The Importance of Mastering the Basics and Disrupting Network Effects

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Jul 21, 2023

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The Importance of Mastering the Basics and Disrupting Network Effects

In the pursuit of knowledge and success, it's easy to become fixated on advanced concepts and strategies. We crave the cutting-edge, the innovative, and the complex. However, it is often the basics that matter most. No matter the skill or craft, mastery of the performance is built upon mastery of the elemental components.

Scott H Young, in his article "You're Never Too Good for the Basics," emphasizes the significance of returning to the basics. He asserts that we often overlook them not because they are hidden, but because they seem obvious. Yet, it is through a deep understanding and practice of the basics that true mastery can be achieved.

The same principle applies when it comes to disrupting network effects, as explored in the article "How to Disrupt Network Effects." Incumbent networks can be disrupted in a similar fashion to other businesses. Startups create new value propositions and target low-value markets initially, gradually encroaching on the incumbent's market. However, disrupting network effects comes with its own challenges and risks.

One approach to disrupting network effects is by making the incumbent's network redundant while creating a better customer experience. Networks often introduce friction to create a network effect, such as limiting interactions to specific users or sellers. By eliminating these points of friction, startups can dramatically improve the customer experience but at the cost of sacrificing network effects. This approach trades the near-term risk associated with establishing product-market fit for the long-term risk associated with defensibility.

Zoom, for example, attacked Skype by turning its competitive advantage, its network, into a weakness. By allowing its users to call anyone, even without a Zoom account, Zoom quickly overtook Skype. Skype, on the other hand, could only compete with Zoom by abandoning its closed network, which was what made it successful in the first place.

Zillow introduced network effects to the real estate industry by aggregating property listings and connecting agents with buyers. Opendoor disrupted Zillow's network effects by pioneering the iBuyer model, purchasing and refurbishing homes before selling them. This capital-intensive approach made it difficult for Zillow to respond initially.

Another example is Substack, which turned Medium's network redundant by offering a different model for writers and readers. While Substack had to abandon network effects to challenge Medium, it built in switching costs to maintain defensibility.

Disrupting network effects is a valid approach for startups competing against incumbents. However, it is crucial to build in some form of defensibility as well. As a startup scales, it needs a roadmap to regain what was sacrificed in the pursuit of disruption.

Three actionable pieces of advice can be extracted from these two perspectives:

  • 1. Master the basics: No matter the skill or craft, never overlook the importance of mastering the basics. True mastery and performance come from a deep understanding and practice of the elemental components.
  • 2. Change your environment and goals: To return to the basics, consider changing your environment or setting different standards for what you want to produce. By altering your surroundings and goals, your actions must adapt to meet the new challenges and requirements.
  • 3. Observe and analyze your work: After completing a task or project, take the time to observe and analyze your work. Identify the basics in your craft and assess how well you are mastering them. Look for areas of improvement and make adjustments accordingly.

In conclusion, both mastering the basics and disrupting network effects play crucial roles in achieving success. By understanding the elemental components and practicing them diligently, true mastery can be attained. Likewise, by challenging and making incumbent networks redundant, startups can create better customer experiences. However, it is important to build in defensibility and have a roadmap to sustain success as a startup scales. By incorporating these insights and taking actionable steps, individuals and businesses can navigate the complexities of their respective fields and thrive.

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