In 1994 I had one engineer, a box with an antenna that S&P mailed to us, and a serial port. Financial information was a privilege. It flowed through gatekeepers. We put live stock quotes on the web anyway. Looking back, NETworth is still the clearest case I know for reading where you stand.
Strategy is not a plan. It is a form of orientation. It is knowing where you are standing on the map of history. No single view of the map is enough, so I read it through four lenses. The arc tells me where the industry is. The curve tells me who is buying and what they need. The exponent tells me how fast the technology underneath is compounding. The wave tells me who the population is becoming.
Four lenses on one company.
- The Arc
- Infrastructure. To run a browser on Windows you configured a file called winsock.dll yourself. HTML could not yet make a table, so we could not line up our columns of numbers. When the tools are that crude, the field is empty.
- The Curve
- Our first users were students and a handful of curious early adopters. In 1995 Merrill Lynch’s chief executive told me the internet was a fad. Two weeks later Charles Schwab leaned in and signed a contract.
- The Exponent
- Distribution compounded on its own. The Mosaic team put NETworth in the browser’s drop-down menu. When Microsoft licensed Mosaic for Internet Explorer, the menu came with it. By the time Intuit called, about a hundred financial institutions used NETworth.
- The Wave
- In the mid 1990s the economist Ed Yardeni showed how the aging of the baby boom was moving stock prices and savings. Our bet was that ordinary investors wanted what professionals could see. The people who would prove it were already born.
Where the lenses disagree.
Read back through the lenses, three of them said go. The curve said not yet. Most people who understood markets still saw a toy. That gap was our real risk. We were a small team with a product people liked and very little cash, building for buyers who had not all arrived.
Then the arc moved. Netscape went public in August 1995, and large companies that had ignored the internet started shopping for working products. In October, Intuit called. Intuit agreed in late 1995 to buy Galt, and the deal closed the following year. NETworth was a better product inside Intuit than outside it. That year taught me a question I still ask: does my product belong inside a larger platform?
Where the four answers disagree, you have found your strategic risk.
The core of strategy work is always the same: discovering the critical factors in a situation and designing a way of coordinating and focusing actions to deal with those factors.
I have not always read all four. In 1999, at Internet Venture Works, the vision was right. The timing was wrong. Our customers were visionaries. The ordinary shoppers we depended on were not ready to buy a heavy bag of dog food from a website. I had learned the curve at WiseWire. I should have applied it to myself. That debrief is in Debrief Through the Curve.
Richard Rumelt puts diagnosis at the center of good strategy: name what is really going on before you set goals. The four lenses are a diagnostic discipline. They make you name the critical factors before you commit to a plan.
Strategy is orientation turned outward.
Read all four lenses.
- Write four headingsOn one page: Arc, Curve, Exponent, Wave.
- Answer each in two sentencesWhere is your industry on the arc? Where is your customer on the curve?
- Check the slow partAsk how fast the technology underneath you is compounding, and whether you are drawing a straight line through the slow part.
- Look twenty years outWrite down who your customers will be in twenty years.
- Circle the disagreementWhere the four answers disagree, you have found your strategic risk. Revisit the page every six months.
Quick answers.
What are Rob Frasca’s four lenses of strategy?
Rob Frasca reads a market through four lenses: the arc (where the industry is in a platform shift), the adoption curve (who is buying and what they need), the exponent (how fast the technology is compounding) and the age wave (who the population is becoming).
How do you find the strategic risk in a business?
Rob Frasca answers the question each of the four lenses asks, in two sentences each, on one page. Where the answers disagree, he says, is the strategic risk. At NETworth in 1994 the curve lagged the other three lenses. Intuit agreed to buy the company in late 1995.