Comment by sah2ed
8 years ago
FWIW, the expression "create a desert of profitability around you" is more popularly expressed as "create an economic moat".
8 years ago
FWIW, the expression "create a desert of profitability around you" is more popularly expressed as "create an economic moat".
The ideas are more different than the analogies are. A moat would be things like patents, data, expertise, etc that a competitor would need to get to match you and which are hard to develop. That doesn't have anything to do with the profitability of nearby market niches.
Exactly! A moat is less efficient than a desert. A moat is highly susceptible to niche entrants who might expand into your main market after, but a desert leaves no to little money on the table for anyone else.
You are correct, if you believe competition in the marketplace (or the battlefield) is linear -- where enemies/competitors lunge at you in turns, one at a time.
If you do not believe that competition is linear, then it cannot be true by any stretch of the imagination that a moat is "less efficient" than a desert. A moat/desert/<insert metaphor> is only one of many tactics employed to win battles.
IOW, it is not a strategy as you seem to be implying with this reply.
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The problem with this argument is that it is a gross simplification of reality.
Terms like "market", "nearby market", "niche" etc are all abstractions the same way a map is an abstraction of an actual territory. They help us reason clearly but they should not be used as a substitute for the real thing ala "the map is not the territory".
A "desert of profitability" is essentially a battle tactic -- a tactic where you delay the use of your moat (fortress, trench etc) by igniting trouble elsewhere, usually in neighboring lands that enemies must traverse before the war reaches your own land.
IOW, it is a tactic used in conjunction with other tactics, it is not a strategy; all it does is buy you time. Eventually, the technology landscape will shift and such economic moats, no matter how deep, will lose their relevance.
Those aren't equivalent concepts. A moat can refer to any number of strategies to protect your business from competition.