FCC Chair Tom Wheeler – Photo from Wikipedia

The FCC Chair’s announcement this week to redefine what constitutes a multichannel video programming distributor (M.V.P.D) was described as a measure to increase competition to counteract the consolidation of content producers and distributors. I believe that the ramifications of this policy–should it be enacted–will have a significant impact not just on the distributors–which are the target–but on the way that content is produced.

By reducing the barriers to entry, the industry becomes more prone to disruptive innovation, which may produce alternative revenue models. Traditionally, content has used advertising during live-air broadcasts to cover production costs, and then sought lucrative syndication agreements after a certain threshold of episodes. I see this model as unsustainable in an era where content is increasingly available on-demand and distributed through the internet, primarily because the networks that purchase syndication rights to fill their air-time, become obsolete when that content catalogue can be accessed at any time.

To compete for market share firms will need to either wage a price war, or increase their points of difference. I think that the latter is likelier, and that differentiation will be created through exclusive original content. Thus customers will be acquired through interest in specific shows, which will result in more selective choice than is possible in the current era of channel bundling.

Strategy must be derived from a comprehension of external factors as well as internal strength. The Northern Gateway Pipeline is attempting to leverage the ample supply of Albertan oil to satisfy increasing demand in Asian markets. Its challenge; however, is convincing those whose land the pipeline passes through possesses a minimal threat–especially relative to the economic rewards. The company has thus far failed to do so, with First Nations opposition being the most prominent. This circumstance has especial focus on Aboriginal groups because the proposed route crosses through reserve territory. Pipelines, despite transporting oil with a lower risk than alternatives, evoke strong images that develop into a near immutable negative perception.

Photo by How Stuff Works

This issue also reflects the larger image problem facing traditional energy companies. It is this external difficulty that threatens the greater interests of oil companies, which has motivated them to spend significant amounts on lobbying, and introduce new advertisement campaigns.

The combination of psychological factors, lack of benefit for aboriginals, and genuine danger to ecosystems, makes the likelihood of the project being completed small. Thus, Enbridge should seek to circumvent the opposed jurisdictions with alternative transports, thereby avoiding the external issues, rather than challenging an entrenched position that would be impractical to persuade.

SheTaxi is hoping to replicate the convenience of app based shuttle services–Uber Et al.–but differentiate by having exclusively female drivers, for a female clientele. Its value proposition is that the status quo offers a subpar experience for women, with unappealing interiors, and overwhelmingly male drivers. Company founder, Stella Mateo points to women exclusive gyms and choice in gender for a gynaecologist, as proofs of concept. Her assumption that something that was successful in an industry, is directly transferrable to another indicates a poor foundation for her value proposition.

Photo from SheRidesNYC

The principal difficulty for the company; however, may not be differentiation, but points of parity. Taxi services must meet a certain vehicle concentration to be convenient. The company currently has 100 drivers compared to YellowCab’s 13 000 cars in New York. Other start-ups may have faced similar struggles, but successfully poached experienced drivers by eliminating fees to licence vehicles. The problem for SheTaxi is that 95% of existing drivers in New York are male, and consequently, its drivers will be as inexperienced as they are difficult to find.

Congruently, the company’s challenges to find and train drivers, and the questionable core proposition make it likely to struggle, and fall into obscurity, after initial press about its novel thesis dissipates.

Photo by Michael Bohanes

On his blog, company co-founder Michael Bohanes describes the failure of his first start-up, Dinnr, and shares lessons from his experience. The company offered same-day delivery of all the necessary ingredients–pre-measured and ready–from a recipe that customers could select online. Mr. Bohanes blames a poorly constructed value proposition for making success infeasible. Furthermore he warns of the perils of poor market research, which can give an ambitious entrepreneur false confidence.

Because of the size of his company there are no other sources from which to gain perspective, and therefore it’s difficult to dispute or deny his conclusions. Whether or not operational or strategic mistakes contributed to the demise of Dinnr is unknowable given the available information.

Thus, the surest factor in failure was his decision to found a business based on what he knew and liked, rather than identifying a need that could be filled by a service he was qualified to provide. His market research further undermined this process, by conducting face-to-face interviews with direct questions, which led to sympathetic answers from participants, rather than extraction of valuable underlying information.

Together, these two errors convinced him that he had found a value proposition married to an untapped market. In actuality, he was relying on tenuous research and non-specific customer segments, to support a passion, rather than a business.