IMD Business School, LEGO® Professor | 2025 Thinkers50 Top 50 | Director, Center for Future Readiness
Steinway’s CEO admitted it out loud. Yamaha Corporation knew their pianos better than they did. Think about that. The world’s finest piano maker, the choice of Carnegie Hall and the Smithsonian, conceding that their rival understood their own product better. Arthur Rubinstein once said a Steinway has no equal in the world. Steinway sold 6,000 pianos at their peak in 1926. By 2012, just 2,000. Sold to private equity. One workshop left in Queens. Yamaha? Producing 200,000 instruments a year. What happened? Steinway perfected pianos. Yamaha collected capabilities. Yamaha killed the floppy-disk keyboard my parents bought me for HK$60,000 when I was seven. Then it dominated the industry. The companies that die don’t lack excellence. Kodak perfected film. Blockbuster perfected rental stores. They declined because they perfected the wrong thing. Winners don’t perfect products. They collect capabilities. I told this story to 7,500 people at Nordic Business Forum. The night before I couldn’t sleep. All I could think about was that obsolete keyboard and what it taught me about survival. Rick Rubin was there. So was the former CEO of Nokia who pulled the company back from bankruptcy. Between them and the data, three principles emerged. They apply to billion-dollar companies and to individual careers alike. Your core competency is what you’re good at today. Your capability stack is what saves you tomorrow. The gap between the two determines everything. In my latest newsletter, I unpack the three non-negotiable principles these future-ready companies live by. It’s about being an inch braver than yesterday. 👉 Read the full piece here
Howard Yu Howard, I love this precisely because it wasn’t a simple story of a niche, upmarket product vs. a mass-market one. By adding the examples of Kodak and Blockbuster, you showed that the answer is not just “go mass-market and get scale”. I’ve been thinking about the fates of Apple and Sony, the two players that brought the ability to edit photos and video to the average consumer through computers. Today, Apple has grown its revenue from $5.36b in 2001 to $391b in 2024. In contrast, Sony's revenue grew incrementally rather than exponentially, from $58.5b in 2001 to $85b in 2024. Capability stacking explains this perfectly: Sony is still the gold standard in hardware. For 20+ years, my mum has refused to buy a TV that’s not a Sony. But Sony stayed rooted in hardware, while Apple embraced the shift to mobile devices and built a cloud ecosystem around their product. Meanwhile, Apple is taking the "building block" approach. It pushed home creators through iMovie and Final Cut Pro. But Adobe has invested more in Gen AI video editing than Apple has. Now that Adobe released Premiere for iPhone this month, maybe Apple doesn't have to compete with enhancing FCP but just leverage what others have built for iPhone. Interesting!
Howard Yu - This is a MIC DROP 🎤 post if I have ever read one! I would say the "core competency" / "capability stack" gap applies so well to career transitions, leadership development, and the like! Love it!
It is enlightening to say the least. Do u have a podcast that i can tune to? Or Substack?
Howard Yu, what a beautiful content. Thank you for sharing this example. 💕 I grew up around Steinway and Steinway & Sons concert pianos, and I have a Yamaha at home 🙃 😉, which has a concert piano touch and sound. I love your "Your core competency is what you’re good at today. Your capability stack is what saves you tomorrow." Yes, yes, and yes!
Howard Yu Sorry, you’re wrong. They declined (failed) not because they perfected the wrong thing but because they didn’t perfect the next thing. Remember, Kodak invented digital capture in 1975 but intentionally did not pursue for fear of destroying their core business…
I see a lot in these stories related to what’s described in ‘The Innovator's Dilemma’ by Clayton Christensen. Blockbuster actually had a chance to buy Netflix for cheap, but they thought the price was too high. It probably would have killed Netflix anyway.
Howard Yu suggesting a broader view - capabilities yes - but not home grown necessarily or even most likely. Partnerships and acquisitions are important tools in the box. And the ‘easy to work with’ eludes to a capability for engaging in open value chains 🚀
" It’s about being an inch braver than yesterday."- Fully agree Howard Yu. And the iconic brands sometimes, seem not to accept this "law" of being competitive TODAY.
wow amazing read Howard Yu these 3 questions apply to personal career also, thanks Sir
I loved this article. However, I must disagree with the statement “Stop perfecting. Start collecting.” Every success example you shared had perfection embedded within it. A sustainable business thrives not by choosing one over the other, but by doing both. Perfecting without collecting leaves you vulnerable, while collecting without perfecting makes you weak.