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Full Combat Business

16.04.2009

Business in an era when 1+1 = 2 (not 3)combat

Most articles that discuss a company’s mission, vision, strategy, or even marketing often cite Nike and their tag line “just do it”. It is also well known that during an earlier time Nike had a different internal slogan of a completely different sort:  “beat Adidas”. About the same time Nike had their aggressive slogan, the company I worked for had a similarly aggressive internal slogan of “kill Weston-Loral” (our geographically closest direct competitor).

Why is it that these old style, aggressive slogans, that target a competitor are now so rare? Why are aspirational slogans like “just do it” all the rage? What can we learn about the effectiveness of these slogans in their time? My thesis is that such slogans were the products of their market environments and that much of the same market environment has returned leading to the conclusion that slogans and their consequential real action need to change back to the old again.

In the late 1980 through the late 1990s, there was relatively modest global economic growth (especially if we discount the .com bubble). If you wanted your insurance company to grow, it was almost impossible not to have another insurance company shrink as a direct consequence. The optimal strategy, for such an insurance company, was to target a weak opponent that should shrink and rally your company on an understandable objective. However, by 2000, global economic growth became so large that such a enemy based, targeted strategy just created a distracting battle while the others moved on and took all business growth leaving you two to irrelevant competition over some legacy piece of the market. My conclusion from these two periods is that when there is plenty of new business it is best to be aspirational and avoid direct confrontations that might distract you. However, when business is stalled or shrinking, it is best to pick a weak enemy and start a fight.

In both Nike and my former employer (Honeywell/Measurex/DMC), the ‘pick a fight’ strategy was highly successful. In fact, in our company, we ultimately needed to buy our effectively defeated enemy in order to re-orient the company to take on almost any other competitor seriously. Here is how it worked in practice one the once the enemy was defined: Salesmen would identify accounts that were historically controlled by our enemy but our enemy was not doing a great job satisfying the customer. Our salesmen could steal the business from our enemy by great targeted sales relationship efforts and potentially sacrifice initial margins. This would make our enemy defend their ‘cash cow’ accounts.  If our enemy could not fight back, we won the business and retained some margin for our ongoing war chest. If our enemy ultimately proved too strong in a particular account, we made certain to “pollute the price” so that they would ‘bleed out’. We would do this by presenting crazy low priced proposals knowing (and hoping) that we would never get the business.  In fact, we would intentionally target accounts where the customer liked our enemy and provoke a price reduction even if we would never have a chance to take business. On the other side, in engineering, we would respond feature-for-feature, ensuring that we were always one step earlier and better than our enemy in every case.  Total imitation + innovation was powerful. Since we offered everyting the competition had plus some innovation, we could say that we don’t care what the customer prefers (since we make money from both), but that our recommendation is for XXX (which, our enemy does not have) Finally, manufacturing saw every report of our enemy’s lower price or faster delivery in the market as a legitimate benchmark which must be beat– processes changed, suppliers changed, etc. It was a true war. The consequences were quick and severe.  Like wartime, every aspect of the business could be defined in the simple question “will this help defeat our enemy?” Strategy sessions were staggeringly short and simple– everything at every level was automatically aligned. It was a contagion like a forest fire.  And it worked.   …. I think it will work again– right now, today….

How to deploy this technique within your company? First, it only works where you have less market share than your enemy (Nike and my company were relative newcomers to the market). If you are a big company, then you need to limit the battle to a market segment where you are the ‘new guys’ displacing the abusive.  It must be a ‘just war’ when it is declared to your staff (and recognized by your customers).  Next, you need to be totally committed at all levels. You are declaring total war and not discussing a ‘police action’. Your internal staff will never understand a ‘peace for our time’ or ‘peace with honor’ declaration at a later date. Finally, define your first battles and win them at all costs.

Risks: you must pick a company that is fat, slow to react, and does not have consistently satisfied customers— not so difficult to find today since many big companies want to (or must) “milk the accounts” and keep margins as high as possible. You must also avoid fighting more than one enemy at a time for the same reason real armies must avoid this. Note, while you are attacking your enemy, be aware that your next enemy is likely resting and will not be weak. Finally, it must be a winnable war. In the above examples, these companies could compete on price, quality, features, marketing, and sales skills. If your enemy is getting his business through political connections, superior relationships, or superior technology that you could never duplicate, then there is high risk that the war is un-winnable. Remember, your enemy should feel the pain in 6 months and should be declared vanquished in 36months. Like real war, speed counts.

Is this nice? No. However, this is nothing personal. There are simply not enough coconuts on this desert island of ours. When new trees grow too slow, I will get my coconuts by taking yours. It is not pretty, but like Darwinian biology, it is our reality.

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