Strategic Secrecy and Excellence

[August Jackson]

I always look forward to Ken Sawka and company's "Looking Out" newsletter in my e-mail in-box. The articles are usually very challenging and expand my own understanding of the relevance of curren business and political happenings to competitive intelligence. In this morning's newsletter Ken poses a question about one of my favorite companies, Apple. Speaking of Apple's track record for secrecy when the cultural trend is pulling in the direction of openness and transparency: Is Apple's obsession with secrecy good business?

This article resonates with me because very recently I finished reading the Jeff Jarvis book What Would Google Do. This book touches on themes of openness and transparency and lays out a set of rules for how to be Googley and succeed in our modern business environment that favors "ecosystems" and "platforms" over stand-alone companies. A great video summary of the book is at readitfor.me.

In WWGD Jarvis puts Apple forward as the unGoogle and asks how it is Apple can break all of the rules of being a modern technology company and still be as successful as they are. It is clear that Apple are playing a clever game of chess about when to be transparent and when to be completely opaque. A few examples of Apple's openness: adoption of the USB port for peripheral connectivity, support for the MP3 file format on the iPod (Sony chose to support only proprietary music formats and effectively ceded the portable music market they had owned for nearly two decades) and what I consider to be deliberate "mistakes" in updating the code of Apple web pages to pique interest in pending product releases.

Jarvis makes the case that Apple get away with this because their products and services are truly excellent. Early this week Jarvis posted an entry to his blog that named The E.... The Economist is able to break almost all of the rules of modern news business (charging for on-line content, no writer bylines) and is much better positioned than most other news media properties to innovate into the new age that is clearly upon us. Apple and The Economist can be rule breakers because, Jarvis posits, the products they deliver are so clearly excellent and in-line with what customers really want.

Part of the key to effective strategic secrecy and overall success in the marketplace is excellence in the eyes of your customers. While this seems self-evident, how many companies and governments have we seen that don't deliver quality products or services yet remain opaque? How do we regard their secrecy? I tend to regard it as a sign of poor processes and a clear misunderstanding or disregard for the needs of their customers or constituents, indications of either laziness or self-interest.

Many executives, I am afraid, will take the wrong lesson away from Apple's strategic secrecy and put the cart before the horse. "Now we're going to be cagey about our widgets and then the cash will just come rolling in!" The freedom to be opaque must be earned.

As always, I am interested in the thoughts of the community here assembled. How do you perceive strategic secrecy and excellence as competitive differentiators? What criteria do you believe (if any) are required before a company gets to break the rules in its industry? What are other companies that are delivering excellence or applying strategic secrecy? Can you have the latter without the former?

[Arik Johnson]

Nice post August! I think it's possible for substantially any company to "break the rules"; the firm simply needs to understand which information to release and which to keep secret.

For example, Apple's product releases have become a deliberate exercise in opaque anticipation-building. Furthermore the secrecy surrounding which features and benefits new products will convey to customers often flies in the face of clearly articulated customer wants. iPhone 3.0 for example took YEARS to get us simple copy-and-paste (which I used this past weekend no fewer than a couple of dozen times and it significantly sped up my productivity). Apple was patient in delivering this much-requested value until it was the right time and could be executed with the same level of excellence customers had come to expect from their overall user experience. In the meantime, the rumor mill fired up every time an update was announced as to which features the next OS would have... "would there finally be copy-and-paste, or tethering or video support?!"

You get the idea I'm sure: Apple is selectively transparent with its release of product information so as to create artificially pent-up demand for features everyone knows will come eventually. And that's my point: information asymmetries are no longer the basis of competitive advantage - in an Intelligence 2.0 world, asymmetric interpretation is what really matters.

[Vivek Raghuvanshi]

Hi August,

Strategic Secrecy's spinoff is product / service Excellence.

Whether we go in for a :

1. Broad Differentiation Strategy or
2. Best Cost Strategy or
3. Focussed Differentiation Strategy

we need to remember that our "Customer Acquisition Strategy" should keep in mind the "Customer Retention Strategy".

For the "Ladder of Loyalty" to work ie getting a Customer to become Advocate of our product and services, we have to offer Product / Service Excellence.

In the "Battle for Positioning" the product / service, without Excellence being the USP, we cannot work on our "Best Cost Strategic Option" or "Broad Differentiation Option" or "Focussed Differentiation Strategy"

Name of the Game:- Managing Consumer / Market Perception