Why Most Organizations Get Strategy Wrong

Tensions between the US and China have heated up recently and while tariffs grab a lot of headlines, I believe the more important battle is being waged over core communications technology and the Internet itself.

5G is the new standard for broadband wireless networks with speeds and features that will revolutionize our world enabling the Internet of Things, autonomous vehicles, remote surgery, etc. But it increasingly looks like those advancements will proceed on two separate tracks. We won’t have an Internet but a Splinternet as Kai-Fu Lee, CEO of Sinovation Ventures, pointed out in Davos recently.

As there was once a first world and a second world during the Cold War there will now be two camps: one led by China and the Belt and Road countries and one led by the US and the West. Who gets to be the first world and who is the second is what will play out over the next decade or so. While standards will keep the systems roughly compatible in the near future, subtle changes in how these networks are implemented can block compatibility. Additionally governments on both sides will actively exclude hardware and applications and services from each other’s networks. NATO is now coordinating to ban Hauwei equipment from western 5G networks. I can’t imagine that restrictions won’t follow on other products and services building off the US Committee on Foreign Investment in the United States (CFIUS) process and other efforts.

On the Chinese side Google/Alphabet has famously had issues with accommodating China’s censorship demands which again blew up last winter when its Dragonfly project was revealed. Facebook and many other US sites sit on the other side of China’s Great Firewall and even Apple’s iPhone, while legal, is under pressure from rising competition, tariffs, and a general Chinese economic slow down. The US and China are on a path to become two competing technology camps like Android and iOS on steroids and with nukes.

In effect we are embarking on an App Store Cold War where companies will be forced to choose sides or attempt to play both sides of Scylla and Charybdis. Judging by the results from many of the current tech giants (and countries) on both sides this will be an increasingly dangerous and unsuccessful game. Countries will be forced to choose but in a different game than the Cold War. Rather than AK-47s, you get cloud services and Che Guevera and Kermit Roosevelt are being replaced with a mobile payment system.

It is surprising how quickly this competition has emerged into the open. Trade deal or no, the competition will not go away any time soon. The App Store Cold War has just begun.


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