Any kid who has ever been in a fight can tell you that it’s not wise to go blow-for-blow with a bigger, stronger bully.  If a scuffle is inevitable, then a sneak attack, a quick kick to the groin, or some other surprise will yield better results.  Just standing your ground will inevitably result in a beating.  You have to change the rules of engagement to give yourself a chance of survival.

Barnes & Noble (B&N) would benefit from being reminded of this right now.  They appear to be standing up against Amazon and attempting to fight them on neutral ground.  Not a good idea.

Barnes & Noble has some notable strengths, but trying to match Amazon’s spending power or mimicking their technology strategy aren’t two of them.  The $300M investment from Microsoft is nice, but it is pocket change for Amazon who will gladly challenge B&N in a price war.  The DOJ ruling, no matter how it turns out, will not give B&N the upper hand.  At best, it will only buy them more time.

Barnes & Noble needs to change their strategy.  They need to see themselves as a book ecosystem, not just a retailer.

What does that mean?  Instead of developing hardware, software, a proprietary bookstore, and managing physical locations, they should focus on two things—books and connecting people around books.  Apple developed the groundwork for this model when it created its App and Developer ecosystem.  Instead of developing all the games, tools, and software themselves, they let others plug into their robust distribution network and innovate for them.  Now they have 650,000 apps which have been downloaded an unfathomable 30 billion times by users.

Barnes & Noble could do the same thing.  They could let any developer, independent bookstore, or college dropout, plug into their bookstore and help them sell books.  They could entice technology minds to create other reading apps, powered by the B&N bookstore.  They could let innovators create book derivatives and additional revenue streams across the new digital platforms.  The power of mobile, social, group buying and a number of other things could be unlocked almost overnight.  Most importantly, the risk would be distributed across all these experiments and B&N could focus on just one (or two) things.

Amazon wants to own and control the whole book ecosystem.  So let them try.  Barnes & Noble should take the opposite approach of facilitating the interactions across the ecosystem but letting all the parties—the readers, publishers, authors, and agents—control their own brands.  It would yield them a much more favorable outcome.