Lessons for an Upstart Business From Console Wars

Console Wars is a great book detailing the early history and the rivalry between Sega and Nintendo and the battle for your living room during the 90s.  Sega was second fiddle to Nintendo until its U.S. division led by recently hired Tom Kalinske went “rogue” and aggressively took on Nintendo.

I walked away with 4 ideas about growing your business from Tom Kalinske’s efforts to turn Sega of America from a bit player into a powerhouse.

  • If you’re the upstart you have to be what the big guy isn’t. Be a choice for the consumer. Nintendo’s games and advertising were family friendly. Tom allowed Sega’s games and its characters to be edgier. Sonic the Hedgehog versus Mario.
  • When you’re the little guy be bold with your marketing and brand imaging. Don’t play it safe. You have nothing to lose. It is the only way to grab some market share from such a dominant competitor.
  • Substance does matter but a great story matter more. Sega needed quality games and a good console with the Genesis otherwise no one would’ve ever bought them. The Genesis wasn’t as good as the Super Nintendo when you get down to the nuts and bolts but it didn’t really matter. Tom Kalinske and his crew were able to spin a better story and the difference between the Super Nintendo and the Genesis wasn’t noticeable to the average consumer. And it was the story that attracted people to the Sega Genesis.
  • When running a business and you finally start winning the battle and obtaining success you can’t rest. You have to prepare for the next battle. Your competitors won’t concede; they will get better and more aggressive. Keep your quality high and your story fresh. When you lose focus on this your business will die. After the success of the Sega Genesis, Tom kept pushing for bigger and better but Sega Japan hindered him. Sega Japan killed the deal with Sony to partner on a new system harnessing the power of CDs and 3D graphics. Sega Japan developed the Saturn, a 32-bit console, to fend off Atari’s Jaguar system when the real threats were the upcoming 64-bit system from Nintendo and the Sony Playstation. This was when Tom walked away from Sega. No story could make up for the lack of substance at Sega.


Author: Glenn

A portfolio manager with American Money Management LLC and an assistant water polo coach at UCSD.

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