subject: The Power of White Space [print this page] The Power of White Space The Power of White Space
There was an Interesting article in Forbes back in January that discussed how Facebook beat MySpace. By this time I'm pretty sure we all know the story. Once upon a time, long ago (about 4 years) MySpace ruled the social networking universe. The site had risen to dominate the emerging social media industry, was backed by the deep pockets of News Corp. and certainly seemed to have an unlimited and rosy future at the top of the mountain. But, then along came a little upstart site called Facebook. Facebook wasn't especially cool to look at (what do you mean I can't customize my profile page!) but it started grabbing users anyway, by providing a mix of features that resonated with consumers. Over the next couple of years, as MySpace stagnated (perhaps enjoying the view from the penthouse too much to worry about the competition), Facebook surged. After a few years of trying to figure out how to recapture its past magic, MySpace has dramatically downsized and attempted to reinvent itself as more of a niche social network focused on music and entertainment. Whether it manages to succeed in carving out a profitable place for itself in today's social media ecosystem remains to be seen. Facebook, on the other hand, has moved into the old MySpace penthouse digs as the reigning king of all social media. I would bet that the MySpace-Facebook battle will be a case study in market disruption for plenty of MBA business classes across the country for years to come.
The Forbes article tries to look at what happened at each of the two companies and figure out what went wrong and what went right to create the complete reversal of fortune that we have watched play out over the past few years.
First, the author discusses what went wrong at MySpace. His premise is that arguably the biggest mistake the company made was to become too professional and turning over control to corporate management at News Corp. The use of things like long-term business planning, professional management, forecasting, and other traditional MBA style business management techniques were all complicit in the company's downfall. All of these traditional business tactics put MySpace in a position of trying to out-think the marketplace, according to the author.
Conversely, Facebook operated in what the author calls "White Space". The company grew (as many startups do) without a comprehensive business plan, daily strategy meetings, and other old-school corporate business thinking. The company allowed the market to dictate where it should go and how it should grow. Facebook was more focused on ideas to make the site better and more useful to its users than on specific revenue streams or other key business drivers. Operating in White Space gave the company the freedom to grow without the constraints of long-term business plans and projections.
While I'm not sure I totally agree that Facebook has built its business by always listening to its users (if so, it wouldn't face regular user backlash against various site changes), I think the idea of building a business in White Space is an interesting concept. The author doesn't really dig into whether he believes the benefits of White Space have always applied or whether they have come into play along with the growth of the Internet. I think there is a good argument to be made that the faster pace of innovation and change brought about by the emergence of the Internet makes long range business planning much more challenging than it was 20 years ago. When entirely new markets can appear without warning, companies that are poised to adapt quickly and capitalize on new ideas are most likely to be successful (see Twitter, Groupon, etc.). Companies that rely too much on long-term planning and have many layers of bureaucracy and traditional management structures may find it harder or even impossible to adjust quickly enough to keep pace.
The affiliate marketing space is a great example of the White Space concept in action. As an affiliate, it can be very beneficial to have a business plan. But, if that plan is too limiting and doesn't allow for your business to evolve with the industry, you won't have long term success. Part of being successful in our business is being able to adjust to changing conditions very rapidly. Being unable to change course quickly means you could either miss out when a new vertical or traffic source develops or be completely lost when the offer or category you focus on suddenly dries up. Successful affiliate marketers build their business in the White Space, always looking for new ideas and ways to improve conversion rates or drive more sales.
Circling back to the MySpace Facebook article, it will be interesting to see how Facebook handles being the market leader. As the company grows, will it be able to continue operating in the White Space or will it get bogged down in some of the same issues that helped bring down MySpace?
