around them. The most successful businesses generate superior economic returns because no one offers exactly what they do to their audience, they effectively monopolise the supply of a certain bundle of benefits to their target customers. You can only buy an iPod from Apple and a Big Mac from McDonalds. Of course, there are many near substitutes for both, but you can’t get exactly the same thing, each brand offers its own compelling proposition that can only be satisfied by it and it alone. Apple is monopolists in the iPod market. If that doesn’t make sense to you just think why people buy iPod’s and where else they can get that exact bundle of benefits: nowhere.
Of course the term “monopolist” normally refers to cruder examples of market dominance, often based on financial muscle, but I find it a very useful way to think of competitive strategy and the importance of maintaining the uniqueness of your proposition that others just can’t copy. It should be your principle focus, always to maintain this critical value generating difference, because it should define your brand and what it stands for. This sort of monopoly creates wealth and that’s what keeps the lights on, but what happens when monopolists just have too much power?
Well, the new Mexican government has just announced a bold set of policies, which will attempt to stimulate competition and accelerate economic growth, by tackling the huge monopolistic tendencies of Carlos Slim, who has now been the world’s richest man for some years. Although TV and mobile telephony are his most well known business interests, Mr Slim has shown an exemplary ability to find hidden investment opportunities and to dominate many markets, but the new Mexican government want to see this change so that others can have a go and, they believe, Mexico will then become a more prosperous country.
The underlying and somewhat contradictory argument seems to be that whilst monopoly drives wealth and that is a good thing, too much market power is a bad thing, and that is why we live in such a regulated world. At the end of the day some folk are just better able to exploit market opportunities than others and that, in the long term, does not a healthy economy make. Mr Slim’s market domination has of course more to do with his vast economic power, that prevents competitors emerging to fight with a distinctive but different offering; very often dominate players in any sector have similar power, just look how relatively successful BT were, during the 1990’s, at limiting the development of competitive fixed-line telephony in the UK: I know because I was foolish enough to challenge them!
If you choose to take on a powerful commercial competitor like Mr Slim, or BT for that matter, you will only have limited success if they decide to stop you. Richard Branson did well at penetrating British Airways’ trans-Atlantic monopoly, but few of us have his armoury to do battle with. The most successful small businesses find niches that the big brutes of the commercial world aren’t interested in, niches where they can become monopolists, of a sort, all on their own. That striving for monopoly often leads to wealth and happiness need be a secret no more.
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