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Globalization’s Competitive Landscape

August 10, 2006


I started Enterra Solutions because I saw companies struggling with tectonic shifts in the competitive environment that emerged at the beginning of this century. Those changes included changes in the security environment, the regulatory environment, and the competitive environment. The Financial Times recently examined the fierce stuggle taking place in the competitive world of Internet search engines [“Survivor’s quest for a future,” by Richard Waters, 31 July 2006]. The combatants in this struggle include Google, Microsoft, Yahoo, and Ask.com. The focus of the story was Ask.com, which started life as Ask Jeeves. The article notes that it has managed to survive when other search engine companies like Lycos, Alta Vista, and HotBot have fallen by the wayside. For viewers of America television, Ask.com has raised its profile with the new reality show Treasure Hunters, where participants are allowed to get help on their laptops using the Ask.com search engine. Being a British paper, however, the Financial Times discusses other strategies Ask.com has used to build its market share.

Ask.com has shown a certain level of resiliency simply by surviving when similar companies have not. All of the other surviving competitors mentioned above, however, are behemoths by comparison. That caused the Financial Times to examine how the company survived thus far and how it plans to survive in the future. Ask.com received a financial shot in the arm when it was purchased by InterActive Corp, the internet services and home shopping company run by Barry Diller. Like most smart Davids taking on much bigger Goliaths, Ask.com selected an asymmetric strategy. As the article describes it:

The search engine faces challenges familiar to any company looking to take on far bigger and better established competitors. For Ask.com, though, these are made more acute by the technological demands of the field. Advanced search technology requires both brains and brawn: Google, for instance, can throw ranks of PhDs at the problem, along with massive computing power. The answer, according to Ask.com, is to make a virtue of its size, its brand and its distinctive approach to technology. Even in a market where Google, Microsoft and Yahoo hog the headlines, there may be room for something different.

In other words, Ask.com plans on thriving by not taking on the big boys head-to-head, but by securing a unique niche based on a different approach to searching the Web. “It’s not a question of being better – it’s just different,” adds Rahul Lahiri, head of product management. “It isn’t a zero-sum game.”

As I see it, this is the correct use of an asymmetric strategy. When we see non-state actors using asymmetric strategies to challenge the U.S. or other western powers, they generally understand that they have opted for a lose-lose scenario (I’m going to hurt the big guy even if it kills me). Ask.com is looking for an approach where everyone can continue to win. Smart. Differentiation is the holy grail that most businesses look for in order to separate themselves from the competition. The company’s first attempt to differentiate itself (and the reason it started life as Ask Jeeves) was to use “human editors to post answers to the most common questions asked on the internet. In spite of promising instant answers to users’ questions, it could not deal with the wide range of queries that came its way.”

The attempt to answer natural language questions was enough differentiation to keep the company going. The article notes that Ask.com entered the search engine business when it bought:

Teoma, a search engine with just seven employees. Based on a Pentagon-funded research project at Rutgers University in New Jersey, Teoma was the brainchild of Apostolos Gerasoulis, a Greek-born computer scientist. With a different technological starting point, it is possible to create a differentiated search engine, says Mr Gerasoulis. “You can’t copy and win – you have to innovate.”

The innovations that Gerasoulis talks about include a new way of clustering search results and providing preview windows of web pages. In other words, Ask.com is trying to differentiate itself by making its search engine more user friendly. It obviously can’t claim any better content than other search engines (after all, they all search basically the same Web pages). The article reports that in trying “to out-Google Google by trying to build a search engine with a more useful user interface, Ask.com has the benefit of an understanding parent. InterActive Corp allowed the company recently to reduce the amount of advertising on each search page in order to improve the user experience.”

While this represents out-of-the-box, even counter-intuitive, thinking, it also reflects a continuation of the asymmetric strategy the company adopted to go against the giants. The article notes that Microsoft is going to integrate its search engine software into its next version of desktop software and Google is trying to pre-load search software onto new Dell computers. Ask.com can’t out-power the powerhouses so it is relying on making its experience so much more pleasant and useful that sophisticated surfers will willingly switch to its product in spite of what comes loaded on their PCs. The article concludes by describing the sophisticated search techniques used by Ask.com:

Not all search engines are created equal. Like Google’s PageRank algorithm, Ask.com’s technology relies on analysing the patterns of hyperlinks between web pages to identify those that are likely to be most useful. It takes a different approach to weighting pages, however, aiming to single out the real experts and authorities on any particular subject rather than finding the closest match to a particular word or phrase. That potentially makes it more suitable for a user who is researching ideas or concepts on the web – though even its supporters concede that it is not as effective at answering the narrowly-focused queries that make up much of the activity on search engines. Based on HITS (Hyperlink-Induced Topic Search), an idea developed by Cornell University computer science professor Jon Kleinberg in the late 1990s, the technique tries to uncover both the best authorities (pages that contain the most useful information) and the best “hubs” (the pages with the most links to useful information) on any given subject. To do that, the search engine looks for the pages with the most links to them (authorities) and the ones with most links to other useful sites (hubs). It begins with an estimate, and then runs a rapid series of iterative calculations as it narrows in on a more accurate approximation. The biggest challenge of this technique is to carry out the massive computational demands fast enough to make it practical in a search engine, says Mr Gerasoulis, who in his academic career was an expert in parallel computing. The technique naturally uncovers “clusters” of connected web pages, tightly linked groups around a particular subject or idea. Alongside its list of search results, Ask presents a series of suggested clusters to make it easier to narrow in on a subject. A search on “Jaguar”, for instance, suggests different groupings based on the car and the cat.

I’m not prescient enough to know whether Ask.com’s asymmetric strategy will ultimately succeed, but I do know that they are thinking horizontally and adopting strategies that give them the best possible chance of success. They have learned lessons that all resilient enterprises must learn, that the competitive landscape generated by globalization offers both challenges and opportunities. Learning to avoid the challenges and embrace the opportunities depends on creative leaders and innovative employees.

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