Michael Porter’s Three Strategic choices

How to save Finland

Juuso Myllyrinne
Sep 29, 2014 · 4 min read

We Finns are a weird bunch. We either love bad-mouthing our homeland or sing it’s praises to anyone who’ll listen. It’s always about our fantastic PISA scores, low-corruption rates, energy efficient buildings or our engineering prowess in mobile technology — and just a few minutes later we rant all about the dismal unemployment situation, high taxes, low growth even for a Euro nation and somewhat embarrassing relationship with Russia.

The matter of the fact — and the heart of the problem is that we’re somewhere in the middle.

We’re ok.

We’re a middle of the road nation. With a middle of the road strategy. To be kind of good at everything. To be all things to all people. You can’t be the best, but hey, it’s pretty good. We create smart generalists. We don’t have any glaring weaknesses, but no particular strengths either.

This is the issue right here.

The middle of the road is the worst place to be. In classic business strategy there are only really three different routes an entity can take. It can either be the cost leader (produce something generic, cheaper than anyone else), it can differentiate itself (create an artificial monopoly) or focus on the needs of a particular segment (an even tighter monopoly). So you’re either Lenovo selling the cheapest PC-laptop, Apple exclusively selling the MacBook or you’re Alienware selling the best gaming laptops.

I remember the graph in the title from Michael Porter from my first year marketing text book, and more recently Peter Thiel in his book “Zero to One” describes the same thing in more detail. He takes it a little further and says that the optimal strategy for a small, resource poor start up to corner a big market is fairly unintuitive, it happens through cornering a small market… and then growing the market. Not attacking a big market head on. Paypal cornered the first few thousand hardcore sellers on eBay. Facebook cornered first just one University. Uber started in San Francisco only.

This is focus and differentiation. And it’s the path to sustainable growth. Middle-of-the-roaders tend to lose out with time.

Finland has the resources of a start up in the race of nations and that’s why it will eventually lose it’s comparative advantage in mainstream education. We’ll never win the World Cup. Our action movies will never be as good as the ones from Hollywood. Our rap music is somewhat embarrassing. You shouldn’t build ships in a market where it’s simply not viable to do so. We will not win the patent war. Probabilistically thinking, the next Serena Williams won’t come from Finland. We can’t be Lenovo.

This won’t happen because we’re lazy or bad people, we just have less resources to compete in these middle-of-the-road pursuits.

The only sensible thing is to stop trying to fit in the middle. We should stop trying to emulate what others are doing. We should be Apple or even Alienware.

We should find the weird little niches that no-one even thought of doing.

We should create more of the the world’s best melancholic movies, more of the world’s best freemium mobile MMO strategy video game for touch interfaces, more of male-choir shouting, more of wife-carrying tournaments, more cloud-berry jam, more reindeer boots, more ever-hot saunas, more airport de-snowing technology, more data wiping innovations or more of a better way to segment consumers on websites using a smart data mining algorithm based on online gaming platform technology and what not.

We have a monopoly to Finland — to it’s culture, people and infrastructure.

We can create fantastic things in the cracks of the world that no-one ever even thought of. Then when we love it and it’s great, we can export and sell it to reap the benefits. We should be the odd ones out. We shouldn’t try to emulate Silicon Valley or Hollywood. They’ll always be better at doing what they do, but if we do something that didn’t even occur to them, we can be the best at that.

Like Thiel predicts in his book, the next Zuckerberg won’t create a social network. The next Larry Page and Sergey Brin won’t create a search engine, the next Steve Jobs won’t create the iPhone. It’ll be something completely different.

And it can come from Finland, if we stop trying to fit in and let ourselves be unique. We have the perfect laboratory of a well-educated, fairly homogenous and tech-savvy nation. Create a splash at home and then unleash it to the world.

    Juuso Myllyrinne

    Head of Strategy, Executive Director and generally a Pretty Big Deal. Fantastic at Xbox Ice Hockey.

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