Build a Creative Monopoly With This Plan for Success
Monopoly is a game that most of us played as both children and adults. Also, in school we “learned” that monopolies were all bad. Monopolies were the territory of companies like Standard Oil early in the 20th Century that cornered the market and tyrannically raised prices. As a result the common belief is that all monopolies drive up prices and create an unfair environment for competition.
Monopolies are not always bad. Inside in his insightful book Zero to One, Peter Theil focuses on “Creative Monopolies”. Most of us are taught that our economy is based upon competition. That it is competition that makes economy healthy creates jobs and provides the way forward.
However, if you're going to pursue a new business idea why would you choose an area full of competition? To improve your chances for success, identify an area to build your business where you can have a virtual monopoly. Current examples of creative monopolies would include Twitter, Facebook, Microsoft, Google, Apple and LinkedIn. Each of these examples are technology companies, with only Apple and, more recently, Microsoft making tangible products.
Beyond technology-only companies, there is a great deal of room for creative monopolies. One very well-known product company using technology is Amazon. Amazon is a great company for delivering products directly to people's homes and offices. Other companies that can be looked at as creative monopolies focused on products are include delight of Airbnb, Über, Tesla, Tura.
What the smart business is essentially looking for should be a new idea or product where you can create a virtual monopoly by having the best solution oriented product offered by an excellent company into a market that will deliver enough financial reward to support the required effort.
So if you have a great idea for new company, you may want to pay special attention to the seven questions that Peter Thiel believes every business that would like to monopolize its market must answer. These are:
The Engineering Question - can you create a breakthrough product or technology
The Timing Question - is now the right time
The Monopoly Question - can you get the biggest share of a little market (and then extend and dominate)
The People Question - are the right people on the team
The Distribution Question - can you actually deliver your product
The Durability Question - can you defend your market for 10+ years
The Secret Question - what unique opportunity have you identified
To be fair, there are many companies that are highly successful, that cannot answer each of these questions affirmatively. However, if you cannot answer all seven positively, you are going to fight harder for long term profitability than businesses that can.
Look hard at the questions and see which you can bend your business plan to a positive answer. The more positive answers you can create….the better your odds of success.
If you are a creative monopoly or now, ensure you are operating well if you are going to be successful. Without a creative monopoly, competition defines your business more than your uniqueness and you need to be ready. Facing that challenge directly, will give you the ability to succeed even without a monopoly…but, wouldn't building the next great creative monopoly be big time fun?
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"I think it's wrong that only one company makes the game Monopoly." - Steven Wright