In one my previous posts, I talked about how conglomerates are returning in the form of technology giants like Google, and are incredibly profitable even though they do not buy in to the idea of “The Coherence Premium”. In this post, I am going to extend the idea by discussing about Facebook.
Facebook recently offered $3 billion for Snapchat, a mobile photo messaging service widely popular with teens and young adults. Snapchat is unique in that the text or photos sent disappear after a few seconds, and these can be sent to a select group in the network. Facebook has traditionally been popular for posts that are broadcast to a large audience, but the younger generation has often got into trouble because of this and is rather wary of posting material which may have any risqué connotations.
One of Facebook’s core competencies is to create this large network of friends using very intelligent algorithms to “suggest” people you may know. It has tried to create a “life album” kind of approach with its timeline and photos features. Its photos functionality became quite popular so it made sense when it bought Instagram, which is also about broadcasting pictures to a large audience. The Snapchat offer was not leveraging this core competency, but was about increased engagement within an audience which followed a different trend, even it is among a smaller number of eyeballs for any given post.
Facebook is slowly losing relevance with the younger crowd and it is essential for it to adapt to changing trends and audiences. In “The Fluid Core”, author Haydn Shaughnessy, talks about the following guidelines for thinking beyond the core competency:
- A fluid core that is more important than sticking to the few coherent competencies.
- Radical adjacency of pursuing new products or markets which are adjacent to the existing ones.
- New service infrastructure in cloud and mobile to adapt to new innovation paradigms.
- Drivers and strategies for upcoming trends like BYOD.
- Externalization which can better utilize new labor systems in the long term.
And suddenly Facebook's move to acquire newer companies outside their core competencies makes much more sense. Wouldn’t Facebook, Google, and other such “innovative” technology companies, benefit more from guidelines on maintaining fluid core competencies than a rigid and coherent set of competencies?