How Not To Run a Business – The Sheep Strategy


As I read this post about the "herd mentality," I couldn't stop thinking about how it applies to running a business. In the post, Stephen Dubner writes about how he regularly waited in line for a crowded bus, only to realize that walking to the next bus stop (which is visible from the first one) cut his wait and allowed him to sit with his daughter, instead of stand during the ride.

Once we hit upon this solution, we haven't boarded a single bus at Point A. We get to sit; we get to listen to the iPod together (we both love Lily Allen, and I don't worry so much about the fresh parts since Lily's British accent renders them nearly indecipherable for Anya); we don't arrive with a smushed lunch.

But what I can't figure out is why no other bus passengers at Point A do what we do. To anyone standing at Point A morning after morning, the conditions there are plainly bad. The conditions at Point B are clearly better since a) Point B is close enough to see with the naked eye and b) the buses that arrive at Point A from Point B often have room on them, although only for the first 10 or 20 passengers trying to board at Point A.

Personally, I am happy that more people at Point A don't go to Point B (which would make me have to consider boarding at Point C), but I don't understand why this is so.

There's a saying on Wall Street that no one ever got fired buying IBM. It's probably true. If you do what everyone else does, you share the pain of failure. That's why business strategy is such a "me too" game. "We do what they do, only a little better (cheaper, faster, whatever)." That's how some companies do strategy.

Take web tv as an example. It's a hot market, and I'm not knocking it – I think it has huge potential (hint hint – watch this blog…) but some mainstream companies are pouring money into it just to say they have a web show division. Listen to them talk for 2 minutes and you realize they are doing it out of fear – out of the desire not to miss the boat. I know because I heard some of them speak at SXSW. It was like a chorus of "me too, me too." But many of them are doing it wrong.

Here's the thing – web shows aren't for big budgets. Producing them like tv shows is a sure way to lose money. Yet, that's what some of these companies do.

Strategy is built on strengths. Me-Too strategy rarely works because your strengths aren't the same as those of your competitors. If they are, you should build new strengths.

Following the herd is a sure way to mediocrity. If that is what you're going for, then ignore this post. Otherwise, don't let the safety of the herd make you too comfortable.

  • I too believe in the “sheep” theory.
    Not many are willing to take the lead or go out of their “comfort zone”.
    I have seen it too many times!
    Excellent article.

  • I too believe in the “sheep” theory.
    Not many are willing to take the lead or go out of their “comfort zone”.
    Excellent article.

  • Rob,

    I always heard the old “nobody ever got fired for buying IBM” in reference to purchases by IT departments. And that meme persisted way beyond its useful life.


  • Some of the worst examples of sheep-like behavior can be found in journalism. Most publications seem interested in covering something only if other publications are already covering it. The whole concept of product differentiation does not appear to be grasped at all.

  • Great post Rob! Inspired me to write a related post of my own…

  • David,

    Great observation, and annoyingly true! It seems like publications’ idea of differentiation is MORE of the same than the other guys.


  • Hey David, great comment on the Freakonomics post. I believe that the “sheep theory” is as true as many other natural laws in the universe.

    From some of my traveling experiences I’ve seen that there are cultures and nations that are more open to innovation and differences within society than others. In contrast, some cultures are extremely adept and used to working in “sheep” mode, following others and doing what the rest are doing. I believe this is a tough issue to judge upon since it comes from so back behind in culture and historic background (perhaps even back then in cavemen times).

    That said, I think we need more people willing to take chances and to take the “side-road” opening up with new and fresh ideas that challenge our current point of views and paradigms. If more people did this we wouldn’t be so deep in the troubles we now are (wars, violence, politics, oil dependence, product innovation, etc.)

    Great post & sorry for my long comment.
    -Ron E.

  • mayor

    i want how more the sheep bussiness in Nigeria